Why Conversational Chatbots Are a Retailer’s Dream Come True

Chatbots are being hailed as the next big thing in marketing, customer service and digital commerce. For retailers, chatbots offer benefits across all these key areas and more.

Why all the hoopla over chatbots? People enjoy the personal one-on-one connection with chatbots in the same way they enjoy their personal mobile experiences. With chatbots, consumers engage willingly, spend lots of time, and share valuable information.

For retailers, this type of engagement is a dream come true. Brands have been trying desperately to engage consumers through all available channels — email, display ads, social media, videos, newsletters, surveys, and more — only to see dwindling response rates and conversions as consumers become immune to the noise.

By engaging customers in deeper conversations that they seek and enjoy, chatbots enable brands to obtain insights that drive more sales and enable better decision making. For example, the recommendations that customers accept and reject from chatbots can be used for more precise targeting, media buying, personalized offers and creative messaging.

New Channels, New Opportunities

The data underlying customers’ conversations with chatbots, coupled with the perk of simultaneously fortifying a deeper relationship between brands and consumers, is a godsend for retailers and their data-driven marketers.

Data-driven marketing thrives on the freshest and most relevant customer data, and chatbots enable brands to uncover in real time what customers care about most. With customer engagement occurring within a one-on-one chatting experience that mobile users prefer, it's a win-win for brands and customers alike.

Memory is Key

One of the most important advantages of conversational chatbots is their memories. Chatbots that live on messaging apps have the ability to retain information about each user with whom they speak, eliminating the redundancy of asking users for the same information repeatedly.

Chatbots can use the information they retain about individual customers to personalize engagement, suggest alternative products, cross-sell and upsell.

For example, a chatbot might say to a returning customer, “I see you bought new running shoes last month. How did you like them?” The chatbot could continue the conversation by informing the customer of new running shoe styles and suggesting other items.

With nine out of 10 consumers saying that personalization has an impact on their buying decisions, this degree of personalization can mean a significant boost in sales and customer loyalty.

As chatbots learn customers’ preferences, they can apply the information to future recommendations. Chatbots also are able to pull data from different sources, such as consumer buying trends and shopping behaviors, and add the information to the data they acquire during real-time customer sessions.

Chatbots back-ended by advanced analytics can be a significant differentiator. As McKinsey reports, few companies have advanced analytics capabilities, but the few that do exhibit higher levels of growth.

Chatbots Are Welcome

Surveys show that all generations of users prefer communicating with businesses via text messaging. Nearly 75 percent of the world’s internet users use messaging services, and millennials make up the most dominant segment. eMarketer data shows that 80 percent of millennials are positive about using chatbots, and 78 percent of people who text wish they could text with a business.

With consumers moving so heavily towards messaging, it's no surprise that a large portion of executives say they're planning to deploy chatbots. Thousands of companies are now developing chatbots to handle private conversations that have been occurring via Facebook Messenger.

Measuring Success

As brands explore integrating chatbots into their overall go-to-market strategy, adding a new consumer touchpoint, there are a number of ways they can measure the value of conversational chatbots.

On the surface level, the simplest way to gauge the effectiveness of a chatbot is how long it’s able to engage the shopper. Brands can benchmark the length of engagement in terms of time or the number of turns in the conversation between the chatbot and the customer.

Six- and eight-minute conversations are considered exceptional results. It means a person is spending quality one-on-one time with your brand, giving and taking useful information and forging a deeper relationship that will pay dividends in loyalty and revenues.

End-user sentiment is another key indicator. If 65 percent of users have input a smiley emoji in their conversations with chatbots, brands can infer that they've delivered a helpful and enjoyable customer experience.

While the user enjoys interacting with the chatbot, the information surfaced from chatbot engagement can be valuable for the brand. For example, Disney’s Miss Piggy conversational chatbot crowd sourced votes for who she should have on her late-night talk show, Up Late With Miss Piggy. NatGeo’s Genius, on the other hand, asked more specific and personal questions about how viewers felt about each TV episode and their own lives, which yielded valuable information for the network.

Purposeful Conversations

The deployment of chatbots, like any other marketing tool, is goal-oriented. From promoting a new product to converting sales, chatbots were designed to lead conversations towards an end goal — in the same way a brand would design the customer shopping journey from discovery to purchase. Based on the conversation flow between the user and chatbot, brands can identify any breaks in communication and analyze the data to optimize the experience.

In real-life instances, more than 70 percent of people who chatted with conversational chatbots answered the questions they were asked. Compare these results to the 10 percent to 15 percent average response rates seen in traditional online surveys.

It’s Time for Brands to Get Chatty

For engaging customers, generating sales and gathering marketing intelligence, chatbots can be the most dexterous tool in retailers’ digital playbooks. In deploying chatbots, rather than siloing a chatbot from other marketing activities, it’s important for brands to devise strategies that incorporate chatbots within a unified marketing program. To accrue the optimum benefits, it's critical that the chatbot has a memory, can gather information, and is programmed to drive goals.

As analysts point out, businesses that embrace chatbots to drive conversational commerce can enjoy a significant competitive advantage. Brands should invest in chatbot planning just as they do for any other important marketing and sales channel.

Seth Greenfield is the co-founder and CEO of imperson, a studio creating premium conversational bots capable of conversing in natural language and tailored to each brand and character’s authentic voice..