Bots for Business
3 Ways Chatbots Can Improve Your Bottom Profits
Increasingly, organisations will hire a chatbot that will increase productivity and sales.
By Dr. Mark van Rijmenam
December 10, 2019
Back in the 1950s, Alan Turing hoped that machines would eventually “compete with men in all purely intellectual fields.” These machines “will be feared and respected, and perhaps even loved,” stated one of the founding fathers of artificial intelligence (AI), Irving John Good. Since these early predictions, it would be a long time before AI would eventually take off. This is especially true for artificial conversational agents, which have been around for decades but only recently became advanced enough that organisations can benefit from them.
Alan Turing, artificial intelligence pioneer.
A brief history of the chatbot
The first bot that was capable of basic communication between a human and a computer via natural language processing (NLP) was ELIZA, which was developed in 1966. In 1972, the PARRY chatbot was developed to simulate a paranoid schizophrenic person, and in 1995 A.L.I.C.E. (Artificial Linguistic Internet Computer Entity) was a popular online language-processing bot. With the developments of artificial intelligence picking up steam, there is an increasing convergence of the human and the machine, thereby becoming increasingly interwoven in mutually dependent networks.
These human-to-machine interactions are especially visible in areas where chatbots are implemented, as humans are directly interacting with AI. Examples of these convergences can be seen with the introductions of Siri in 2010, Google Now in 2012, Amazon Alexa in 2014, and Cortana in 2014. Each of these chatbots has the objective to be able to have conversations with anyone about anything eventually.
In 2016, Facebook enabled businesses to offer automated customer support on Messenger—using chatbots. Since then, chatbots have come a long way. Those first chatbots on Messenger were still relatively unintelligent bots. Most of them were so-called on rails chatbots, where answers and questions were predefined and the chatbot had only a limited understanding of the context.
More recently, we have seen chatbots evolve drastically thanks to advancements made in artificial intelligence in general and natural language processing in particular. These technologies allow more free-flow chatbots, where users can enter free text, which requires a better understanding of the context and of what actually is being said. The more chatbots will incorporate artificial intelligence and natural language processing, the bigger the impact on the future of work.
How AI and NLP will create smarter bots
At its core, a chatbot is nothing more than a software program that can talk with a user using an intuitive interface. When it comes to human-machine conversations, context matters. The more data you feed a chatbot, the better it will understand the context of the user and the better it will be able to handle complex requests. Although most bots in service today are rule-based, more like an automated FAQ machine, AI and NLP are rapidly making bots more intelligent.
Natural language processing enables a chatbot to understand the meaning of what someone says. It allows your customers to talk to a computer, just as they would speak to a friend. Alexa, Cortana, or Siri, are examples of how far NLP has come in recent years. Intelligent chatbots that are augmented with AI and NLP can have smart conversations with the customer. If required, they can even have a personality that matches the brand experience of an organisation. Such chatbots will have a unique voice and approach when servicing customers, thereby drastically improving the customer experience.
Natural language processing is the key to intelligent bots.
Artificial intelligence becomes especially relevant to help the bot know which answer fits best in what circumstance. To achieve that, conversation analytics (the capability to analyse user conversations) and sentiment analytics (the capability to identify, extract, and quantify information to detect emotions) become key. Using conversation and sentiment analytics, a chatbot can better understand the context and identify problems, such as knowing when a user is stuck, the bot no longer responds, and users leave.
Conversation analytics and natural language processing will boost the adoption of chatbots. The more intelligent a chatbot becomes, the better it can help your customers and the more it can increase your sales and reduce your costs. In fact, smart adoption of chatbots can have a direct impact on your profits.
3 ways that chatbots can help improve your profits
Chatbots will augment your employees. They will allow your staff to focus on the more important queries, while chatbots can take over the more mundane and simple tasks. When chatbots are fully integrated into your organisation, are context-aware, and use the latest NLP technology, they can have a serious positive impact on your business. Here are three ways that chatbots can help:
1. Chatbots reduce customer service costs
According to research by Chatbots Explainer, chatbots can seriously drive down your customer service costs. At the same time, your agents can deliver better customer service as they have more time for more complex queries. The savings potential is up to 30 percent, if you can automate the first line of questions from clients. Often, these simple questions are related to, for example, an address change or lost password. Having these questions no longer handled by an expensive customer agent can save a lot of money. In fact, research by Juniper showed that the banking industry could save up to $7.3 billion by 2023, thanks to chatbots. No wonder that banks, such as RBS, HSBC and Wells Fargo, are experimenting with chatbots.
2. Improve customer engagement and deliver a unique experience
While nothing beats talking to an empathetic human agent, chatbots can provide a unique customer experience. Especially when call centre agents are busy, chatbots can take over and offer instant gratification. More importantly, chatbots can also deliver a unique experience in itself. The Domino’s Pizza bot is one of those well-thought-through chatbots that offers such an experience and engages with the customer. It is linked to various voice assistants so customers can order a pizza from the comfort of their chair, without even having to take out their phone.
3. Increase your sales using chatbot recommendations
Research by DigitasLBi showed that, already in 2016, 37 percent of American consumers were willing to make a purchase using a chatbot. If that chatbot is capable of upselling and recommending various products, it can directly influence your sales. The trick lies in providing the right recommendation for the right customer at the right price, which is where artificial intelligence comes in. If the chatbot has access to a wide variety of data sources, including previous purchases, interests, social media likes, and search history, the chatbot can make a specific offer for the right customer, which has a higher chance of converting. This could significantly increase your revenue.
In the future, chatbots will be everywhere
The advantages of intelligent chatbots, if done correctly, are clear: reduced costs, better customer service, increased brand reputation, and increased sales.