| August 12, 2019

Are Alexa Skills Worth it for Startups?

Alexandra Savidge

Alexandra is Head of Marketing at DAP. She uses her background in digital marketing, UX, content and e-commerce to create... Alexandra is Head of Marketing at DAP. She uses her background in digital marketing, UX, content and e-commerce to create impactful digital experiences for our clients.
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Alexa is by far the most popular digital voice assistant right now, which isn’t too surprising given that Amazon commands around 70 percent of the voice-enabled smart speaker market.

 

But what does that have to do with your startup? While Alexa is good at ordering diapers on demand or queuing up your music playlist, it can also do wonders for your startup business.

 

Let’s go back a bit, shall we?

 

When the first generation of Alexa devices was launched in 2014, beyond the original consumer rush to buying the latest fad, much of the business world completely ignored them. Or, worse, some laughed at them.

 

Alexa devices and the associated skills were often shunned as chatbots that simply automate functions we already had on our smartphones — listening to the news, checking the time, or looking up recipes.

 

Five years later, no one’s laughing. And it looks like everyone wants a slice of the Alexa market. Take the state of California, for instance. It now has a skill for tourism which allows visitors to get tips on what local towns, attractions, and cities to visit within the state.

 

There’s a myriad of other Alexa skills making great things happen.

 

You can now use an Alexa skill to learn whether a flight is on schedule. In Europe, over 20 percent of doctors use Alexa for patient care. Plus, banks let users check their balance and transaction history via Alexa, as well as make purchases on the platform. Even thermostats have Alexa skills built in.

 

In April of 2019, Amazon announced Alexa has become HIPAA compliant. What’s more, at the latest Consumer Electronics Show (CES) event in Vegas back in January, there were over 300 different devices that announced they’ve incorporated Alexa in their latest design.

 

The list goes on and on.

 

No matter how you look at it, Alexa is having a moment. But whereas some companies have caught up with the trend, and even capitalized on them, others — especially startups — are failing to understand the power of voice assistants.

 

This article will explain the top Alexa skill considerations that startups should look into when building a product. We’ve also included a step-by-step guide on how to build a skill.

 

The state of the smart assistant industry

Alexa skills

The smart speaker industry was worth around $2.68 billion in 2018 and is forecast to be valued at $11.79 billion by 2023.

 

Today, voice-activated digital assistants are now a dime a dozen, with Amazon Alexa, Google Assistant, Apple Siri and Microsoft Cortana dominating the market.

 

Did you know that there were some 2.5 billion smart voice assistants in use at the beginning of 2019? Analysts at Juniper Research say that this number will grow threefold to 8 billion assistants by 2023.

 

While smartphone assistants like Google Assistant and Siri take the lion’s share when it comes to volume ranks, smart speaker assistants aren’t far behind. 

 

In fact, 90.1 million adult Americans say they have used a smartphone voice assistant monthly, compared with 41.5 million for smart speaker assistants. An additional 77.1 million US drivers say they use digital voice assistants in their cars at least once per month.

 

The latest report by Edison Research and NPR shows that there are close to 120 million smart speakers in the United States alone, a major uptick of 42 percent from a year ago. What’s interesting is that more than half of the owners have at least two smart speakers in their households and 52 percent of US adults use their smart speakers on a daily basis.

 

Amazon has recently confirmed that it has sold more than 100 million Alexa-enabled devices worldwide. When it comes to voice assistant apps, China is where the action is. Chinese digital giants like Alibaba and WeChat are now offering app-based assistants alongside traditional smart speakers like Amazon Echo. That being said, it’s anticipated that 78 percent of all app-based smart assistants will be installed in China.

 

Of more importance to startups, there’s one area smart assistants are making inroads into business: voice search. In fact, voice searches are expected to account for more than 50 percent of all digital searches by 2020.

 

In 2018, 56 percent of consumers used smart voice assistants at least once to look for a product, service or business info via search, with 46 percent saying they used it daily, according to Forbes. Overall, users say they prefer voice search for its ease of use and effectiveness. That being said, Alexa is arguably the biggest player in the smart assistant market.

 

Bottom line: In the home, consumers are using it to take interactions to the next level. Alexa is also helping businesses, particularly startups, to enhance their daily operations, collect early feedback, and to deliver next-level customer service.

 

Getting to know Alexa, Alexa skills and Alexa for Business

 

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What is Alexa?

Alexa is Amazon’s digital assistant that’s powered by voice recognition technology. This technology leverages artificial intelligence (AI) and machine learning to convert speech into text or other functions. In the past five years or so, Alexa has established itself as the leader in the smart assistant space.

 

Alexa “resides” in Amazon Echo, Echo Dot, the Tap, Fire TV and an array of third-party smart speakers. And it can do just about anything, from playing your favorite songs to grocery shopping. What’s more, Alexa can control a plethora of smart devices in homes, offices or in cars. 

 

Consumers love Alexa for its ability to make everything hands-free. They love it so much so that 65 percent of Alexa users say they cannot imagine going back to life without the digital assistant. But, what makes Alexa so powerful and capable? Short answer: Alexa skills.

 

What is an Alexa Skill?

Right out of the box, Alexa comes with a wide range of built-in commands. For instance, Alexa’s capabilities include turning lights on and off, checking local weather forecasts, playing Spotify music, and answering several different questions.

 

These capabilities built into Alexa are what are called skills

 

You can think of Alexa skills as voice-based apps that you can download and install in your smart speaker. They are designed to extend the features or capabilities of Alexa. As of the end of 2018, there were over 70,000 skills available from the Alexa Skills Store (the equivalent of the Amazon App store) and other 3rd-party developers.

 

Alexa skills are so popular among consumers because they can do things fast and with a high-level of accuracy. Skills enable consumers to play trivia games, listen to radio channels, find out how certain stocks are performing, get news updates, and much more.

 

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And just like with a dog, you can teach Alexa new tricks or skills. The Alexa Skill Kit (ASK) by Amazon lets you build new custom Alexa skills and make them available to everyone or only a specific group of users. Your startup can create a private skill that’s only available to your employees and partners. This brings us to the next point: Alexa for Business.

 

What is Alexa for Business?

Alexa for business, also known as private skills allow companies to build skills not available on the public marketplace. In other words, not directed at consumers.

 

Last year, Amazon made the technology behind Alexa available to businesses, companies, and developers who are interested in building their own set of private skills and solutions. The platform that makes this possible is called Alexa for Business.

 

Part of the popular AWS (Amazon Web Services), Alexa for Business is a service that can enable startups to boost productivity, streamline product pipelines, automate processes, and overall harness the true potential of Alexa.

 

How do you go about building an Alexa skill?

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Let’s take a look at both the upsides and downsides of building a custom Alexa skill: 

 

The pros

As an entrepreneur, you know how crucial it is to get things done quickly. That’s where creating Alexa skills for your startup comes in handy. This service allows you to bring Alexa and its capabilities to your workplace. If implemented correctly, it can do wonders for many aspects of your startup or your clients ‘needs, from communication to management and event control.

 

  • Streamline your meetings — Alexa can help you schedule meetings more efficiently and stay on top of your video conferences. Your employees can reserve meeting rooms and book conference halls using voice.
  • You can get a handle on your emails and other mission-critical communications. With Alexa for Business, you can read, organize or reply to emails in a heartbeat.
  • Monitor your website, products, and services — Alexa can help track and provide status updates as well as reports about your site downtimes, product availability and more.
  • Document organization — Most employees, including startup staff, say they waste over four hours each week trying to find files. Alexa could take this load off their shoulders.
  • Improve employee productivity by setting reminders, tracking your to-do lists, organizing emails, and many other operations in between.

 

The cons 

  • Amazon’s closed system for deploying Alexa skill is rather frustrating, to say the least.
  • As an AWS service, any cloud issues can impact on the effectiveness of your skill.
  • Security and data privacy are still major hurdles to full adoption even in the workplace.

 

How to build an Alexa Skill — A quick guide

alexa skills

Every Alexa skill is made of two crucial components:

 

1) Skill interface, which is the same as an application’s user interface (UI). It receives user’s verbal requests (what you speak), processes them using voice recognition tech and then matches them with predefined intents (what the user wants the smart speaker to do). Intents can be invoked by a sentence, phrase, or word. Eventually, the skill interface will create a line called JSON encoded event.

 

2) Skill service, whose job is to figure out what action the smart speaker should do. It receives the encoded message from the interface, determines the proper response, and sends it to the user via a smart speaker.

 

When you create a skill, you are building both components — the skill interface and the service.

 

Step 1. Sign Up for Amazon Developer Service (ADS) and AWS accounts

The skill service will be implemented in the AWS environment. So, you’ll need to create a new AWS account, if you don’t have one already. Similarly, the skill interface will be created within the ADS platform.

 

Step 2. Start building

Sign into your ADS account, click on Alexa. Next, choose “Alexa Skills Kit” and then click on the “Start a Skill” button under ASK. You will be taken to the new Alexa Skills Kit developer console. From here select “Create a new skill.”

 

Step 3. Create an interaction skill model

The interaction model comprises the intents, invocation name, and utterances, etc of your skill. You can find all these components from the console tabs.

 

Step 4. Pick the endpoints

Once your model is ready, you will have to choose the endpoints which determine if the skill is an AWS service or a user-implemented one. More often than not, your private skill will be an AWS service. If this is the case, choose the “AWS Lambda Function” under the “Endpoints” tab.

 

Step 5. Create AWS Lambda functions

There are three Lambda functions that you need to define. They all coincide with the three kinds of intents/requests: LaunchRequest, IntentRequest, and SessionEndedRequest. They perform different actions, so ensure these functions are well-defined.

 

Step 6. Test your new skill

You can test your new customer Alexa skill in two ways. First, you can use the Service Simulator that’s found under the Configuration tab. Once in the simulator mode, enter a typical utterance for your skill and see if it’ll invoke your skill. Secondly, you will have to take your skill for a test-drive on an actual Amazon Echo.

 

Step 7. Review, customize, repeat

If you anything is amiss, customize the Alexa skill further, and then go back to testing. Repeat until your skill does what it is supposed to do best.

 

Of course, there’s plenty of technical steps you need to take in between to create a robust Alexa skill. If you don’t have the right set of development skills, you might want to outsource to a digital agency like Digital Authority Partners.

 

What’s the timeline and budget to build an Alexa Skill?

alexa skills

Building an Alexa Skill — The timeline

Any startup can build a private skill and submit it to Amazon to be approved, just like a mobile app. The timeline can range from a few hours to several weeks or even months, depending on the developer’s experience, how complicated the skill is, and the approval process. A flash briefing skill, for instance, can be created in a matter of an hour.

 

You can speed up the skill approval period by:

  • Ensuring your invocation name is in line with Amazon requirements. It should work perfectly well with the smart speaker and Alexa.
  • Modeling the three example phrases precisely like the interactive model’s sample utterance.
  • Making sure that your skill doesn’t infringe on any existing IP requirements.
  • Providing clear and concise help instructions when requested by the user.
  • Managing sessions properly – you should make sure to define when and if sessions are open or timed.   

Budget — The cost of creating an Alexa Skill

It’s Amazon’s number one goal to boost the number of skills on their Alexa platform. They have slashed several costs involved in a bid to keep people using their Echos and other Amazon smart speakers.

 

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Talking of budgeting, Amazon allows developers to create custom Alexa skills for free. However, you will have to foot the bill of hosting your skill either on your own server or using AWS.

 

The cost to host change from skill to skill, depending on at least two factors: (1) how complex your Alexa skill is, and (2) the popularity of the skill.

 

The good news is that Amazon has announced plans to subsidize the cost of hosting a skill on AWS. As a startup, you can get a one-off $100 promotional credit. If you think your skill will attract other AWS fees, you can apply for an additional $100 every month. Unless your skills are designed to handle complex functions, the 100 bucks should be more than enough to cover all your costs.

 

In a nutshell, the cost of creating and hosting an AWS-hosted Alexa skill will be virtually nothing once you apply for Amazon credit. However, you might have to pay a professional developer to create an awesome and functional skill for you.

 

What are the biggest industries adopting Alexa Skills?

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In this section, I will cover industries that are benefiting the most, some use cases and existing skills.

 

(A) Alexa for healthcare

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Amazon has a vested and clear interest in the healthcare sector. Just recently, it cut a $1 billion check to acquire PillPack, only a few months after inking a deal with J.P Morgan and Berkshire Hathaway. According to CNBC Amazon has put together an Alexa team dedicated fully to developing health and wellness solutions.

 

How can Alexa help in healthcare?

 

Helps patients manage their conditions and overall health better. Take Omron Health, for instance. The Japanese health tech company has created a blood pressure skill for Alexa. This will allow users to take their blood pressure readings on the fly using Alexa via Omron Health Guide. The award-winning Sugarpod is another Alexa-powered solution that’s turning heads in healthcare.

 

The winner of Amazon’s Alexa Diabetes Challenge helps type 2 diabetes to integrate Alexa into their daily routine and manage their condition more effectively.

 

It reminds the elderly to take their meds on time. Failing or forgetting to take medication is a big issue especially amongst the elderly and those suffering from dementia, Alzheimers and Parkinson’s Disease. Companies like Libertana have developed Alexa apps that help with adherence to meds.

 

Improves hospital interactions and entertainment. Avia has developed an Alexa-driven platform that allows hospital patients to control in-room entertainment and call for a nurse.

 

For more information on Alexa for healthcare feel free to read our in-depth report titled: Alexa in Healthcare: 17 Real Use Cases You Should Know About.

 

(B) Alexa for finance

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Finance-related skills now account for around 2 percent of the size of the Alexa Skills Store. The potential of Alexa in finance is truly unlimited. There are skills that send market updates, new blogs on finance, and other investment help.

 

Monitor stock prices. There’s not one but multiple skills that already help track and send you updates on stock prices. Perhaps one that stands out is TD Ameritrade skill that updates on stock prices for major indices, mutual funds, tradex funds, and all US traded stocks.

 

Receive tips on wise spending and smart living. For example, Forbes’ Level Up skill helps you start your day on the right foot by delivering financial advice audio reports.

 

Keep a tab on your spending. Want to curb your impulse buying? The credit card company Capital One has created an Alexa skill that allows their customers to keep track of their credit spending.

 

Pick winning stocks and investment vehicles. As an entrepreneur, it is prudent to diversify your portfolio, and there are skills designed specifically for that. Take Stock Watch by Motley Fool, for example; it helps you keep up with the best-performing stocks so you can pick a winner.

 

Get forex rates. What’s the exchange rate for the euro? Alexa skills like Currency Today helps you convert any foreign currency into USD.

 

c) Alexa for e-commerce

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Voice commerce is an area Alexa poses a huge potential. After all, shoppers are expected to spend an estimated $40 billion via Alexa by 2022, up from $2 billion in 2018.

 

Influence consumer buying decisions. A recent study shows 85 percent of users end up buying items suggested by Amazon Alexa. This is huge because you can push your products or services directly to consumers via your Alexa skill. A good example is 1-800-Flowers skill. Besides helping the user place an order for flowers, the skill allows users to ask for flower suggestions.

 

Improve customer service and support. You can create a skill for existing customer care platforms like Magento.

 

Shopping list creation. AnyList is a great example of a top-rated skill that allows users in creating and sharing shopping lists.

 

(D) Alexa for education

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Learning and Alexa is a match made in heaven. There are already more than 2,000 education-related skills at the Alexa Skills Store. Existing use cases include:

 

Receive marketing advice. Consider Marketing School skill, for instance. It provides users with a ten-minute daily marketing tip from Eric Siu and Neil Patel.

 

Learn astronomy. If you are itching to know what Mars rover is up to, download NASA Mars skill. It is a neat and interactive skill that’s quite educational.

 

(E) Alexa for office

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Alexa can do much more than telling time at the office. It can schedule meetings, reminders, queue up to-do lists, and enhance management. 11 percent of employees already use Alexa at work, with 60 percent of organizations planning to hop onto to the smart assistant train. How Alexa can help in the office?

 

Manage your office and staff better. There are several Alexa skills that help organize tasks, coordinate meetings, set reminders, and so on. You can integrate them with email clients, cloud applications, and calendars.

 

Make an office shopping list. Running low on stationery? Just say, “Alexa, add ink post-its to my cart.” This will reorder office items you have purchased from Amazon before.

 

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Make your invoicing easy. Use voice to create your invoices from start to finish.

 

Schedule and automatically start phone and video conferences. This is where Alexa skills like Conference Manager by Vonage can take lots of pressure off of you.

 

Collaborate better and improve communication. Chatbot for Slack is a nifty skill that allows for rapid communication and next-level collaboration amongst your teams. You can also read, reply and stay on top of your email organization using Alexa.

 

What are the biggest industries that should adopt Alexa Skill in the future?

There’s a lot of industries that should adopt Alexa but they’re so trapped in the past, it will take years before they do it.

 

(A) Alexa for Pharma

alexa skills

The pharma industry currently conducts clinical trials by simply calling every single participant weekly to collect feedback that is usually in the form of Yes/No or 1-5 rating of their health. This is a perfect use case where Alexa could shine. How Alexa can help pharma industry in the future?

 

Improve medication adherence — An Alexa skill can be used to help the elderly and those with cognitive disorders stick with their medication

 

Conduct more efficient clinical trials — They can develop an Alexa skill which helps monitor, and collect patient feedback via automated surveys instead of using manual calls. It would save a lot of hassle and money, as well as ensure accurate record keeping.

 

(B) Alexa for Transportation

Future use cases are endless. Alexa skills can help deliver information about airports security lines before you start your journey. You can also get flight alerts from the comfort of your home.

(C) Alexa for Hospitality

alexa skills

There are many ways Alexa skills can revolutionize hospitality:

  • Take in-room entertainment to a whole new and personal level. Alexa can deliver better and more personalized games, video and music for guests.
  • Streamline hotel operations and employee communication
  • Alexa can summon a hotel concierge
  • Manage and tailor local offers like tickets to events, discounts, and other marketing strategies.

(D) Alexa for Culture

Rather than using silly devices and headsets while visiting a museum, in the future, we can simply use a skill to listen to more info about a painting, the painter, and much more.

 

(E) Alexa for Security

Imagine if you had your security guard’s voice on file and while on security rounds as well as check in via Alexa. Amazon has already developed Alexa Guard, a skill that converts your Echo and other Alexa-enabled smart speakers into security gadgets. The retail giant has partnered with ADT to offer interactive security with the help of Alexa Guard.

 

(F) Alexa for Auto

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Digital technologies are fueling a seismic shift in the supply chain, and digital assistants like Alexa are at the forefront of the revolution. According to Bain & Company, 88 percent of consumer products CIOs say emerging technologies like Alexa, AI, and machine learning will have a significant impact on their supply chains. How so?

 

Voice ordering will take center-stage. This gives users the ability to voice-shop for consumer products.

 

Autonomous delivery will spruce up supply chains. As labor and transportation costs bite into the lucrative drop-shipping market, companies are turning to Alexa in conjunction with autonomous vehicles to improve the supply chain.

 

What does the future hold for Alexa?

alexa skills

Smart assistants are here to stay. And they have become smarter and bigger. In this section, I will talk briefly about what the future holds for Alexa and where I see the market in the future.

 

Alexa as a friend

Amazon has recently announced that Alexa will soon have a brain. In other words, Alexa will remember what you did and how you interacted with it in the past. It’s not far fetched to eventually see Alexa as a friend. Not just someone you can converse with, but also someone who remembers.

 

Half a year after launch, more than 500,000 people were already saying “Alexa, I love you.” Just imagine how attached people will become to Alexa when it has a brain!

 

Death of smartphones and traditional mobile apps?

With the current capability of Alexa, it is not hard to imagine a scenario where we are shifting away from smartphones and apps to a UI-less voice interface. 

 

I think we are inching closer to the reality depicted in the Her, the 2013 sci-fi film that featured Joaquin Phoenix and Amy Adams. Just like in the movie, Alexa’s replacing smartphone apps because everything becomes one question away.

 

Cars will have Alexa even more so than today

Cars will fuel the next Alexa revolution and with good reason. Voice tech has been built into cars since back in 2004 when Honda brought on board turn-by-turn navigation system developed by IBM. 

 

No matter how you look at it, vehicles are the ultimate use cases for voice recognition technology and digital assistants. Alexa just sounds better and more natural in a car. It won’t be too surprising if the homes and cars of the future will “talk” to each other via Alexa.

 

Alexa is (and will continue) redefining marketing and advertising

With Alexa advertising, it’s easy to know who has and who hasn’t “seen” a particular ad. This makes it easy for marketers and advertisers to learn more about their target audience and tailor their ads for them. Besides, Alexa and other smart assistants are influencing the future of voice SEO.

 

Digital businesses now have to switch from short-tail keywords to questions, create voice-friendly content, and focus on local search in order to be found via Alexa. After all, 30 percent of all searches will be done with smart speakers instead of screens by 2020, according to research by Gartner.

 

Faster speed to market & more experimentation

Getting a startup off the ground can take time and cost oodles of money, not to mention that 9 out of 10 startups fail. Now, imagine building Alexa skills to test a startup way before you build a website or an app. With an Alexa skill, it will take only a fraction of the cost to design, build, test, and bring it to the market!

 

Conclusion

Alexa for business is here to stay, and startups can stand to benefit the most. 

 

While creating an Alexa skill has its challenges, it can help both veteran and new entrepreneurs manage their staff better, stay organized, cut costs, boost productivity, get early user feedback, and take their products to market at a fraction of the cost.

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