Over the last few years, chatbots have started to make their presence felt throughout the digital marketing ecosystem. The retail industry has been as excited as any to experiment with this new technology, with the hope that the convenience these integrations would provide would delight users and create deeper customer experiences. After all, chatbots provided retailers with a 24X7 personal-assistant alternative to store associates. And bots with ecommerce functionality could help shoppers avoid checkout lines.
But recently, chatbots have been abandoned by several high-visibility retailers. So where do they fit in, if anywhere, at this moment in time? And what does the future hold for bots?
First, let us look at why chatbots provide an exciting opportunity for retailers. Many retailers operate with thin margins, and though it is necessary for the retail industry to improve customer experience, doing so isn’t always margin-friendly. The potential that chatbots offer for improving the customer experience at a relatively modest cost, compared to many other alternatives for doing so, is attractive to retailers.
Chatbots can interact on a large scale, and many provide real-time transaction functionality, so the opportunity to introduce this touch point before and at the point of sale appeals to retailers. If the path to purchase is made more fluid, the user experience is enhanced.
Another impact is brand support. Chatbots can be more than simply information providers or transaction agents. They offer an opportunity to create or extend a brand’s personality. With the ability to implement directly into a retailer’s website or app, marketers can add a key touch point on the customer journey.
On the other hand, if bots can successfully handle routine requests, such as “where is my order?”, then brands can utilise existing associates or call-center staff for responding to more complex customer queries.
Millenials favour chatbots
The good news for chatbots is that millennials view their use favourably. According to eMarketer, “in a December 2016 survey by Retale, nearly 60% of US millennials said they have used a chatbot. More than half of those who had never used a chatbot said they’d be interested in trying one.”
The eMarketer article goes on to explain that “two-thirds of respondents said they’d be likely to buy an item directly from a chatbot, [versus] only 14% who said they would not be interested in doing so.” This sounds like a strong endorsement from an influential target segment.
Chatbot challenges exist
Although the potential for this technology is apparent, problems exist in the capabilities around voice recognition and natural language processing, which has led to several high-profile brands abandoning bot implementations.
For example, fashion retailer Everlane–a partner in Facebook’s chatbot launch via its Messenger service–announced that it would no longer use the plug-in after it hit a failure rate of 70 percent.
Consumers have also not shown tolerance for chatbot interactions, whether those interactions are successful or not. A Digitas/Harris Poll survey found that 73 percent wouldn’t use a brand’s chatbox a second time if something went wrong on the first interaction. And customers with higher-level needs, such as product customisation, will not likely enjoy the experience until capabilities improve. Even when a request is a simple “where’s my shipment?”, some may become frustrated at dealing with a brand agent that is limited in function.
Retailers must advance cautiously when deciding to provide the chatbot experience. As with any new opt-in experience, users will expect much. They will want personalisation, they’ll seek exceptional service, and they will need to feel satisfied when the experience is over. While Facebook may be able to tolerate inconsistent bot interactions, retailers who operate on thin margins to begin with cannot risk poor engagements and unhappy customers.
In addition, retailers must be wary of the impact of chatbots on store employee roles. Training associates to add more value to the shopping experience will be important as more routine tasks are managed by bots. Brands will need to take more care in providing a delightful, personalised physical experience along with digital interactions.
The future of chatbots in retail
Although the technology is not yet where it needs to be–in terms of a low fail rate–retailers can be hopeful that chatbots will become more effective at customer interactions. Much of their effectiveness will rest on further advancements in natural language processing as well as on further evolution in sophistication of designing voice- or chat-driven user interfaces.
In fact, AI developers such as Google are making huge strides in improving algorithms to mimic semantic patterns in speech. Also, the pace at which AI-driven technologies are being developed can only mean a significant jump in successful bot implementations for retailers.
As so-called deep reinforcement learning is optimised, the failure rate will shrink and consumers will become more comfortable with this next exciting digital engagement tool. Bots will become more conversational, and hopefully empathetic, too. This will serve to enhance the customer experience and restore retailers’ enthusiasm for chatbots.
It’s important for retailers to ask whether bots can effectively augment an exceptional in-store experience. Retailers will want to use bots to guide customers, such as those searching for gift ideas. Doing so must be as easy as texting a friend.
Deploying chatbots to provide storytelling, product exploration, and other marketing functions will help brands succeed with this technology. But other functions will be available as well, such as seamless transaction processing, so brands will need to determine how chatbots will be used for marketing, utility, or core business functions.
While it’s difficult to predict exactly when chatbots will become ubiquitous in retail, I firmly believe they will become a strong component once the kinks have been worked out.