What It Means to Be a Smart Brand in the Age of AI.
Huge’s framework for evaluating which brands effectively collect user data and personalize experiences.
In the race to be “innovative,” brands are scrambling to leverage new technologies—artificial intelligence, conversational interfaces, RFID bracelets, in-store beacons, and even drones—to collect data on users and personalize experiences for them. But how effective are these initiatives? Are they scalable or sustainable? Are brands realizing increased business value? Most important, do customers share in the benefits?
There’s a shortage of objective public data and validated resources to answer those questions conclusively. And yet, the stakes have never been higher for brands to get it right. A recent study of CMOs from the U.S., U.K., and China from organizations with $500 million+ in revenue found that about two-thirds believe AI will play an essential role in the future of their companies. But only a third say they have a solid understanding of how to apply AI to their business. Large companies late to deploy AI solutions—using computers to perform tasks previously performed only by humans such as visual perception, decision making, and speech recognition—will fall behind: They’ll fail to engage customers in more personalized and relevant ways and miss out on data-driven insights that directly impact products and sales.
This isn’t theoretical. Big data and machine learning are finally making mass personalization a reality. We can learn from the behavior of an individual user and tailor experiences for them like never before, with progressively less custom development. Brands can create what we call “anticipatory” experiences that make decisions on behalf of users based on their goals, preferences, and behavior. You can see this in the way Spotify predicts what music you’ll like based on your past listens, and how Digit automates how much money to move to a savings account by assessing your income and spending habits. So which brands are poised to make the most of their customer data, and how quickly?
That’s where the Smart Brands Index comes in. Huge has created a new framework to assess which companies lead the way in solving problems for users in novel ways, while improving their bottom line, building brand equity, and beating the competition. The upcoming index—focused by industry, with the first sector report launching in April—will identify and rank the smartest brands, explore their methods and tools, and provide actionable guidance to today’s business leaders. In an era when many companies are talking about the importance of AI and personalization, but far fewer are successfully deploying technology toward those goals, the Smart Brands Index will help identify companies creating innovation that’s for more than just show.
Our assessment focuses on how well a company leverages data to deepen the relationship between the brand and the user over time. Do users gain utility and value from the experiences? Do brands gain user-level intelligence to inform operations? The optimal Smart Brand accomplishes both, building customer loyalty and brand equity over the long term.
In short, a Smart Brand:
- Learns from every customer interaction.
- Personalizes every customer interaction based on that data.
- Provides a single, connected experience wherever the customer is.
- Understands both rational and emotional dimensions of its customers’ journeys.
Huge has developed a systematic approach to measure how customers benefit from emerging brand experiences. While consulting market research to understand critical, growing customer needs, we have mapped consumer journeys to see where customers require solutions from brands. Then, we’ve looked to see how brands provide solutions and deliver customer benefits through brand equity data, psychographic and technographic research, and social media analysis. To get a sense of how actual users are really using new interfaces, we are also leveraging our own user test lab—an initiative we’re affectionately calling Curie —to validate user benefits, as well as identify pain points and killer apps.
In a Curie test-lab session, Research Lead Elsa Kaminsky (left) and Senior Interaction Designer Jenny Clark (right) interview an Amazon Echo user about how she interacts with her device.
To gauge how companies are positioning their investments in Smart initiatives, Huge is looking at annual and quarterly findings, investor presentations, and management interviews in articles and press releases to uncover quantitative and financial data, as well as gathering qualitative signals that may indicate whether brands are moving in the right direction. We’re also evaluating current brand experiences across in-store and digital platforms to assess methods for gathering intelligence.
Although our approach is broad and exhaustive, our analysis is focused on brand experiences that are publicly accessible and already in the market. Companies may be investing in undisclosed, internal, and long-term initiatives that we are not taking into account, since they do not yet benefit users.
Some interesting examples.
No brand totally gets it, yet—not even Amazon, which, for all its investments in voice, RFID, and drone technology, still struggles to deliver compelling user experiences. For example, although Amazon is ahead of the curve on conversational interfaces with its Echo, it has not yet figured out how to make the device indispensable in users’ lives or become a trustworthy source of information. As one Curie interviewee told us: “If I say, ‘Alexa, how long does it take to get to work?’ it could give me an answer. But I don’t know if I can trust it like I can with Google, because Google knows more about my movements. With Google, I know the sources it is coming from.” The Amazon experience, although easy and convenient, is mostly transactional rather than delightful or useful—two key ingredients to building customer loyalty.
In contrast, let’s look at Nike, whose Nike+ serves up an ecosystem of experiences—spanning running, product discovery, and purchase—to more than 28 million users. With Nike+, customers can personalize their sneakers, get a heads-up on new shoe releases, and select and track their workouts. With user reviews attesting to the utility these experiences provide in helping customers avoid waiting in line or facilitating easy returns, Nike has been able to deliver experiences that meet customer needs, while accruing intelligence on customer style preferences. The challenge for Nike is how to create a unified user experience from its disparate apps.
Also in the retail apparel space, we’ve analyzed Rebecca Minkoff, a young luxury brand that has placed big bets on the “connected store,” deploying smart mirrors in two of its 11 stores to enhance product discovery in fitting rooms. So far, however, the brand’s delightful in-store shopping experience has yet to carry over to its e-commerce platform. Then there’s Macy’s, the established department store retailer that is looking to maintain its robust brand health and loyal customer base while taking advantage of recent innovations. While Macy’s is experimenting, for instance, with beacons to track customer movement and deliver push notifications based on where she is in the store, it remains to be seen if or how the chain will connect its standalone tech initiatives into a unified experience.
Get smart. The first categories in our Smart Brands Index are retail, apparel, financial tech, and travel and hospitality. Stay tuned for the first industry deep dive in April to read about the brands that are poised to shape a smarter future, and the techniques they used to get there.