AI Companies Need to Take a Page from Amazon’s Playbook, and Embrace the Relevance Transformation

Of all the titans of industry in the digital space, none looms quite so large as Amazon.

Amazon has come to dominate the market over the past decade not by creating e-commerce, but rather by creating the most relevant and immediate consumer experience. The e-commerce giant has focused on relevance and speed by leveraging customer data and machine learning to deliver unified and personalized experiences. This allows them to win at every touch point of their customers’ journey and keeps them coming back to buy more.

Amazon’s success can be measured by its market share. In 2017, Amazon controlled a whopping 44 percent of all e-commerce in the USA, up four percent from 2016. In just the first half of 2018 Amazon has exceeded last year’s growth, gaining five percent in Q1 and Q2; it currently dominates with 49 percent of the e-commerce market, and controls five percent of all retail spending. Meanwhile, in 2017 e-commerce grew nearly four times faster than traditional retail.

Businesses can learn from Amazon’s example by investing in the technology needed to remain competitive in the digital era. The companies that are leading the digital age are the ones that are turning the true potential of technology into measurable business value. The biggest takeaway in Amazon’s story for businesses is the importance of relevance, and using technology to transform the shopping experience by leveraging customer data and AI to gain insight on key decision points across the customer journey.

We call this Relevance Transformation – not to be confused with digital transformation; they are distinct and complementary. Digital transformation focuses on replacing legacy technology with cheaper, more effective technology to accomplish business goals and transactions. Relevance Transformation focuses on improving the quality and yield of the interactions themselves, using data not only to deliver relevant content but to identify which content is needed at that micro-moment, given the context and intent of the person searching for it. In short, while digital transformation is often transactional, relevance transformation is strategic. Both meet at the intersection of technology and human capability.

Artificial intelligence (AI) is the true game changer and can no longer be ignored. AI powers the Relevance Transformation. The importance of investing in AI to personalize customer experiences cannot be overstated; because relevance is the cornerstone of success in the digital age, and for the first time ever one-to-one business is made possible at scale, enabled by machine learning capabilities. But beyond simply improving the user experience, personalization has real, tangible business outcomes.

Throughout history all technological development and evolution has shared the universal limitations of human segmentation. Human minds are only capable of categorizing and handling so many personality profiles and interactions, and program the rules accordingly. Even a liberal estimate of the human mind’s ability to aggregate data about a person and provide him or her with a meaningful, relevant experience is a far cry from the untapped potential of AI. Where humans might be able to handle dozens or hundreds of uniquely personal, tailored interactions and rules, AI can handle millions. Before AI, software enabled humans to program rules. AI finds the rules by feeding it with millions of interactions and data. The limits of AI are theoretically only as wide as the breadth of variety in the human experience itself. Hence while segmentation allowed personalization advances using group attributes, AI takes it to a whole new level by automatically crafting a million different interactions to a million customers, automatically finding in a split second the subset of digital soulmates that can help predict a likely individual outcome, a new paradigm and capability that humans with classic programmatic rules approaches could not possibly handle.

Some companies have already begun to tap into the potential of AI, including Grubhub, Spotify, Netflix, Pandora and of course Amazon. Each of these companies have successfully leveraged AI to identify key growth levers and new business opportunities to fuel their Relevance Transformation. Imagine a world in which you could sign into an app that knew what you were craving before you did. In the food service space, Grubhub has already begun collecting data to recognize customers’ tastes and preferences, analyzing thousands of dishes to help the platform predict and suggest dishes users will find most appetizing in a given moment. In digital radio, Spotify and Pandora are using big data and AI to personalize music offerings for individual listeners – with the ultimate result of driving business success. Meanwhile, according to McKinsey, Amazon can attribute 35 percent of revenue, and 75% of what consumers watch on Netflix comes from their recommendations engine alone. All of these companies successfully use AI to recognize when their customers are at crucial decision points, and provide timely, relevant recommendations to deliver the personalized digital experience their customers expect, while delivering greater business value.

To remain competitive in an ever-digitized space, business executives need to be asking themselves if they are maximizing the potential of AI within their own organizations. Are there areas where customer satisfaction could be improved to enable more conversions, better self-service, more proficiency? Understanding that each non-relevant digital transaction leads to a negative business outcome, how much capital gets wasted every quarter and how much opportunity is missed? Every minute that goes by without answering those questions, potential revenue is being siphoned from the bottom line, customer service is more costly and less effective, and the true value of digital assets is underperforming.

Today we stand at the cusp of a fundamental restructuring of the business landscape as AI creates quantum-leap business opportunities never before available, enterprise-wide. Embarking on a relevance transformation helps actualize those opportunities to fuel business growth, customer satisfaction, and employee proficiency. AI unifies interactions and ensures that everyone — every customer, partner and employee — has access to the most relevant information, the moment it’s needed, to create effortless and personalized experiences. That’s the Amazon way; relevance not only digital. That’s what customers expect and it’s how businesses will scale in the digital age. Business executives should take a page from Amazon’s playbook when exploring the importance of reaching customers with meaningful, relevant data, recommendations and experiences at key decision points in the purchasing process. This investment demonstrably delivers the kind of value that makes the difference between a one-time and repeat customer, improving both the user experience, the conversion and the bottom line.


About the Author

Louis Têtu is Chairman and Chief Executive Officer of Coveo. Prior to Coveo, Louis co-founded Taleo Corporation, the leading international provider of cloud software for talent and human capital management, acquired by Oracle in 2012. Prior to Taleo, Louis was President of Baan SCS, the supply-chain management solutions group of Baan, a global enterprise software company with 5,000 employees. Louis is an Engineering graduate from Laval University of Canada in 1985 and in 1997 was honored by Laval for his outstanding social contributions and business achievements.