This chapter is dedicated to different business scenarios in which chatbots can be implemented to gain business benefits. In this chapter, we look at various business challenges that can be resolved by implementing chatbots and then we examine the benefits of chatbots. Last, we see how chatbots enhance the customer experience.
Traditional Business Scenario
Today, businesses have become very dynamic, and the customer experience itself is a big challenge for organizations because of competition in the marketplace. Let’s look at some examples of challenges in the retail industry. End user demands are so high there is no room for compromise. Consumers demand products of their choice, at discounted rates and packed with multiple offers and cash back, and ask that these products be delivered to their home for free as quickly as possible. These products are purchased online while consumers sit at home. Some consumers are bored with visiting standalone grocery stores. They prefer to visit a mall, where they can buy groceries, then watch a movie, and dine at a restaurant. Other consumers order their food and groceries online while sitting at home. Consumers buy home appliances, such as refrigerators and washing machines, online. They buy clothes, electronics, groceries, medication, and furniture online. The retail industry is transforming constantly as a result of increased customer demand and the desire to meet customer expectations. In addition, the retail industry faces challenges such as cost reduction, operations efficiency, customer expectations and experience, human resources, and inflation. Customers are more demanding and there is always extra pressure to exceed their expectations in products, services, and buying experiences.
There have been quite a lot of retail bankruptcies, but also there are many major retailers that have managed to survive and grow their businesses around the world. They have proved themselves to be Best in Class and are able to face major challenges within their respective industries. The following sections detail some common challenges faced by the retail industry. However, some of them have been mitigated by implementing AI solutions such as chatbots.
Managing Ever-changing Customer Expectations
Customer preferences are always bound to change, and most of the time they do so faster than the speed of a bullet train. Customer preferences depend on personal choices, seasonal trends, choices recommended by families and friends, and available offers. Thus, it is very important for retail businesses to engage customers, understand their expectations, and fulfil their expectations. Normally, retailers do not change products every day, but they do offer different elements such as discounts on and offers for products based on customer trends and demand. In short, retail businesses need to innovate every day.
Chatbots can help manage the majority of customer expectations. The most challenging thing is to understand customer need and offer affordable products without losing the consumer. During this entire process, customer engagement is important. But, if a customer is virtual, it becomes more difficult because there is no “look and feel” of a product from the customer’s point of view. Engaging customers through chatbots means you must understand their demands, offer the right products, and generate the look and feel of products with images. These customer engagements are recorded by chatbots and the results are aggregated in the form of customer trends to make product-based decisions and future plans. This information is then used as the basis for offering additional products to customers per current trends.
Preserve Customer Loyalty
Customer loyalty is one important aspect of business growth, and the loyalty factor is related to the customer experience. If you make customers think they can be easily replaced, retailers will find it difficult to survive. By receiving an exceptional customer experience, the same customers will visit your shop again and again to purchase items online or in person. Most important, they share their experiences with others.
Promotions and offers are not the way to retain customers. Personalization has now become an important factor. To be in touch with your customers personally, you need to connect with them at a personal level. However, this is close to impossible without the help of staff. Chatbots have taken personalization to the next level—above personal e-mails and text messages—and have created a bond between customers and businesses. With chatbots, retailers can connect personally with their customers, ask what they need or what new items they want, update them about products and offers, and send surprise gifts. With chatbots, interactions with customers coexist as communication between two human beings.
Build an Employee Bond for an Effective Customer Experience
With complex customer demands, managing staff has become challenging for retail organizations. This challenge is faced mainly by large-scale retail companies that have multiple locations, but they are unable to communicate and collaborate with their employees, which can disrupt business processes. Retail organizations do not understand that their employees are their own customers, and they need to develop similar customers.
With the internal implementation of chatbots, retail organizations collect employee feedback and deploy training programs, among many others. Interactions captured by chatbots are again aggregated into trends and patterns to find scopes for new opportunities.
Employee Retention
The retail industry is one that has the highest employee attrition. Employee retention is one of the toughest challenges in industry. And hiring employees requires a lot of energy and operational costs.
Chatbots are an effective solution to this challenge. They are used to increase employee engagement with the company. Using chatbots, a business can suggest training programs for employee growth and acquisition of skills. Organizations have deployed human resource assistance with chatbots that offer help and services with regard to employee benefits, medical claims, leave management, and transport facilities .
Rapid Growth of Digital Customers
In this era of digital transformation, consumer behavior changes rapidly. With the rapid growth of e-commerce, consumers have ample choices when purchasing products. Although some consumers prefer buying products online, there are traditional consumers who still love to buy products in stores. They access the Internet to read product features and reviews, but they like to go to the store to make a purchase.
Nowadays, touch screens are installed to capture customer interactions for those consumers who buy products in stores. Touch screens contain chatbots and provide offline access to the store. Big retailers such Walmart and Kroger have installed chatbots in their huge stores for product recommendations, product location within the store, registration for loyalty programs, and for billing as self-service.
So far, we have seen how challenges in retail can be overcome by using chatbots, which help primarily by engaging with consumers to provide product recommendations, offers, and discount information; to address employee queries; and provide self-service checkout, thereby generating customer loyalty and an enhanced customer experience.
A study by Oracle (documented by Business Insider), predicted that 80% of businesses reported they already use or plan to use chatbots by 2020. According to figures available on the emarketer web site, 1.4 billion people a year are now interacting with chatbots. In general, chatbots live inside apps such as Facebook Messenger, Internet web sites, and e-mail applications. In a formal, conversational way, they converse with customers to execute a number of tasks, from ordering items to suggesting and finding products. The following sections provide examples of innovative companies that have deployed chatbots successfully to help improve operations, connect with customers, and increase sales.
1-800-Flowers
1-800-Flowers.com , Inc., is a floral and gourmet food gift retail organization and distribution company in the United States. It was one of the first retail organizations in the United States to use a 24/7 toll-free telephone number, then switched to the Internet to accept customer orders, and then finally switched to conversational commerce using chatbots to engage with customers.
1-800-Flowers.com uses a chatbot in Facebook Messenger to help customers send flowers to their dear ones directly from the bot instead of going through the company web site, which also serves as an online store. The bot offers recommendation on the type of flowers based on inputs provided by the customer. Furthermore, it helps customers update delivery addresses and make payments, provides offers and discount information, and provides timely updates on delivery. The bot also helps customers choose the message to be printed on the gift card sent with the flowers .
Sephora
Sephora is a French-based multinational chain of personal care and beauty stores that was established in Paris in 1970. Sephora offers about 300 brands, along with its own private label: Sephora. It is a world-class chain that offers beauty products, including cosmetics, skincare, fragrances, nail color, and haircare.
What is the lipstick worn by the Oscar winner? What is trending in nail color? Which lipstick will look good on me? Can I get a world-class perfume? Which nail color suits my skin tone? Which shampoo will give me silky hair? Answers to these questions are provided by chatbots within a few seconds. You can upload your picture to a virtual artist app and check out different looks. According to Sephora, more than 4 million people have used the chatbot and virtual artist app .
H&M
H&M is a multinational Swedish clothing company well known for its fashionable clothing for men, women, teenagers, and children. H&M has more than 4,500 stores in more than 62 countries and employs around 132,000 people.
H&M’s chatbot quizzes customers about their style preferences, colors, size, trend, and fabric type. Based on this information, recommendations are made to customers based on their preferences. Customers can also select the type of clothes they want and, after making their final selection, the chatbot adds them to their cart and requests payment. This service is available for both online and offline shopping.
Disney
Disney has proved that chatbots are not limited to customer service, employee engagement, and sales. Chatbots can also be leveraged for strategic marketing initiatives, such as creating excitement for the release of its Zootopia film. To do so, Disney created an Officer Judy Hopps bot on Facebook Messenger to engage customers. This officer was one of the characters in the film.
On average, Disney found more than ten minutes were spent by users chatting with Officer Judy Hopps. This was an awesome experience—to be able to chat with Officer Judy before watching the film.
Casper
Casper Sleep is a United States-based e-commerce company that sells sleep products online. The company also has showrooms in New York City, San Francisco, and Los Angeles.
Casper’s chatbot helps customers choose a mattress based on the size of the bed, color, and type of mattress. Interestingly, their chatbot is available during the night—between 11 p.m. and 5 a.m. The company believes there are some nights when people can’t fall sleep and need Casper during the night, which is the reason for the bot to be operational during the night.
Why Do Businesses Need Chatbots?
In this section, we explore several reasons why today’s businesses need chatbots to be successful. There is a tremendous increase in the number of users of messaging apps such as WhatsApp, Slack, and Skype, and Facebook Messenger alone has more than 1.2 million monthly users. Like messaging apps, virtual chatbots can imitate human conversation to help solve business problems and they have an increasing demand in the market. Chatbots are used to schedule a ride, order food, book a hotel and flight, make a doctor’s appointment, and more. Stats used in this section are available from chatbotsmagazine.com .
Chatbots help in saving time and effort by automating customer support. Gartner has predicted that by 2020, more than 85% of customer interactions will be handled without human assistance. Chatbots not only handle customer inquiries, but also perform business tasks such as collecting customer information, scheduling meetings, and setting up conference calls, thereby reducing operational costs. The market of chatbots is on the rise, but, chatbots have not replaced couriers, doctors, and writers, for example.
Entertainment : Chatbots amuse people by giving them funny tips, and they act as a friend with consumers through engaging conversation.
Productivity : Chatbots aid in finding and provide access to information quickly and efficiently when requested by consumers.
Curiosity : People have developed an understanding of chatbots, and want to explore their abilities and try something new to enhance their customer experience.
Social and relational factors : Chatbots fuel conversations and enhance social experiences. Chatting with bots also helps avoid loneliness and gives people a chance to talk without being judged. They also improve individual conversational skills.
Now let’s look at some primary reasons why your business needs chatbots.
Scale up Your Operation
Chatbots do not have limitations like humans. Human agents can handle only two to three conversations at a time, with minimal accuracy. However, chatbots can operate without an upper limit and with accuracy. By deploying chatbot solutions to complement your human task force, your business can grow and survive in competitive markets.
Address High-volume Queries from Your Customers
If your business receives a lot of inquiries from customers, chatbots can take the pressure off your customer support team by handling multiple queries 24/7. As the first point of contact, chatbots can screen calls from customers and redirect them to human consultants when needed.
Recommend Products
With regard to Business-to-Business-to-Consumer (B2B2C), such as Amazon, when the same product is offered and sold by multiple companies, customers need recommendations for choosing their products. Chatbots help customers choose products based on the information they provide during their conversation. For example, what if you want to buy a cell phone and there are multiple options available, and each varies in terms of cost, features, availability, and ratings? A chatbot would help you make the decision to buy the right product for you.
Handle Gen Y Customers
Gen Y or millennial customers are not very easy to handle because they prefer to inquire and compare products before they decide to buy. Also, they prefer to chat using their smartphones, rather than speak to an actual human after waiting in a long queue. If you design products for Gen Y consumers, then investing in a chatbot is a must to enhance the customer experience and increase sales.
Maximize Personalization
The more you are in touch with your customers, the more business you are likely to get from them. You can send them e-mail, but they may not necessarily read it, and the same goes with Short Messaging Services (SMS). If you call them, they may get irritated. But, build a conversation with them using chatbots and they are likely to respond. Some banks have deployed chatbots to calculate consumer eligibility for personal, business, or home loans. The chatbot asks for information systematically and consumers are given a loan amount in a few seconds. Previously, human agents took days and months to calculate loan amounts.
A chatbot is designed to answer specific questions, instead of displaying vast amounts of information. Paying maximal attention to a customer increases the chance for your product to be purchased by the customer.
Create an Interactive Marketing Platform
Using web sites or cell phones to engage customers provides a passive customer experience. There is no personal touch with consumers. In the case of creating a marketing campaign, it is very difficult to reach consumers because the campaign traffic is unidirectional: from the business to the consumer. With chatbots, however, campaign traffic can travel in two directions, which helps to calculate the return on investment of the campaign.
Drive Organizational Efficiency
Chatbot deployment helps you manage your staff in the most effective manner. Your employees may not like to perform mundane or repetitive tasks day in and day out. They may prefer change and challenging work. Chatbots help by tackling repetitive tasks and providing 24/7 support effectively.
Waiting for an operator to respond when your customer dials in: “Your call is very important to us. Please stay on the line.” This is quite annoying.
Having a customer search your FAQs page, which is more than 100 pages long
Chatbots help with the shopping process. They ask consumers pointed questions about the product they want to buy. The bot sends the information to the sales department and determines whether the product is available for purchase. If it is unavailable, the chatbot will tell the customer when the product will be available. Customers do not have to repeat their requests; the chatbot remembers the customer’s preferences and uses this information when the customer returns.
Improve Response Rate
About 90% of questions sent from a company’s Facebook business page remain unanswered. A chatbot guarantees a 100% response rate to questions and converts these leads into opportunities .
Automate Repetitive Tasks
Most customers expect to get answers for the same questions: What are your hours? Where are you located? Do you make deliveries in my area? Chatbots reduce the pain of answering duplicate questions by consumers.
Chatbot Design Considerations
Define goals: Determine why you want to create a chatbot. List the functions your chatbot needs to perform during customer interactions.
Choose a channel: Determine where your chatbot will live. Host your chatbot per client preference for communication, whether it be a web site, mobile app, Facebook Messenger, WhatsApp, or other messaging platform.
Choose the development method: Determine how you want to develop your chatbot: using ready-made chatbot functionality (which is available in Azure) or building a custom bot from scratch.
Create, customize, and launch: Prepare questions the chatbot will answer and build in the answers the chatbot will deliver during conversations with customers. Double-check everything before rolling out the bot to production.
The main challenge in designing a chatbot is understanding the language of your customers. In every business, customers are bound to express themselves differently, may create typos during the conversation, and may have their own way of writing. Language depends on several factors, such advertising campaigns in the market, the political situation in a given country, and releases of new services and products from Google, Apple, and Pepsi, among others. The way people talk depends on factors such as location, mood, weather, and moon phase. Therefore, it is important to train a chatbot to understand correctly everything the consumer asks. This requires a lot of effort.
WeChat and Facebook: Two Famous Chatbots
Questions that business owners think about are: Aside from investing in web site development and a friendly mobile app, why would we invest in chatbots? Won’t they put my organization at risk—with customers interacting with bots and not human beings? For conservative organizations that have always believed that customer loyalty is the human connection, not bots, for them this is the biggest step toward business transformation. Banking and insurance domains, which rely on human brains because they deal with money, most often think the switch to chatbots for customer service is a big risk initially. But, AI is the present and the future for businesses, and chatbots are an example of AI. To understand more, let’s take a look at Facebook Messenger and WeChat—two organizations that deployed a chatbot solution well before other businesses to increase sales and engage customers more effectively.
WeChat is a Chinese multipurpose mobile app used extensively in China for messaging, social media engagement, and mobile payment, and it was developed by an organization called Tencent. It was launched in 2011. By 2018, it was one of the world’s largest standalone mobile apps by monthly active users, with more than 1 billion monthly active users. WeChat gained popularity across the globe as a result of its attractive stickers and its investment in chatbots. WeChat not only uses a text medium, but also voice recognition integrated with AI, which allows apps to do more challenging tasks than simple chatting. One of the core successes of chatbots is that users don’t have to download a new app every time they need a new service.
The chatbot running on WeChat has been categorized into two segments: subscription accounts and service accounts. WeChat continues to focus on enhancing services offered by chatbots to create best-in-class customer experiences. The future development of chatbots includes increasing complexity and sophistication in currently operational chatbots so they can carry on long and meaningful conversations with end users and not act simply on FAQ-based strings of text sent by the user. WeChat has the most popular bot deployed on this platform, called Microsoft Xiaoice, with 40 million users in Japan and China. In addition, the voice of the bot can be changed based on signals it receives from users.
Facebook Messenger
Facebook Messenger is a chat application developed originally as Facebook Chat in 2008. Facebook revamped its messaging service in 2010, and subsequently released standalone iOS and Android apps in later years. Facebook has ambitions similar to WeChat and, by taking a leaf from the book of WeChat, Mark Zuckerberg, the chief executive officer of Facebook, developed an ambitious vision to turn the Facebook Messenger app into a commercial hub with the development and incorporation of multiple functionalities and utilities in a single app. It started with an integrated peer-to-peer payment method on the Messenger app, which then developed into a full-fledged chatbot API to interact with customers.
Facebook Messenger has more than 11,000 active chatbots and more than 23,000 registered accounts on wit.ai, Facebook’s NLP service for developers. By making an ambitious move in the development of chatbots, Facebook has now integrated features such as sending responses in audio and video, as GIFs, and so on, in addition to text responses. This has increased sales and enhanced customer experiences of several big brands such as Sephora, whose Reservation Assistant chatbot has increased the average spent by a user by $50; SnapTravel’s bot has seen bookings of more than $1 million in a year.
As a big, medium, or small company, if you are late to join the chatbot revolution, it is not too late to create best-in-class customer experiences. This is the right time to start investing in chatbots for your business.
Businesses Need a Chatbot, Not an App
App Use
Region | Average no. of apps installed on devices | Average no. of apps used daily | Average no. of apps accounting for 80% usage | Time spent on phone per day | Most commonly used apps |
|---|---|---|---|---|---|
United States | 37 | 12 | 3 | 5 hours | Facebook, Chrome, YouTube |
Worldwide | 33 | 12 | 3 | 4 hours | Facebook, WhatsApp, YouTube |
People Want Fewer Mobile Apps
A 51% decline in the downloading of mobile apps per month
This is not to say that people stopped using apps or that downloads are down overall. We can recognize there are apps for everything and everyone, but people do not need a new app. When we develop a mobile app, we need to think seriously about whether we really need it. Will it help achieve business goals? Will return on investment be high? Most important, will it help customers when needed? In general, customers’ expectations are that they want to access information and they want their requests processed faster. Think about ordering food from a restaurant and buying groceries. In this case, you need two different apps that need to be downloaded and accessed individually to place orders. It is a clumsy user experience to have to switch between mobile apps. And if there is a version upgrade, users need to install that. It is most inconvenient to switch constantly among a bunch of applications on your mobile device. Furthermore, whenever you have new requirements, such as buying shoes, for example, you are forced to download the relevant app.
With chatbots, life is simpler. You do not need to download it or reinstall new versions. You simply ask the chatbot to process your request. The same bot provides timely updates on delivery. It is easy to use a chatbot; all you need to do is search for a chatbot in a messaging app and then start chatting. It’s all about enhancing the customer experience and developing business growth—and chatbots are an important factor.
Apps Have Become a Tough Business
Mobile app download statistics
We must also keep in mind that mobile apps are not web sites, and it is mandatory to update them. Every year, new OS versions are released, which must be updated; otherwise, the app becomes unsupported on the latest devices and people stop using it. Designs must be updated with the latest trends. Failing to update an app design may degrade the customer experience. Apps survive only when continuous development is planned.
You do not have to compete with apps. Chatbots allow you to set up a business where people already spend most of their time on mobile devices: in a messenger app.
People Use Messengers More Than Other Types of Apps
Popular downloaded apps in 2019
Messaging apps have surpassed social networks
Chatbots, which live on messenger platforms, have a greater potential to reach large audiences. Therefore, it is possible to provide app services via messenger platforms without any need for a dedicated app. Facebook Messenger, for example, has more than 800 million users, and with a chatbot onboard, you can reach all of them. Times have changed; earlier, people used messaging apps for exchanging texts and graphics, but now these messaging apps have developed into platforms, with APIs for custom development. People now use messaging apps to interact with brands.
Scale Your Business Using Chatbots
By adopting bots, organizations can scale up their business. Imagine you are a mobile device service provider and, through Facebook Messenger, a couple of users connect with you to resolve their queries linked to their mobile devices. Using Facebook Messenger, you can resolve their problems, which is similar in terms of convenience when you chat with friends or family members. If more than 100 users contact you to resolve problems linked to their mobile devices, one employee cannot to manage such a mammoth task in a timely manner. You would need to hire more than 100 employees. But why hire 100 employees when chatbots can do the job and simplify complex business situations? This AI solution allows you to manage your customers efficiently and scale your business.
Realize Cost-effectiveness
For mobile app development specific to your business needs, you definitely need to work with professional iOS and Android developers, and user interface/user experience designers to create a best-in-class product that provides a better customer experience than your competitors. You can use DevOps or Agile methodology to complete development faster. From the project start date until the launch of your app, a lot of time is expended and there are heavy development costs. There may also be delays in a project that also increase costs. Chatbots allow businesses to provide their services efficiently—at a lower cost than an app development project. But even if larger businesses have the money to build a dedicated mobile app, it’s still worth considering a more economical solution in the form of a chatbot.
In addition to the app development effort, there are other tasks, such as testing, user acceptance testing, documentation preparation, and quality control, all of which need to be completed before the app is submitted to app stores and before users can access its services. You also need to develop a product road map to enhance your mobile app continuously with new features, a new look-and-feel, and technology upgrades. App maintenance is sometimes very costly and inconvenient, and it requires a constant investment to be successful in the app marketplace.
Everything about chatbots is much simpler. There is no need to worry about app development, because messenger apps are built by third parties. Furthermore, chatbots feature updates that can be done with continuous integration to the back end.
Realize Better Marketing and Increased Sales
The working of chatbots depends on the type of industry. For example, business-to-business (B2B) chatbots help you purchase goods and services; retail chatbots allow you to order groceries; bank chatbots provide you with banking services; food chatbots are used to order food; trading chatbots can deal with your shares; content chatbots can share content that you like; booking chatbots can book hotels, movies, trains, and flights; and the list goes on and on. Chatbots can be useful for any industry. They can help you streamline your business operations, increase efficiency, and improve marketing and sales.
Chatbots can create a personalized experience for your customers by promoting sales or the launch of new products by sending notifications to your customers. Posting such information on your web site or social media accounts, such as on the company Facebook page or in the company’s Twitter account, does not help to increase engagement compared to e-mail marketing, for which the same message is sent by e-mail to all your customers.
Benefits of Chatbots
Thirty-four percent of respondents said it was hard to navigate web sites.
Thirty-one percent could not find answers to simple questions such as names and addresses.
Twenty-eight percent could not find information such as phone numbers.
Predicted chatbot use cases
When you analyze the survey responses to what users would use a chatbot for, 37% of respondents said to find quick answers during an emergency, 35% said to resolve a complaint, and 35% said to get detailed explanations. Interestingly, 34% experienced a human component when interacting with chatbots. Chatbots are the answer to consumer frustration. And if the chatbot cannot help, then consumers want that chatbot to connect them with a human.
Benefits of using chatbots
Chatbot benefits: millennials vs. baby boomers
Potential drawbacks for chatbot use
Benefits of chatbots vs. mobile apps
Benefits of chatbots vs. e-mail applications
Benefits of chatbots vs. phones
Consumers preferred chatbots over apps in five of the ten benefit categories, including getting quick answers to simple questions and 24-hour emergency service. When it came to e-mail, consumers preferred chatbots to speedy response times and 24-hour help centers; they provide a definitive edge when it came to getting detailed/expert help. It’s a similar story when we compared the benefits of chatbots vs. a phone call. Consumers preferred to use the phone to acquire emergency assistance and to get quick answers to complex questions. E-mail and phone were also considered superior to ease communication and register complaints, getting them resolved in a timely manner.
Summary
In this chapter, we looked at various business scenarios—especially retail businesses—for which the deployment of chatbots results in a better customer experience. We also examined why chatbots are required for business growth, making constructive comparisons between mobile apps and chatbots. Last, we saw the benefits of chatbots as indicated by survey respondents who were millennials and baby boomers.