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Conversational Commerce and the Rise of the Chatbots

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A convergence of advances in AI and the rising popularity of mobile messaging apps has ignited a new wave of innovation in digital commerce. Chatbots – virtual assistants that converse through typed messages – provide 1-to-1 personalised customer service interactions, bringing brand voices to life and providing an unprecedented convenience to commerce experiences. 2017 is the year of conversational commerce.

The Chatbot Movement

Chatbots’ greatest benefits lie in their convenience, and while there are certainly risks of the opposite effect, their potential to improve customer service is unquestionable. Research from Forrester shows that 57% of firms surveyed are either already using chatbots or plan to begin doing so this year. As early investors have proven, the most successful applications of the technology provide a delicate balance of cognitive and personable dialogue with direct, automated efficiency.

While perhaps unbeknown to much of the western world, Chinese messaging app WeChat is undoubtedly the world leader in the conversational commerce movement. Created in 2009, WeChat has quickly become China’s dominant mobile messaging platform, now boasting close to 1 billion active monthly users.

After the launch of WeChat’s Chatbot platform in 2013, Microsoft started development on “Xiaoice”, a bot that aims to develop an emotional connection with its user by reacting to positive or negative keywords in conversation. The bot’s personality is a result of systematic data mining, taking dialectical cues from real human conversations on social media, and has earned Xiaoice over 40 million users in China and Japan. Though more of a social experiment than a commerce application of the technology, it’s safe to say the Chinese are sold on the idea of technological augmentation.

Understandably, WeChat’s popularity in China has prompted Facebook to make efforts to provide a Chatbot platform for the Western world. After introducing a bot API for its Messenger app in the spring of 2016, Facebook now has upwards of 100,000 monthly active bots ready and waiting conversation – much of it commerce driven.

“I don’t know anyone who likes calling a business. And no one wants to have to install a new app for every business or service that they interact with.” Said Mark Zuckerberg at F8 in 2016. “We think you should be able to message a business, in the same way you would message a friend.”

What Chatbots Mean for Brands

53% of people say they are more likely to do business with a brand they can message. So, what do Chatbots mean for brands? Bots mean business.

In an attempt to ease strain on telephone service agents, Vodafone this year launched Tobi. Powered by IBM Watson and hosted on Facebook Messenger, Vodafone claim Tobi understands what a customer needs help with more than 90% of the time. While initially able to answer 112 query types, the bot can now respond to about 150.

“In terms of his success, we’re using measures that we use for human agents as well, so looking at his first contact resolution rate – ie does he match or is he better than a human?” said Vodafone’s Chief Operating Officer and Director of Customer Service, Neil Blagden. “We treat him as a virtual agent but he’s one of the workforce and we’re trying to create that personality around him,” he added.

Recognising the shift away from company websites, Dutch airline KLM has put development focus on conversational commerce, becoming the first airline to try it’s hand at the technology. This change in strategy is unsurprising when you consider the airline receives around 125,000 queries from passengers a week.

Through Facebook Messenger, passengers can request booking confirmation and boarding cards, ask to change seat, and can be instantly alerted of delays. In an attempt to streamline the most frustrating possibility of the air travel customer experience, lost luggage complaints can be filed and rectified directly from the chat app.

“People are not going to websites anymore, they want to be on the platforms of their choice,” said Gert Wim ter Haar, Social Media Hub manager at KLM, “That means a lot for brands and the question is what will remain of your brand if you are not making efficient use of the connection that you have with the customer.”

The future of conversational commerce

While the potential of conversational commerce for brands is astronomical, it’s fair to say that uptake on the global scale hasn’t yet got off the ground. Despite its impressive results, the reality is that the technology behind chatbots is only in its infancy, presenting a massive potential for future-focused Australian brands.

Businesses saved $20 million in 2016 thanks to conversational interfaces, and the cost savings forecasted to reach $8 billion by 2022. The difference between these figures in a relatively short space of time is indicative of the expectation.

Today’s chatbots are undoubtedly useful, providing quick resolutions to Q&A type queries, such as the price of an item online or the nearest branch, but expect the bots of the near future to challenge the necessity of human-driven customer service altogether. Gartner have predicted that 85% of customer interactions will be human-free by 2020, even going as far to predict the average person will soon have more conversations with bots than with their spouse.

Although the full force of the technology is yet to hit Australian shores, more and more people will soon expect the seamless customer experience that bots are capable of. Early adopters will see the biggest benefits and if your brand isn’t ready, your customers will find another that is. Our advice? Invest early, and bring conversation back to the center of your customer interactions.

This is the era of conversational commerce, talk to eWave today to transform your customer experience strategy.

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Nick Hull
Strategic Solution Consultant

Aug 11, 2017