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Does your business really need a chatbot?

Like artificial intelligence, chatbots have become part of the trend of improving marketing techniques and customer services. They’ve been increasing in popularity for both businesses and consumers.

Insider Intelligence forecasted that consumers’ retail spending via chatbots will increase by $142 billion in 2024, which is a significant uplift from 2019 with just $2.8 billion consumer spending through chatbots.

Today’s consumers expect 24/7 service and assistance from businesses, encouraging more companies to develop chatbots and virtual assistants to address their customers’ needs at any time of the day.

As one of the first brands in the retail industry to use chatbots, Sephora has two bots to improve customer experience. This Reservation Assistant allows customers to schedule appointments with beauty specialists through the chatbot. On the other hand, Color Match uses augmented reality so that customers can choose specific shades of colors for makeup.

Australian organisations are also following this global trend of using chatbots in business.

The Australian Football League (AFL) developed a Messenger-based chatbot so they can have a “finals assistant” that answers fan questions about matches and events. Meanwhile, the Art Gallery of New South Wales created a Messenger chatbot in 2020 to bring their exhibits to their potential visitors, when the worst of the pandemic (and the lockdowns) hit that year.

Despite coming from different industries, these brands have a common goal in using chatbots: To improve customer service and the overall experience.

It’s unsurprising then that many small to mid-sized business owners are starting to consider developing their own chatbots. But despite its seeming efficiency, some experts believe that chatbots are killing customer service.

Before you decide on investing in a chatbot, consider its advantages and disadvantages and whether it will help you achieve your business goals.

What is a chatbot?

In business, a chatbot (short for chatterbot) is an artificial intelligence (AI) system that enables customer engagement through text or speech. A chatbot simulates human conversation and it is typically used through most messenger applications like Facebook Messenger, making them accessible and easy to use.

One of the biggest appeals of chatbots is its ability to engage with customers at any time or day of the week, without being constrained to one physical location. Chatbots can run 24/7 and this allows businesses to serve more customers at a time than if they used their own manpower and resources.

A chatbot can work in one of two ways: Using set guidelines or machine learning. When a chatbot functions with set guidelines, their responses are limited to a number of requests or a list of vocabulary.

For example, a set guidelines chatbot can instruct a potential customer to, “Let me know how I can assist you by typing content, content marketing, or content strategy.” But if a customer types “storytelling content,” the set guidelines chatbot will not recognise the command and will either repeat their previous instruction or transfer the customer to a human assistant.

Meanwhile, a machine learning chatbot features an artificial neural network and is programmed to self-learn as it receives more inquiries with new words and textual dialogues. 

Whether a chatbot uses set guidelines or features machine learning, it can function in different ways for a business:

  • Customer service – Many customers don’t want to “stay on the line” and wait for an operator’s answer. It also lessens their effort in searching for an answer in the FAQ webpage.
  • Streamlined purchasing process – A chatbot can look for the items you want to purchase and forward it to you via message, minimising the time and energy to search through tons of pages with specific filters on.
  • Automate repetitive tasks – Most customers have the same questions (e.g. “What are your work hours?”, “Where are you located?”, etc.) and having a chatbot answer them can lessen an employee’s workload. 

The application of these functions can be developed in different ways, depending on the complexity of the chatbot and the business’ industry.

The Skyscanner bot for Skype allows users to search for flights, either individually or as part of a group, before providing real-time prices and route options as well as a link that redirects users to complete the booking for their trip.

Paypal also launched its first payment bot in Slack, letting users send money to each other without leaving the work chat platform. This is ideal for quick peer-to-peer payments between co-workers (i.e. splitting lunch, coffee orders, sharing cab fare, group gifts, etc.).

Chatbots are undoubtedly useful for corporations and large businesses, particularly when their customer base is on an international scale (and therefore much more challenging to satisfy). But this doesn’t necessarily mean it will yield the same positive results for small businesses. 

Are chatbots effective for a small business?

While a chatbot has many supposed benefits, it also has disadvantages that can negatively impact your business.

Statistics show that 75% of customers still prefer interacting with human agents because they can directly handle any questions a consumer might have. More than 60% of customers are concerned that chatbots lack the understanding or ability to handle complex issues.

Matt Grech, senior technology analyst and writer, had this to say about the data: “Many of us know what our issue is, we know what we need help with, and we just want to speak to someone to get that help. More steps in the way of us getting to that human interaction feels less like assistance, and more like a nuisance.” 

Because it lacks that human touch, chatbots can further downgrade a brand’s customer service rather than improve it. A chabot can’t feel the urgency or importance of a customer’s request or inquiry, so the exchange can come off as frustrating and wasteful.

There are even records of the worst “chatbot fails.” Inspirobot generates unlimited quotes and images to inspire and motivate users. But the random mix of words (i.e. “The reptilian agenda doesn’t change monarchy”) make for incoherent and hilarious images instead.

UX Bear by UXDesigncc was developed to chat about design and, while it fulfilled its functions for the most part, it also went off-topic in the most unusual ways. It once asked a customer what their grandmother thought about designs (which became even more awkward when the customer replied that their grandmother was dead). Because it was so hard to use and it made up nonsense, the bot never took off.

Ultimately, chatbots and other similar AI-powered bots can’t replace human content creators and marketers. It’s doubtful it will ever fully emulate our potential for creativity, emotion, and human intelligence and understanding that can directly address inquiries or requests. 

While chatbots often work successfully for corporations, a small business should look for more “human” alternatives to effectively engage customers and improve the services and experiences they provide.

Why high-quality content provides a better customer experience

In a study by Think Relay and reported by CMSWire, only 3.6% of mid-market companies make use of chatbots because they feel that their customers may feel reluctant to engage with them. These businesses also assessed that they have enough manpower and resources to handle the current volume of work and customer demands they need to address. 

Having a creative and productive team allows you to create content that enhances customer experience. Businesses that offer comprehensive guides or educational eBooks encourage customers to share your posts and subscribe to your official accounts.

Choosing the right platforms for your content will also make it more accessible and easier to engage with. By sharing branding materials through engaging social media posts, you also make your information more shareable and relevant to customers. 

Unlike a chatbot (which can come off as cold and impersonal), storytelling is an effective way to humanise your brand and create better content. It gives your brand a strong personality and makes it more relatable to your target audience. 

By using storytelling in your content, you can also create an emotive and inspiring piece that sparks a connection with your potential customers. It invites them to engage with your content, either by talking about their experience with the piece on their own platforms or by purchasing from your business. 

By establishing a strategy that addresses every question and concern your audience may have with targeted pieces of content, you can give them the customer experience they deserve without the need of a chatbot.

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