The Time for Chatbots Is Now

April 1st, 2017

Are chatbots here to stay? Should you be experimenting with how chatbots and artificial intelligence (AI) can augment or even redefine your customer experience? Absolutely. Many leading consumer brands, including CNN, TacoBell, Dominos and 1-800-Flowers are in the thick of experimentation already. We recently helped syrup company Torani launch a chatbot to help consumers navigate through thousands of Torani recipes on Facebook Messenger.

Chatbots - software that uses messaging to "talk" to people and then carries out automated tasks - are a smart first foray into AI for consumer brands. The technology is finally getting to a point where chatbots can have useful, engaging "conversations" with people - and with the rise in the use of messaging apps, chatbots make a lot of sense. In fact, texting is the most frequently used form of communication among Americans under 50 and much of that communication occurs within messaging apps.

Chatbots are no hype

How big is the chatbot and AI trend? Forrester reports that investment in artificial intelligence is on track to triple in 2017 - an uptick that began in 2015-2016 with companies like Apple, Google, Microsoft, Uber and others acquiring AI startups, backing startups with VC funds, or developing products that use AI technology.

Furthermore, a survey by Oracle of 800 senior marketing and sales executives in the UK, France, the Netherlands and South Africa revealed that 80% already use or plan to use chatbots by 2020. Business Insider mentions that 60% of consumers using messaging apps have used chatbots at least occasionally.

The role of chatbots today

Right now we see chatbots as particularly relevant for CPG companies and online retailers. These first-generation chatbots let consumers choose from predefined customer inputs and can understand limited free text. These chatbots can help consumers find recipes or purchase products directly from brands' e-commerce sites. They also can engage customers with digital campaigns to promote offers. Chatbots also modify the user experience by bypassing traditional navigation and search and enabling a guided, more conversational shopping experience.

Second-generation chatbots allow consumers to type in free-form questions and requests, and AI-based learning will enable chatbots to give more "intelligent" responses. A significant challenge in creating smarter chatbots is managing and accessing the data that powers them. Available data often isn't structured with the necessary metadata, or is "trapped" in siloed systems that don't allow API access. As this begins to change, chatbots will increasingly deliver an experience that is driven by rich content.

Linking a chat customer to his/her backend CRM/loyalty/billing account to apply customer preferences and information can be a powerful step in making conversations and recommendations more relevant and personal. It focuses the customer experience on shopping, with less time spent on shipping and payment details, which can be applied automatically. Linking CRM and loyalty program data also makes it simple for the customer to reorder a past order or redeem loyalty points.

Chatbots in the future

In the future, chatbots will participate in voice-based conversations. Also, chatbots will interoperate with Internet of Things (IoT) devices like Amazon Alexa or Google Home to deliver voice-based experiences. Imagine finding a recipe using a chatbot on Facebook Messenger and having Amazon Alexa to read it out to you while you cook.

Chatbots also may use big data, predictive modeling and AI to forecast customers' needs to be able to throw the right deal or product at the right time. We may see a combination of chatbot and human customer service, where the chatbot seamlessly hands off to a human to solve a more complex problem and then takes over again when the issue is resolved.

Furthermore, as more information and devices become discoverable, chatbots will likely be able to deeply tap into multiple repositories of data to provide more detailed information; for example, the wash instructions of a certain dress or when new inventory will arrive at a certain store. Chatbots may even interact with other devices to perform services like uploading the nearest store address to your connected car's GPS.

It's exciting stuff, though chatbots are in early stages yet, with companies gathering data and measuring performance and effectiveness. Even with their imperfections, there are enough relevant applications today to encourage brands to experiment now so they understand how chatbots and AI can enhance the customer experience and are well positioned to be competitive in the future.