How to use retail chatbots to provide better customer service?

Modern retailers are looking forward to an era in which they will be able to streamline their product-customer interactions and offer 24/7 service without compromising on their salary structure. It won’t be a farfetched comment if we say that chatbots are part of that customer service plan!

Yes, chatbots are helping modern retailers stay in touch with their customers 24/7, and they are also contributing towards enhancing customer experience by reverting to FAQs with more accuracy. This enables retail businesses to make good use of the virtual agent and involve the live agents when they are available.

Chatbots are offering better ways of improving the customer engagement process while decreasing the cost of customer service. As a retail business owner, you must know that you cannot rely on a single customer touch-point as your customers require multiple ways to communicate with you.

What are chatbots?

25% of customer service operations will use virtual customer assistants by 2020 — Gartner

Chatbots are virtual agent programs developed and integrated into your website’s chat support service to stimulate automatic customer interactions based on predefined conditions, triggers, and/or events.

Here are a few examples of using chatbots for retailers:

  • They can be programmed to be proactive or reactive.
  • They provide consistent replies.
  • They give immediate responses to your customers.
  • You can collect important customer data without the use of any form.
  • You can get them programmed to work with your live chat or official social media.

The concept of chatbots has been around since the 1960s.

You can check out this infographic from Futurism to know more about the history of chatbots.

Although the idea of having chatbots has been around for so long, it has just recently caught up to the craze with modern businesses.

Why are retail chatbots important?

60% of customers surveyed said they’d leave a company after unfriendly service. — PWC

The market is competitive and uncertain with the recent Covid-19 pandemic wracking havoc on the retailers. As you know, desperate times call for desperate measures, but in this case, it’s all about taking smart measures.

Plus, when you know that your customers’ expectations are increasing with each passing day, you need to discover various methods for staying ahead of the competitive crowd and gaining customer loyalty. The technological advancements are opening new paths for businesses in the retail sector for retaining their customers whilst attracting new ones too without blowing a hole in their budget.

We are certain that you are aware of the importance of customer engagement and personalization. Well, this certainly has pushed some retailers along the path of using chatbots, take Amazon, for example. And it is high time that other retailers start learning about its importance and start implementing it in their customer experience strategy.

Retail chatbots are best suited for enhancing the customer experience by improving the satisfaction levels and improving the revenue cycle of your retail business. Their simplicity, ease of integration, and ease-of-access create a win-win situation for retailers and customers alike.

Despite being so much resourceful, retailers vary when it comes to its application in their business model. The reason behind this is the dilemma of using chatbots or not. The lack of awareness regarding the subject of chatbots is also the cause of hindrance to its implementation.

Reasons that make AI chatbots a popular technological choice

Let’s discuss a few reasons that will put chatbots as a top option for retailers to enhance their customer experience in the coming years.

  1. Messaging-based chatbots for customer success teams

2019 saw a stupendous growth in the use of messaging-based bots. Atleast, 50% of the Fortune 500 companies have already started experimenting with chatbots, and around 5–10% of them will go for complete implementation of the technology.

So the question arises where the retail industry stands on the implementation of chatbots in their technological mix?

“Many messaging bots can already be found in proprietary retail apps — like Subway and FreshDirect — and when you message branded Facebook Business Pages. Facebook recently confirmed that customers have already created 33,000 chatbots for its Messenger app thus far.” — Shopify

33,000 chatbots! Tells a lot about the emergence of technology, doesn’t it? Although you might differ in opinion, once the technology gains popularity and traction, it will be advantageous for business in two important fronts; user experience and cost reduction.

2. Both customers and brands will hang-up the phone

With the advent of future digital customer service tools, phone calls will become less usable.

On average, the call volume currently makes up around 45 percent of interactions with customer service teams. And there is a projection that this number will decrease to 14% by 2022. There is a shift from voice-based customer service to digital, and the shift will come more quickly than what businesses are anticipating.

Many businesses are taking drastic measures to keep their employees safe in this pandemic, and that includes the increase in work-from-home routine or working with a staff with 30–50% strength. In such an underpowered staff scenario, there will be a need to deploy more virtual agents to keep the customer satisfaction level up and secure brand loyalty.

As per a 2016 study of 6,000 consumers in Europe, Asia, and North America, 9 of 10 consumers would like to use messaging services to communicate with their preferred businesses.

3. AI and retail chatbots will positively affect pre and post-sales customer experience

From the start, chatbots will be an integral part of your customer’s online journey until the end.

For instance, during pre-sales, AI and chatbots will be continuously improving customer experience and result in the decline of cart abandonment as they can provide personalized and predictive recommendations to your customer’s on-the-go.

Take examples of retailers like H&M, Nordstrom’s, Staples, and Sephora, have implemented retail chatbots for better product discovery, and enhanced the purchase experience.

During post-sale, AI-powered chatbots will better serve the customers with their purchase records and prior communication with the business, helping get resolution faster.

For instance. Retailers can use chatbots with rescheduling deliveries and processing returns. Amazon is the best example of this practice. As we mentioned earlier, having AI-powered chatbots will help retailers be proactive and reactive during customer interactions.

This year, brands of all shapes and sizes will need to start thinking more strategically about how they can automate their customer service operations. In today’s digital world, automation in customer service is necessary to deliver an efficient experience for agents and customers alike.

Chatbot use cases in the retail industry

Let’s divulge a little more detail regarding how retail chatbots are changing the retail sector with these use cases.

  1. H&M

H&M introduced its customers to chatbot via the Kik messenger app in 2016. Customers were in awe of the recommendations and new user experience. This experience enabled H&M customers to choose from the recommendations, filters, and style preferences. It also allowed them to share their favorite product pages items amongst their Kik app contacts.

2. Taco Bell

The fast-food giant, Taco Bell integrated its chatbot with Slack, allowing customers to use the app to place orders, request prices, know the ingredients and make payments. This integration has enhanced its brand image and helped in the expansion of its business too.

3. Macy’s

Macy’s went one step ahead and started optimizing their chatbots for mobile devices and web pages. It helped the customers locate their favorite items quickly and enhance customer service. The chatbot is smart enough to answer any queries customers have and help customers find products, making the entire shopping process seamless.

4. Sephora

Sephora pushed their chatbots towards conversational commerce, making it available on messaging platforms. Using Kik, Sephora provides a one-on-one experience to its customers and replicates in-store conversations on their mobile devices.

Customers can make their purchases directly using the Kik app. The Sephora Chatbot makes beauty recommendations, DIYs, reads the ratings and finds products matching the customers’ skin tone and type.

Why does your retail business require chatbot development?

2 out of 5 Millennials think that chatbots provide better service than humans, as opposed to 1 in 5 of older generations — Caravan

The millennials spend approximately $600 billion annually. They are demanding the retail industry to provide products and services seamlessly and uniquely. As per an Oracle study, 56% of the customers are more likely to purchase a retail store that provides its shoppers with a unique way of experiencing products and services.

With the current pandemic forcing users to rethink how they interact with their favorite brands, artificial intelligence-driven technology like chatbots will become a critical part of the retail industry’s customer experience. 80 percent of respondents in an Oracle study confirmed that they are already using or will implement the chatbot technology by the year 2020. The respondents consist of chief strategy offices, senior marketers, and sales executives.

How much will it cost to develop a chatbot for your retail business?

Money is such an important and sensitive part of the business process that jumping to an exact figure will not do justice to this article. We cannot give you a random number and say, “this is what it costs developing your retail chatbot.”

To know the exact amount of money that goes into the development of this new-age technology, you must first understand its purpose. You need to collect data regarding your chatbot’s type of conversation with your customers or visitors. It is, after all, about creating a seamless customer experience for them, isn’t it?

The first impression your chatbot will make on your customers will help them decide if they want to stick with you or not. It’s about your brand name and the ROI that will come after you invest a portion of your business budget into its development.

“There are lots of third-party bot building frameworks. We took several days to review at least 10 of them. Some work only on Facebook Messenger, which is fine if that’s your only future channel”. Jonathan Duarte, the co-founder of GoHire, a San Fransisco based business, got his Facebook messenger job search chatbot, GOBe developed by a third-party service provider.

As a co-founder, Duarte wanted a bot platform that could work with different messaging applications to expand the outreach and usability of his chatbot. The chatbot was built in 8 weeks with the help of two senior developers, bringing the development cost to around $41000.

Kelly Garrett, the creative director of Ekcetera, a Minneapolis based business, chipped in some information regarding the costing of their enterprise chatbot. “At the low end of the spectrum, someone can build their chatbot only as much as their time costs. On the high end, I see that an average Facebook Messenger chatbot for small business marketing purposes costs from $3,000 to $5,000. I have also seen companies spend upwards of $50,000 for a chatbot. It all depends on the industry, company size [and] requirements of the bot.”

So, how do you calculate the ROI for developing your chatbot?

Christian Rennella, CTO and Co-founder of Argentina-based elMejorTrato chose to employ the “build-your-own-bot” option with the assistance of their sales and marketing team. “After 9 years of [working hard] with an internal marketing and sales team to answer our client’s questions through live chat, it was not until 8 months ago that we started developing our own AI chatbot. It cost us $340,000 where the greater part was invested in the salaries of [our] employees.”

Christian developed their chatbot for the sales and marketing team. This move allowed them to measure ROI quickly. “Our sales increased by 24.4 percent, which is around $3.7 million in additional revenue per year”.

How you define ROI will completely depend on what’s your motivation behind developing the chatbot. Businesses can use chatbots for

  • Generating leads
  • Enhancing customer service
  • Direct sale

When the use of chatbots is this diverse, the calculation of ROI will differ. So yes, the cost of developing and the ROI will depend on the purpose of the chatbot.

And, that’s a wrap!

This is a highly competitive niche, and the early adopters will gain a handsome advantage over their competitors. The customers are evolving, and so are their needs and personality traits. They don’t want to be kept waiting for their questions, and they want a 24/7 connectivity to the modern brands. This makes it tough for businesses to meet and satisfy the customers’ demands.

Thus, automating the customer service department becomes an integral part of the strategic agenda of retail owners. Automation will always enable retailers to have the necessary means for providing better customer service.

In such a scenario, chatbots are being looked upon as an easy solution. If you own a business in these trying times where human contact is being avoided for every individual’s safety, then having a chatbot will help you do so. In addition to that, you can maximize your revenue and also provide seamless customer service.

Rapidops has contributed to the development of businesses of various shapes and sizes with cutting-edge technologies. We have developed user-friendly websites and applications that provide users with ease-of-use, enabling business owners to provide the best customer experience.

We have delivered over 200 digital products since our inception with a team of talented developers and testers. We work consistently in bringing your ideas into bankable digital products that drive better revenue.

If you are brimming with innovative ideas and monetizing it, let’s have a chat!

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