How using chatbots can improve customer service - Retail Council of Canada
Marketing & Merchandising | Digital Retail & Technology

How using chatbots can improve customer service

July 29, 2022

This article is provided by Reshift Media , a Canadian – based digital marketing and development organization specializing in retail businesses.

Look to the bottom corner of most modern retail e-commerce websites, and you will likely see a chatbot – usually appearing as a message icon or something more obvious, such as “Chat”. What seems like such a small aspect of a retailer’s website holds a powerful customer service tool that can improve a website visitor’s experience, leading to greater customer satisfaction and customer relationship management (CRM) for a retailer.

Chatbots come in a variety of forms and hold many possibilities for customer support, which is why it is important to first determine what you are trying to accomplish with it and go from there. If you are new to chatbots or are looking to improve your existing one, keep reading to find out what a chatbot is, the various types, and how using one can contribute to your overall customer service strategy.

What is a chatbot?

At the most basic level, a chatbot is a computer program or software that simulates conversations and automatically responds to messages and inquiries from customers. Depending on the type, chatbots can either be very robbot-like, meaning they are simple and to the point with the answers they provide, or human-like in that they can start conversations, respond in a more casual way, and can often be mistaken as a real person on the other end.

It is important to note that a chatbot, while similar in structure and often design, can differ in what it provides to customers, depending on the industry. For example, a chatbot on a Government support website can include vastly different support options (i.e., customers can provide more personal info, ask specific questions, etc.) than a chatbot on a retail clothing website. Again, this is why it is essential to determine what you want your chatbot to provide; some retailers may want a chatbot to provide customers with answers about shipping and delivery policies, help provide product recommendations, offer promotions, and provide answers to frequently asked questions. Some retailers may even want the customer to input their name and email address before commencing the chat as a way to promote follow-up messaging. Chatbots can be designed in a way that will best fit your retail business.

On a global scale, the chatbot market is expected to reach $9.4 billion US in 2024. This is a significant jump from the market in 2019, which was valued at $2.6 billion US; albeit still large, but not as large as what the market will become. This growth in the chatbot market is in large part due to the increased demand for chatbots, as well as the increase in the deployment of chatbot software.

Chatbots, while not new to the scene, are here to stay and continue to evolve.

Types of chatbots

There are two main types of chatbots (that don’t require a live person on the other end):

  • Artificial-intelligence (AI): These advanced chatbots are powered by AI to automatically improve based on customer queries. Using your existing information resources, such as your FAQ page, the chatbot will take this information, provide answers to common customer questions, and continuously learn based on the words and dialogue each customer uses to ask their questions. It will also use technology to mimic a real conversation with a customer, such as machine learning and natural language processing (NLP).
  • Rules-based: Aptly named, this type of chatbot uses rules that you input into it. This means that when a customer asks a question, the chatbot will find keywords in their question and respond based on the keywords from the information and rules you’ve uploaded into the database. While AI-powered chatbots continuously improve over time, rules-based chatbots know the responses beforehand, and if a customer asks a question that does not use certain keywords, it may not be able to provide an answer. 

Which type of chatbot is most beneficial?

The answer to this will vary from business to business – factors like cost and technical capacity can play a role. However, a 2021 State of Chatbots Report indicates that customers find the most enjoyment, and have now come to expect, personalized chatbot support. This means that if a customer has complex questions and concerns, a chatbot that can handle this complexity will have a more favourable response than a chatbot that is only able to handle basic questions or is unable to effectively process a query. However, AI chatbots can come with a higher price tag compared to less intelligent versions.

Personalization is something that many retailers should have as a top priority, as it helps them stand out in the sea of retail. Having a chatbot that is capable of answering more detailed or differently-phrased questions can improve a customer’s experience immensely. This is where NLP can help, as a chatbot can understand the intent behind the question being asked.

Another way to implement greater personalization through the use of a chatbot is to have it programmed to retrieve information from a customer when they are signed in to their account. For instance, chatbots can have the capability to retrieve purchase history, which can lead to new recommendations for the customer. Not only can the customer feel like the chatbot is personalized to them, but it can help lead to greater conversion rates and improve customer satisfaction knowing that the particular store they want to shop on has the item(s) they need or want.

Creating a personalized experience for customers can yield greater results, especially since 80% of consumers are more likely to purchase from a brand that provides a personalized experience.

Is there a need for chatbots?

In almost all cases, the answer to this is: Yes. And while there can be many needs for chatbots in the retail space, much of it comes down to customers’ desire for convenience. In a recent report by the National Retail Federation, 83% of consumers say convenience while shopping is more important than it was five years ago, while 52% say that convenience influences half or more of their purchases. In the same report, some of the main areas that consumers want additional convenience in include: finding deals and promotions, checking inventory, and finding product options easily. A chatbot is a convenient way to meet those needs

Another need for chatbots is due to the changing retail landscape and how customers look for support while shopping. When the pandemic began, retail e-commerce skyrocketed, with a significant number of consumers switching to online shopping than in-person shopping. Fast-forward to now, retail e-commerce sales are upwards of around $5.5 trillion US worldwide, and are expected to reach almost $7.4 trillion US by 2025 – this is a steady increase from previous years. When consumers scroll through an e-commerce website and make a purchase, questions may arise that they need answers to.

Prior to the pandemic, some retailers used customer service companies (or had their own) with in-person call centres to answer customer inquiries. However, when the pandemic restricted workplaces, chatbots became increasingly popular because of its virtual capabilities. Now they’re commonplace and many consumers look for chatbots when they are on a website. To keep up with competitors and employ a quality customer service strategy, using a chatbot that can answer questions quickly and in a way that can essentially “mimic” a customer service agent is something that is increasing in popularity and can be important to have while e-commerce sales continue to rise.

Another way to determine the need for a chatbot is to uncover why a customer might use one. The number one reason customers use a chatbot is to quickly receive an answer to a question, and many now expect an immediate response from a chatbot. An explanation as to why chatbots are used for this reason stems from the frustrations that many consumers feel with online services.

Reports from recent surveys found that the top three frustrations that survey participants experience when using search engines, products and services websites, and mobile apps are: the site is hard to navigate, they are unable to receive answers to simple questions, and basic details about a business (i.e., hours of operation, address, etc.) are difficult to find. It was also determined that if chatbots were available on these online services, some of the top potential benefits for participants could include 24-hour service, receiving an instant response, answers to simple questions, easy communication, a good customer experience – and the list goes on.

Based on this information, implementing or improving a chatbot on your e-commerce website can help address these pain points that many consumers experience, which can aid (and improve) your customer service capabilities, thus leading to a great customer experience on your website and for your brand overall.

Chatbots as a tool in your customer service strategy

Chatbots can provide 24/7 customer support and can be extremely personalized to the customer providing a greater customer experience. If you consider more traditional customer service options, long wait times is something that can cause decreased customer satisfaction, but with chatbots, this is essentially eliminated. Answers to simple questions can be answered in an instant, which saves many businesses time and money.

Chatbots, used as a tool in providing quality customer service, are here to stay, and utilizing them to match your business’s and customers’s needs is an excellent way to stay relevant.

About Reshift Media

Reshift Media is a long-time partner of the Retail Council of Canada. The company is a Toronto-based digital marketing and development organization that provides leading- edge social media, search and website/mobile development services to retailers around the world. Please visit www.reshiftmedia.com to learn more.

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