Conversational Marketing:
Speech technology makes the telephone a new medium

The Voice User Interface (VUI)—speech recognition supported by text-to-speech and speaker verification—is changing the way the telephone is used in two ways. First, by helping us connect with one another. The VUI enhances standard telecommunications functions, such as dialing and voice mail, making them easier to use. It makes the addition of enhanced communication services, such as telephone access to email, feasible and usable. It makes directory assistance more economical, benefiting the service provider, but ultimately the consumer as well. In the long run, the network may use "voice tone" (speech recognition) rather than dial tone (the keypad), as its primary means of interaction with the caller.

Second, by automating services and call centers. The primary user interface for automated services today is the telephone keypad. The difference in flexibility of the VUI is revolutionary, not just evolutionary. Performance of the VUI has improved, and prices have dropped. Most call centers have reached the limitations of extending their touch-tone services, and further reductions in cost and improvement in services require speech technology. Speech recognition can provide access by phone to the type of information we now get from the Internet or company Intranets; and service providers now understand that they must provide an alternative that doesn't depend on next-generation wireless services or upgraded telephones and PDAs.

The telephony VUI can go further and act as a new medium in marketing—in keeping customers and finding new ones. While many existing applications help with these functions, they can be more effective if viewed as part of a corporate marketing strategy. When the telephony VUI is viewed as part of a complete strategy rather than a collection of individual applications, new opportunities and applications for "conversational marketing" become evident. Conversational marketing at its best is an opportunity to deal with customers in a way that is unique to the telephone channel—a rapid dialog with customers who are volunteering their time and interest.

Where we are today

Today's applications are proving their value, and a focus on familiar applications makes sense in the early stages of a new technology. First, companies that are being asked to adopt the new technology understand an existing application and can estimate the benefits quantitatively. Second, callers are familiar with the service and may have an easier time dealing with a new user interface than if both the functionality and the interface were new.

Unfortunately, the familiarity of the applications makes advanced speech technology seem merely an enhancement rather than a fundamental new opportunity. For example, telephone speech recognition is sometimes lumped in with a company's "mobile" or "wireless" strategy, assuming that the telephone will be used largely when the caller is away from the office or home PC. While this is an important use, the reality is more complex. Existing information services that can be reached from any phone have found that more than half the calls come from landline phones, including business phones to access personal email and hotel phones when traveling. Once a user becomes familiar with a service, they often want to use it wherever they are. When a customer likes a service designed for a wireless phone, they may also want to use it in locales where the wireless service isn't available or requires additional charges (e.g., when roaming). One of the advantages of telephones is that they are ubiquitous—there is always one nearby.

Marketing issue motivating conversational marketing

The telephone with speech recognition should be viewed as a new medium, one which addresses a number of marketing issues that experts have highlighted in research and books. As noted, I will refer to this opportunity as conversational marketing. Conversational marketing both suggests new applications and a way of viewing many existing applications as part of a unifying whole.

First, let's address some of today's marketing issues that conversational marketing can help address. A number of marketing writers and researchers have noted important changes in the marketing environment:

• Dilution of marketing channels: There are more ways to reach the customers than in the past, including many more television channels, targeted magazines, and the Web. Customers are deluged with marketing messages. Seth Godin and Don Peppers, in Permission Marketing, 1999, refer to "the attention crisis in America…It's just physically impossible for you to pay attention to everything that marketers want you to."
• Resistance to "interrupt" marketing: Customers are less responsive to classical advertising that interrupts what they are doing to present a message—e.g., TV or magazine ads and Web banner ads or pop-up ads.
• Tailored marketing: The desire to make marketing more relevant to the consumer's general or short-term interests.
• The need for marketing messages to entertain: As consumers get more jaded, the marketing message must compete for their attention. Yet, at times, the marketing message is lost in the entertainment.
• The need to retain customers as well as get new ones: Studies have show that companies can boost profits 25%-85% by retaining 5% more customers ("Zero Defections: Quality Comes to Services," Frederick F. Reichheld and W. Earl Sasser, Jr., Harvard Business Review, September-October 1990). Part of marketing should be keeping customers who are having problems, as reflected in many call-center and technical-support calls.
• The need to make all customers "highly satisfied": Studies have shown that customers who say they are only "satisfied" versus "highly satisfied," are four times more likely to defect (Thomas O. Jones and W, Earl Sasser, "Why Satisfied Customers Defect," Harvard Business Review, Nov. 1995). Part of the reason is that competitors quickly discover the factors that make customers less than fully satisfied, and base their marketing on those weaknesses.

One way in which marketing experts have summarized new marketing trends is by saying that companies need to hold a "dialog" or "conversation" with their customers. For example:

• "One-sided bombardment is replaced by dialog." (The New Marketing Era, Paul Postma, McGraw-Hill, 1999);
• "Markets are conversations… Companies can now communicate with their markets directly. If they blow it, it could be their last chance." (Christopher Locke, The Cluetrain Manifesto, Perseus Publishing, 2001).
• "Emotional Branding is a means of creating a personal dialog with consumers." (Marc Gobé, Emotional Branding, 2001)

Interestingly enough, these references to "dialog" or "conversation" never include speech technology. At one extreme, they refer to very slow dialog: targeted direct marketing by mail, and the customer replying to an offer. A faster dialog is customer interaction with Web sites; but, in this case, experience shows that a customer must be sold within about three pages of interaction, or their interest drops rapidly—allowing only about three "turns" of dialog.

Obviously, speech recognition systems support dialog, and the nature of speech is that it can support many turns back and forth within a conversation without losing the caller. Customer information garnered from multiple calls by one customer (identified, e.g., by an account number) can be accumulated and reflected in the dialog, making the effective "turns" even longer. Even if the caller's interests are unknown to the system prior to the call, speech dialog can support finding out the caller's interests and preferences even within one call.

Callers can even relate to an automated "persona," as speech vendors have been calling the implied personality of the automated system. There is an opportunity to involve the caller emotionally, even to entertain—by humor, for example—and to make the call a pleasant experience. According to research, even if a designer does not attempt to create human-like qualities, the caller will intuitively assign them (Byron Reeves and Clifford Nass, The Media Equation: How People Treat Computers, Television, and New Media Like Real People and Places, 1996). If used properly, this characteristic can make the telephony VUI very powerful.

Call centers and dialog

Dialog with customer service representatives (CSRs) involves a speech dialog, of course, but most marketing experts don't consider it marketing. It is difficult to assure that CSRs will always deliver the desired message, and costs force call centers to emphasize efficiency. "By stressing speed over service, call centers virtually guarantee that they'll end up annoying customers instead of helping them," notes Lior Arussy in "Don't Take Calls, Make Contact," Harvard Business Review, January 2002.

Call centers have staff turnover typically over 25% per year. It is expensive to train representatives to do more than basic operations when they move on to other jobs so often.

Yet, a call to a company or information service is an unparalleled opportunity to further the company's relationship with the caller. When a caller phones an automated system, they are usually interested in a product or need help. They are volunteering their time (a criterion of "permission marketing," to use a current term). The customer should have an experience with the company that (1) is of interest at that time to the customer, based on what they say; (2) solidifies the relationship with the customer by entertaining, informing, or helping them; and (3) extends the relationship, potentially making a sale during the call or getting permission for further contact (e.g., by sending information through email).

The call can be motivated by other forms of advertising, as calls often are when a toll-free number is offered. Thus, conversational marketing can be complementary to more conventional marketing strategies and make them more effective.

Conversational marketing

Most telephone speech applications today emphasize efficiency over relationship-building; however, there are elements of conversational marketing in some of the better deployed systems. A typical touch-tone-style prompt compares to a conversational prompt like a waiter reading a restaurant menu verbatim compares to providing a mouth-watering explanation of the daily specials. At this level, conversational marketing is a matter of good voice user interface (VUI), persona design and system design. Fortunately, we are seeing more of this enlightened style.

Good design alone, however, barely addresses the full opportunity. Exploiting the full potential of conversational marketing requires new applications designed for that purpose. Those applications involve significant creativity, including the involvement of people who specialize in marketing (such as marketing departments and ad agencies). Ideally, marketers should view the telephone as a distinct medium, like print, TV or the Web. Every call should be considered a marketing event, and marketing in other media should be integrated with telephone marketing.

As a specific example, consider "business finder" applications (speech-automated business listings), such as those being tested by a number of companies. A caller may request a specific category of services (e.g., "copying") or a specific business ("Save-More Home Loans"). The company contacted should do more than just provide an address. Without being put in on hold, callers could be led through an automated speech system that identifies their need, provides information and value (perhaps offering a discount to first-time visitors), and makes it easy and enticing to do business with that company.

Achieving the full potential of conversational marketing will take time. First, some good examples are required in order for marketing executives to understand the expanding potential of the telephone. Those first few examples will probably require a careful collaboration of marketing and VUI experts, along with careful integration with supporting database systems. The long-term growth of conversational marketing will be accelerated by the development of tools that don't require an expert on dialog design or programming. A corporate telephone strategy

The Web didn't immediately become ubiquitous; it grew until it reached mass-market penetration and then accelerated. The Web was an evolution of the Internet that became revolutionary. The same will happen with the telephone Voice User Interface, making applications like conversational marketing part of a key corporate strategy. The full power of conversational marketing using speech technology requires the integration of many functions within an organization—the call center, Web management, information technology, technical support, and marketing. That won't happen easily without top management recognizing the need for a corporate telephone strategy, just as many corporations have a Web strategy.

Currently, most telephone speech applications replicate what is being done less efficiently and less flexibly by other means. Conversational marketing takes telephone speech recognition into a more unique realm. It creates new applications that can be implemented because of the advances in this important technology. It unifies existing applications and puts them into a more strategic context. Conversational marketing has the potential to make the telephone a central part of a company's marketing plan and merits attention at the top ranks of companies. William Meisel, Ph.D., is president of TMA Associates, a speech-industry consulting firm, and publisher and editor of Speech Recognition Update Newsletter. He can be reached at b.meisel@tmaa.com.