How Can Bots Help Your Business?
Chatbots aren’t just impacting our personal lives but are also transforming the way in which businesses communicate with their customers and prospects.
August 8, 2019
Chatbots have already extended into so many aspects of our daily life — I wake up in the morning and ask Amazon Alexa to play my favorite jazz music, Amy emails me about today’s meetings, and Slackbot sends me a notification to remind me to buy airline tickets to Bali today. Bots are everywhere!
Certainly, these examples give a sense of chatbots’ pervasive presence in our lives. Chatbots aren’t just impacting our personal lives but are also transforming the way in which businesses communicate with their customers and prospects.
The majority of entrepreneurs and investors are wondering about how bots will generate revenue and become sustainable businesses. In this article, I review the direct and indirect ways that bots can drive revenue to a business. It is important to note that this is far from a comprehensive list, as I am sure entrepreneurs will come up with many other ways to make money in this industry.
The subscription business model is currently the most common way that bots drive their revenue. In this model, the bot provides an ongoing service that the user subscribes to and pays for. This is why this is the perfect tool for subscription businesses. For example, a bot highlights premium functionalities on the payment page, based on user behavior, or helps to pick up the plan or amount of credits, based on the users free activity. It would be also valuable to add machine learning (ML) to this.
Once the payment has been set up, it is important to acknowledge it in the chat interface. Notifying the user of upgrade, downgrade, and recurring payments is a good way to promote transparency and user satisfaction.
The subscription model, when done right, is very lucrative because the lifetime value (the amount of money the user will pay in the lifetime of using your product) of the user is usually higher than in other models.
Ad serving has been the bread and butter of many web and mobile businesses. Bots are in a unique position when it comes to ads, as they can build a personal relationship with the user. They can also collect a lot of personal information that can contribute to more personal and fine-tuned ads that lead to better click-through rates. Here is how it looks on the Kik platform:
As you can see in this example, the bot represents an influencer bot on the Kik platform, and the user actually asks for the ad as part of the conversation. Most advertisers will tell you that a user asking for an ad is as good as it gets when it comes to conversion to paying users. The bot captures the intent at exactly the right moment and serves a relevant ad to the user.
A client that works in retail business did the same. First, we’ve stressed that a huge motivator for these guys was to both provide an engaging fan experience as well as deliver value to the brand—and to do so in an authentic way that is more conversational and personal than traditional advertising. Using chatbots, you can add conversion opportunities (in their case, a coupon for free credits, to start) that makes it easier to demonstrate real value and sales. Also, we added a sentiment question in the bot which, as of today, has averaged out to 88 percent loved or liked the bot. Note that, while some platforms are happy with bots serving ads, other platforms do not allow it.
Talking to the Facebook team, members told me they are exploring revenue models that are related to Instant Articles. Publishers will be able to create a bot that serves these articles and do a revenue share with Facebook on the revenues (mostly driven by in-article ads). But who am I to talk for Facebook? Check out more information about Instant Articles.
Bots can collect a great deal of data from users. Through engaging in a conversation or playing a game, bots can learn about user preferences and interests. An example of such data collection is the Swelly bot. Swelly lets users play a game of choosing between two options. Once the user chooses an option, they are rewarded by being shown their cohort results (creating a social hook to re-engage with the bot) and they get prompted for another choice.
Here is how it looks on Facebook Messenger:
Now imagine you are an e-commerce brand, toy production company, virtual reality (VR) video business, or a fast food brand that wants to know which type of sandwich customers would love or what type of fast food imagery they would find more appealing. This type of bot would be a gold mine for your research. By collecting these types of audience preferences, the Swelly bot can generate a detailed report in a very rapid and precise way. While this bot does not charge the end user, I am sure it will one day make a lot of money helping brands understand their audiences.
Bots can also become the channel in which you sell goods and services. These can be tangible goods that the bot sells directly in chat or a paid service that the bot exposes through chat.
Interesting examples of paid services exposed via chat are the ride services, Uber and Lyft, that developed interfaces for both Slack and Facebook Messenger:
I find these examples very interesting because these are services that were available on mobile and consumed mainly in the form of a mobile app. The conversational interface lets you consume these services and order a ride—without having the app installed on your phone. As the bot market grows, we might see more and more paid services move to chat platforms.
The referral fees model is another major business model on mobile and web that is moving to bots, which can help you decide what to buy or which service to consume—and then refer you to the right service, rather than actually completing the transaction itself.
A good example of a referral business model in bots would be the Kip bot. The Kip bot, available on Slack, Messenger, Kik, and Telegram, is a shopping assistant for teams. Kip helps you find what to buy and then refers you to the merchant that can fulfil the order. The advantage of Kip is that it is not bound to a single vendor. It can potentially serve as a cross merchant and provides the user with results sourced from multiple merchants. When the user completes the transaction on the merchant’s site, Kip gets a referral fee for sending the user to that vendor.
As a conclusion, keep in mind that a bot is a type of user experience and a way to expose products, services, or a brand. The only way to make money out of bots, without having a service or a product, is to be a bot builder and to have someone pay you to build that bot. End users do not pay for bots—they pay for the services exposed by bots. They pay for the products that bots promote, and they are influenced to connect to the brands that bots represent. But still, in the same way we have companies that call themselves mobile businesses, making most of their revenue through mobile, we are going to see more and more companies calling themselves bot companies.
Bots will not only become a way to generate revenue, but also they will be taking big chunks of legacy web and mobile business and will become big businesses of their own. What I usually tell investors who ask me about this market is, “If I do my job right, the next Slack-sized start-up is going to be built on the chat platform.”