Chatbots: How Additional Customer Touchpoints are Changing the Game in Retail

April 11, 2017

It’s true: Chatbots are nothing new. Basic chatbot technology has been around for decades, and chances are you’ve had some kind of interaction with a chatbot online or over the phone. For a while, bot technology took a back seat to more urgent sales trends: branded social media, fully mobile transaction capabilities, optimized and personalized customer experiences, and digital touchpoint marketing. However, chatbots are about to have a moment – and become your customer’s favorite way to shop digitally.

Why Chatbots Matter in 2017

Many B2C companies, especially retailers, are building funds into their digital initiatives to accommodate chatbot development in 2017. But why? For one thing, mobile messaging is gaining traction with customers as a touchpoint for transactions. Brands such as Sephora, Hyatt, and even Domino’s Pizza are using mobile messaging to “talk” to customers, understand their needs, and complete transactions right in the text thread. This “bot revolution” has been underway for a few years, but customer trust lagged behind the technology. But in a recent survey, 60% of millennials had interacted with a chatbot in the last year and the majority of them rated the experience as positive – a marked improvement in customer confidence.

In addition to gaining favor with millennial shoppers in particular, chatbots are becoming better equipped to handle more complicated inquiries. Growth in Artificial Intelligence and natural language processing is helping brands produce bots with sophisticated, nuanced chat abilities that feel anything but robotic. The goal is to develop bots that don’t just process user needs – they understand them. They can make autonomous decisions and deliver the correct response, every time. They are with the customer through every step of a transaction, operating as both a brand ambassador and a personal assistant. They don’t just make the sales conversion, but also foster customer loyalty through highly personalized service.

Furthermore, chatbots allow for brands to package customer service, product discovery, and brand story into one tidy, personalized offering to customers. The ability to be with the customer throughout their brand exploration – from product browsing, to cart checkout, to email marketing and loyalty building – creates the opportunity for a seamless stream of expertly delivered content at the right time, and in the right medium. Consumer engagement becomes possible at a much broader scale than we have ever seen possible.

The Challenges with Chatbots – And Where To Go From Here

A chatbot will only be as good as its data processing capabilities. But a sophisticated chatbot doesn’t simply regurgitate information based on data input. It’s programmed with principles of psychology and social interaction in mind: Can a chatbot respond differently to a customer based on a perceived tone? Based on the kinds of questions the customer asks? Based on where the customer is geolocated, or other personalized data that may be available? These are all questions that emerging AI capabilities are beginning to address, and what companies with an automated customer service strategy should evaluate.

Bad first impressions can ruin a chatbot experience so much that the customer may elect never to use the service again, or worse, return to the brand at all. Chatbots should supplement, complement, and augment the customer experience, not work against it.   A DigitasLBi study found that 73% of Americans would likely not use a company’s chatbot again after having a bad experience with it.  It’s important to understand when and where chatbots are serving the customer well, and when it’s time to get a human involved. Chatbots, which are mostly focused on the front-end of the customer experience, are not a replacement for the personal touch of human-to-human customer service – at least, not yet – so brands should focus on how chatbot services can work congruously with customer service strategies.

Finally, chatbots face a huge marketing challenge: The same DigitasLBi survey showed that only one in five Americans has heard of a chatbot. However, one in three Americans would be willing to make a purchase through a chatbot – so there is potential for this technology. In the end, quality service will speak for itself, and ideally AI technology will become so realistic that customers will not realize that they’re interacting with a bot instead of a human. Focus on meeting the chatbot-positive customers where they’re shopping and grow a loyal base of users; education will come through a happy group of customers turned brand ambassadors. We are just starting to tap into the immense potential that chatbots and AI can offer retailers.   With the chatbot revolution already underway, it’s time to build advanced chatbot services into your online and digital sales strategy.