Chatbots: What Online Businesses Should Know

Chatbot concept. Man holding smartphone and using chatting.

Machine-to-machine communication is quite common nowadays. Think about it: if your e-commerce website were not able to directly sync with your payment provider, you would still be taking orders and processing payments manually. The same goes for other automated processes in your e-commerce workflow.

By allowing machines to speak to one another directly, you have given yourself more time to focus on your business. The next natural step in this automation of an e-commerce business is to allow your “machines” to talk to customers.

Allowing our machines to talk to customers is already a reality for some. Social media platforms and communication apps have already deployed this type of business chatbot-to-consumer connection. Here are some examples:

So, are chatbots something that can benefit your e-commerce business? Let’s take a look at the conversational commerce landscape as it stands and see if this new technology is worth employing in your online business.

What Are Chatbots?

Chatbots are a form of artificial intelligence that simulate the experience of messaging with another person. This type of software is used by businesses to communicate with customers in a number of ways, the most common of which is to handle customer service inquiries.

Since this technology is still relatively new and machine learning (at least in this regard) isn’t quite that advanced yet, chatbots are currently used to provide templated responses to very specific questions or scenarios. While they can adapt and learn more of our natural language, the technology just isn’t sophisticated enough yet to manage the entire customer service experience.

The Pros and Cons of Chatbots

Despite its limitations, obvious benefits that come with using a chatbot include:

  1. They pique visitors’ curiosity.
  2. Because it takes place in a format users already recognize (text messaging), the transition to this communication channel is seamless.
  3. A chatbot can answer questions immediately and 24 hours a day. There’s no need for an “on hold” queue.
  4. Employing a chatbot means less money spent on hiring and maintaining a customer service workforce.
  5. A chatbot can provide more personalized recommendations based on the data you have collected.
  6. Conversations with chatbots can lead to higher engagement rates. The catch is that it needs to be done in a convenient manner and needs to add value to the user’s experience.
  7. Chatbots allow businesses to begin the customer service dialogue in a non-public environment.
  8. Chatbots provide an opportunity to connect with younger customers and are quickly becoming a top engagement tool for targeting digital-native Generation Z shoppers.

That said, this technology is still new and, well, has encountered some pushback. A few possible drawbacks include:

  1. Chatbots work well for service-type companies that have a straightforward set of questions and scenarios they can answer. Product-based online shops might have too many possibilities for bots to reasonably handle.
  2. Chatbots are not hack-proof, as Twitter users demonstrated when making Microsoft’s chatbot spew hate speech.
  3. Retention is low with chatbots. BotAnalytics reports that 40 percent of users drop off after the first message with a bot, and an additional 25 percent drop off after the second message.
  4. Not all consumers are excited about the technology—one survey found that 50.2 percent of people thought computer programs like chatbots were “creepy” (versus 22.6 percent who said they were “cool,” and 27.2 percent who felt indifferent)
  5. Some retail executives have their doubts as well, with 36.2 percent saying AI conversational interfaces aren’t sophisticated enough to handle their customer service needs.
  6. Some of those same executives (8.7 percent) thought the technology would take away from their direct connection with customers.

Is That a Yea or Nay on Chatbots?

If you are hesitant to move into chatbot territory, think about the types of communications you have with machines. Maybe you talk to Siri when you have a question, or you chat up Amazon Echo or Google Home when you are running out of groceries and need to replenish.

A conversational interface for your business is merely an extension of that.

That said, it is going to take some time for this technology to really take off. It needs to become smarter and more agile for it to make a real impact on your business and to leave a positive impression with your customers. Your best bet? Start working on adopting chatbots now, but use them as a supplement to all the other communication channels you offer.

About Endicia

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