Are Chatbots Right for Your Business?

Chatbots are enjoying a surge in popularity as all of us continue to ride out the COVID-19 pandemic and avoid in-store shopping.

Most often used as the first port of call for customers accessing a company’s customer service before speaking to a live agent, chatbots are becoming a necessary tool for businesses looking to streamline their customer service departments while enhance interactions with their customers and improving the customer experience (CX) — a top-of-list goal as global businesses continue to undergo operational and digital transformations.

In a recent chatbot survey, Business Insider predicts that chatbot-driven consumer retail spending will reach $142 billion — an increase from $2.8 billion in 2019. This tremendous spending increase dovetails with a 2018 Accenture survey that shows that 56% of chief information and technology officers say that conversational bots are driving disruption in their industry, with 43% reporting that their competitors are already using chatbots.

Enthusiasm for chatbots is also evident among consumers. Nearly 40% of internet users worldwide prefer interacting with chatbots than virtual agents, according to Business Insider’s survey. The statistic is underpinned by consumers’ craving for immediate responses to online inquiries and problems as well as their comfort in using chatbot-driven platforms, like Google Assistant, Apple’s Siri, and Amazon’s Alexa.

With chatbots accounting for so much of our technologically driven future as both consumers and business owners, how do they do work? And, how can they truly help us to be more productive while saving money?

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What is a Chatbot?

A chatbot is an artificial intelligence (AI) software that simulates conversation using natural language through a number of platforms, including message and mobile apps, websites, and the telephone. There are numerous kinds of chatbots, but most chatbots follow either of two builds:

  • Rule-based chatbots provide pre-defined answers to specific questions. Much like a flow chart, this kind of chatbot works by anticipating what a customer might ask using a series of rules that can be both simple and complex. Rule-based chatbots do not learn through continuous interactions with humans.
  • AI chatbots are powered by machine learning (ML), AI, and natural language processing (NLP), which helps computers understand and interpret human language. AI chatbots learn through human interactions and subsequently use that knowledge to understand and contextualize conversations and, eventually, user preferences.

Chatbots generally have two tasks: analyze user requests to identify user needs and return an appropriate response. How chatbots are built becomes critical here, as the success of chatbots hinges on the human interaction that configures, trains and optimizes a chatbot’s system. Satisfactory experiences with chatbots rely heavily on a chatbot’s ability to understand and deliver accurate information, while also delivering support coupled with a unique, engaging customer experience.

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Business Transformation with Chatbots

As surveys and reports continue to outline the growing importance of chatbots, businesses of all stripes are especially poised to reap the benefits. In addition to charting a path to improving the customer engagement experience, chatbots reduce customer service costs by offering organizations opportunities to make their operations more efficient, especially when estimating overhead costs, such as customer service salaries and other departmental costs.

Chatbots are also proven sales tools. Business leaders report that chatbots have increased sales by 67% on average, according to a 2019 Forbes study. By offering recommendations that introduce customers to new products and services, 24/7 availability and lighting-fast response time, chatbots:

  • Satisfy customers’ demand for a quick, accurate response
  • Lead to higher website conversion rates
  • Generate more qualified sales leads by using qualification logic

In fact, centralizing customer happiness is perhaps the most important benefit businesses will gain in employing chatbots. In addition to reducing customer churn and reaching new customers using chatbot-driven apps to spread the word, such as WhatsApp and Kik, chatbots also deliver deep analytics on your customers. By actively engaging with your company chatbot, customers provide data that helps to determine  which products and services are best serving their needs and reveals their expectations of your business. This valuable feedback offers actionable insights that can help you improve your business.

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Chatbot Challenges

Engaging chatbots does come with some challenges. Customer trust is paramount to maintaining a healthy business bottom line, and they must feel confident in sharing information with your company bot. It is essential that businesses employ multi-layered security measures (encryption, multi-factor authentication, virus protection, firewalls, etc.) within their chatbots to safeguard customer data.

Chatbots, by virtue of being built on human language and interaction, can raise concerns around how they deliver information and services. A chatbot’s “voice” and “sentiment” must be tailored to a business’s customers to avoid customer churn or, worse, rage. AI chatbots’ relatively short history is littered with epic failures, including the recent suspension of a popular South Korean chatbot, Luda Lee, whose initial charm was ruined when it began making offensive remarks and sharing customer data. Luda Lee’s creators are currently being sued by 400 people. These mishaps can be avoided by understanding customers’ needs and ethically engaging NPL, ML, and AI to accurately contextualize and reflect customers’ sentiments, emotions, and needs.

Taking Chatbots into the Future

Chatbots specifically and conversational technology overall are becoming ubiquitous and still changing. Big tech companies such as Amazon and Facebook are continually innovating chatbot technology, while smaller Silicon Valley companies are finding new ways to use chatbots to address our current emotional moment.

For the business sector, chatbots present tantalizing marketing and sales opportunities that bring with them a revolution to CX efficiency. Driving these changes are near-future chatbot evolutions, including the continued humanization of bots through NLP and ML, the expanded use of bots across social media platforms, and the rise of chatbots as virtual assistants that can multitask and effectively eliminate the use of separate applications. The challenge for businesses is to build secure chatbots that engage and keep customers, expand their businesses, and remain ethically responsible to everyone who encounters them.

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