Exploring the Potential of Chatbots: Part 1 of 4

You’ve probably heard buzzwords like “conversational commerce” and “chatbot” being thrown around lately. The announcement at F8 this year that Facebook was going to allow chatbots for Messenger created a lot of excitement in the market – hashtag inventor Chris Messina even declared 2016 the year of conversational commerce. But what does this announcement mean for retailers and their customers?

The Chatbot Potential

Chatbots are fairly simple artificial intelligence that have been in use for years, but now they’re able to have bi-directional conversations with customers. The advantage is that brands no longer need to have an app to connect with customers on their mobile devices, but can still take advantage of all the functionality of the phone like location awareness and push notifications. Customers can instigate a conversation with a brand via chat apps like Messenger, Kik or WeChat, and maintain that conversational history without downloading additional software.

It’s still early stages, but chatbots have basically unlimited potential. Early adopters like Slack have seen “wonderful” results. Bots are relatively inexpensive compared to the cost of customer service agents, and will continue to become more intelligent over time.

Are Chatbots the New Apps?

Facebook Messenger brings a new conversational paradigm to ecommerce: our research shows people tend to use it more frequently than an email contact form. But will retailers be ready for a surge of conversations to engage in? Millennials like to use chat interfaces to shop, but sometimes the chatbot can’t keep up in a two-way conversation. The conversation has to be managed or monitored by a human at this point, and hiring more chat operators to manage conversations could significantly increase costs. Plus you risk ending up with customers who are worse off than when they came to you.

At this point there are still more questions than answers. We know the novelty of chatbots will only go so far if they aren’t useful, but they have the potential to disrupt the way people shop, and we think that potential is worth exploring. We’re investigating whether a retail-specific ecommerce chatbot could be made for a cost that wouldn’t put a good ROI out of reach, but could still be extremely effective. Stay tuned for part 2 in our conversational commerce series tomorrow.

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