There’s a reason the global market size for chatbots will cross the $1.25 billion threshold over the next four years: they work. In fact, consumers increasingly prefer chatbots to live service representatives because they are able to provide accurate answers instantaneously. And an increasing number of forward-leaning businesses are seeing the ways chatbots can enhance customer service, improve customer experience, and boost profits.
What Is a Chatbot?
“Chatbot” is short for “chat robot.” Chatbots are computer programs that are able to imitate human conversations. Different chatbots have different capabilities, depending on the sophistication of their programming. The most sophisticated can process large amounts of data and carry on conversations with the customers they serve.
Are Chatbots and Virtual Assistants the Same Thing?
Your goal as a business leader (or someone whose job it is to enhance customer experience) is to investigate new approaches that measurably improve customer service. The first step is to understand what’s available so you can make a prudent decision about how best to invest your money.
Chatbots are programs driven by artificial intelligence (AI) and machine learning. Chatbots process large amounts of data to answer your customers’ questions. Essentially, a chatbot recognizes particular queries and, based on the data available to it, provides a satisfactory response. But not all chatbots are created equal.
For example, so-called “task-oriented chatbots,” have limited functionality and tend to serve highly specific customer service functions. These chatbots are like interactive FAQs. Or you could choose a “conversational chatbot,” sometimes called “virtual assistants.” These are more sophisticated programs that use predictive intelligence and machine learning that enable them to essentially have conversations with your customers.
The most sophisticated AI-powered conversational tools can actually predict where a conversation is going. They can also learn from each customer interaction. In this way, they continually improve the quality of communication with your customers. Equally important, some chatbots have the ability to escalate questions that are not in the knowledge base to a “human in the loop” who can provide an answer to non-routine questions.
Each of these technologies has its pros and cons. For this reason, it’s often wise to work closely with a business with expertise in artificial intelligence (AI) software applications.
By the Numbers: The Chatbot Revolution
The widespread adoption of chatbot and virtual assistant technologies has created an expectation among consumers for the kind of prompt and accurate responses they generate—and that has been a boon for companies that effectively leverage their considerable capabilities. According to Harvard Business Review (HBR), for example:
“Like all successful automation efforts, customer service chatbots can reduce costs, but the improvements they make in customer experience are far more impactful. Bots are available 24 hours a day, 7 days a week, and often answer customers’ questions more quickly than human agents can. At the car rental company Avis Budget, for example, virtual agents were able to identify and automate 68% of service calls. Just as Web automation in the 90s and mobile apps in the 2010s improved customer convenience, properly designed virtual agents can improve customer satisfaction.”
How Effective Are Chatbots?
When effectively leveraged, chatbots can be a game-changer for the businesses that launch them, substantially enhancing customer service, customer experience, and even employee experience. Consider for example these chatbot metrics from Small Biz Genius:
- Almost 3 of every 4 consumers cite chatbots are their preferred method of communications from business
- In 2020, 85% of consumers report managing all their interaction with brands via chatbots
- Chatbots on average cut customer service costs by 30% or more
- Almost 65% of consumers cite 24/7 availability as their top reason for preferring chatbots
How Can a Chatbot Benefit Your Business?
Every business is different, of course, with different customers, different business goals, and different marketing strategies. That said, the lion’s share of companies that include chatbots in their marketing strategy tend to realize a similar group of game-changing benefits, including the following 4:
1. You’ll Improve Customer Service and Engagement
The most obvious boost to customer service is the chatbot’s 24/7 availability. With a chatbot, you have the reassurance that every customer will be able to meaningfully interact with your business after hours and on weekends. That’s critically important. According to Econsultancy, for example, about 83% of online shoppers require help to complete their purchases. Your chatbot can answer customer questions and provide any direction necessary to add to your bottom line.
2. You’ll Gain Valuable Customer Insights
In addition to providing your customers with the prompt answers they need, chatbots can provide a wealth of research data to improve your products, services, and marketing. For example, If your ecommerce website has an unusually high cart abandonment rate, you can use a chatbot to find out what’s causing potential customers to abandon their carts. If a landing page gets a ton of web traffic but generates few leads, a chatbot might tell you that customers find your online form too long and cumbersome to complete.
3. You’ll Generate More (and Better) Leads
According to HubSpot, generating enough high-quality leads is the number one marketing challenge businesses across the globe face. For example, if you’re generating leads by gating content, your chatbot could direct prospective leads to that landing page, showing how your content can help them choose the best CRM for their business. Said differently, the number of ways chatbots can enhance your lead generation efforts is virtually limitless.
4. You’ll Cut Operating Costs
As noted above, chatbots on average save the businesses that use them approximately 30% in customer service costs. The reason is simple: chatbots are less expensive than their human counterparts. And, unlike human employees, chatbots don’t go home at night, and you won’t need to pay them a salary and benefits.
The bottom line is this: chatbots and virtual assistants can do almost everything a human being can do. They can do it better, faster, and less expensively. The right chatbot will boost customer service and engagement, supplement your market research efforts, generate more quality leads, and save you money.
Of course, choosing the right automation technologies for your business can be both complicated and confusing. That’s where we can help. We can give you the guidance and advice you need to choose the right chatbot for your business and, in the process, help you achieve your principal marketing goals.