To ‘bot, or not to ‘bot: That is the question. In retail, the answer hinges on how to maximize cost and speed in customer service without alienating shoppers. Thanks to rapid advances in the AI field, chatbots are becoming more conversational, responsive, and effective in meeting customers’ needs. In this article, we’ll discuss the increased adoption of chatbots in retail, and the most effective ways that retailers can use chatbots.
There’s no question that chatbots went through growing pains in the early days. As Gizmodo noted in 2019, 52% of customers felt frustrated when navigating an automated customer service experience without an option for human assistance, while 18% felt angry. But the problem wasn’t chatbots as a concept; it was poor automation.
The chatbot customer service experience today is dramatically better:
Chatbots are making customer service more efficient for both consumers and businesses by cutting down on wait times and call center costs, but their potential isn’t limited to fixing problems. Retailers have been leveraging customer profiles and purchase history for years to create personalized ecommerce experiences for shoppers: Chatbots can take that technology a step further to create a more engaging experience with product recommendations and supplemental information to drive sales.
For example, if a customer is browsing bikes on a sporting goods website, a chatbot could volunteer to assist the customer by narrowing the assortment to a designated set of parameters, (e.g., style, size, price), and then make recommendations for apparel, accessories, and transportation and storage equipment that would complement the bike and the customer’s shopping profile.
Chatbots are perfect for answering basic questions that don’t require analysis or problem solving, both in the pre- and post-purchase phases of the customer journey. A few ideal uses for chatbots include:
Chatbots can also be used for preliminary screening questions, cueing up a human customer service rep to handle more complex matters. Humans are still better than bots at solving complex problems and handling emotionally-charged or difficult situations. (The words “I hear you,” or “I understand,” for example, can go a long way, but they need to come from a sentient being.)
It’s also a good idea to involve a human when you’re dealing with higher-end products and experiences: 84% of consumers say that more communication is critical if a purchase is expensive. While that doesn’t mean the communication needs to come from a person, exclusively, it’s better to have someone on-hand in case the issue needs to be escalated.
The best strategy is a blend of bots and people, with sensitivity to high-value transactions and VIP clients.
Chatbots have become ubiquitous in ecommerce, but most retailers are still programming their chatbots to respond to specific prompts with specific answers, escalating matters to human associates when needed. Conversational AI chatbots powered by Large Language Model (LLM), like ChatGPT, are the next frontier.
Currently retailers like Walmart and Starbucks are using conversational AI to make personalized shopping recommendations by analyzing a customer's previous orders and preferences, creating a more efficient, enjoyable shopping experience for the customer. And that’s just the beginning.
Imagine a future in which a conversational AI can guide every customer through their shopping experience, whether in-store or online—answering questions in real time to help shoppers make better decisions. Asking—as opposed to searching for information—keeps the customer focused and reduces the number of obstacles the customer has to clear to make a purchase decision.
Regardless of their potential, chatbots are not a one-size-fits-all solution for retailers. According to a Pew Research study, 45% of U.S. adults say they are equally concerned and excited about AI, and retailers should be sensitive to those concerns.
The most prudent approach to incorporating chatbots and conversational AI in customer interactions is to give the customer the choice to engage. That means being transparent about who or what the customer is talking to at the start of the exchange, and allowing the customer to decline AI assistance. As shoppers collectively become more comfortable with the convenience conversational AI offers, there will be fewer opt-outs.
Businesses spend over $1.3 trillion per year to address customer requests. IBM estimates that chatbots can help to reduce those customer support costs by 30%. A gradual roll-out of increasingly sophisticated chatbots gives retailers and customers the opportunity to acclimate to a new era of technology. AI is going to transform the way that retailers serve customers: Is your company ready for the future?
Currently the Senior Content Marketing Manager at Narvar, helping 1300+ of the world's most-admired brands—including Sephora, Levi's, and L'Oréal—take their post-purchase experiences to new heights. Born and raised in San Francisco, but I've lived all over the world. Previous residences include Seattle, Denver, Santa Monica, Kinsale (Ireland), and Wellington (New Zealand). Writer by trade, football player by passion, and tall by genetic lottery.