Retailers are turning to chatbots to help create emotional engagement between their brands and their consumers.

As computer programs that allow virtual conversations with users, chatbots are amazingly versatile. They can be used to order a pizza or return an unwanted purchase and they are being “humanized” with artificial intelligence (AI) to enable ever more emotional connections with retail brands.

Read to Me, Chatbot

Google, for example, is teaching its AI engine to “read” romantic novels in order to give its chatbots a better understanding of the nuances of customer language. Meanwhile, Facebook has opened up its Messenger app to developers with the goal of creating chatbots that will enable companies to speak directly to their customers. 

(Ed. note: Last night, Microsoft — which just announced plans to drop $26.2 billion to buy LinkedIn — confirmed it acquired three-year-old messaging-app maker Wand Labs. In a statement, Microsoft said that the acquisition accelerates its vision and strategy for Conversation-as-a-Platform, which CEO Satya Nadella introduced at the company's Build 2016 conference in March.

Conversational intelligence brings together the power of human language with advanced machine intelligence —connecting people to knowledge, information, services and other people in more relevant and natural ways.)

Early forms of AI are already evident on a daily basis.

Automated machines walk us through customer service calls with cable companies. Siri acts as our own Apple-based personal assistant. As chatbot technology extends these applications even further, retailers hope to take personalized shopping to new heights by providing customers with new ways of digitally interacting with their brands.

One-Apping the Competition

The big benefit for retailers — especially those offering multiple brands — is that consumers can interact with their favorite brands without the need for multiple apps. 

That would position Facebook, for example, as an intermediary so users would need only one app, effectively creating a single storefront. Brick and mortar stores could reap the same benefit by having customers shop directly from the Messenger app.

Chatbots Will Transform Retailing

Here are four practical ways retailers can employ chatbots to transform interactions:

  1. Customer service: Did you purchase a shirt in the wrong size? A bot could give next-level assistance by altering your order or requesting a different size of an item, in addition to providing shipping updates.
  2. Personalized recommendations: By having access to customers’ social media profiles and calendars, chatbots can use data to offer tailored product recommendations based on customers’ interests and preferences, as well as upcoming events. This level of relevant detail in each customer interaction could result in increased customer loyalty.
  3. Technical help: Having instant, customized troubleshooting and support makes customers feel truly valued. Rather than having to make a phone call, in the digital paradigm users could consult bots about issues with a device or appliance. The bot could connect them to the manufacturer, possibly handing the call off to another chatbot to look into the issue.
  4. Comparing different products: Online shoppers seeking recommendations could consult a chatbot to walk them through options, choices and considerations, just as one might speak to a salesperson in a store.

What Could Possibly Go Wrong?

While the benefits of chatbot technology are abundant, its adoption won’t come without challenges for retailers. Everything from concerns over potential privacy implications to a retailer’s preparedness to connect chatbots to customers could get in the way.

Let’s examine four possible hurdles retailers face from chatbot integration:

  1. Connectivity: To be fully functional, retailers need fast, robust connectivity that integrates these digital agents into existing infrastructure. What’s more, a good chatbot needs access to relevant information quickly in order to do its best for the customer. A chatbot’s effectiveness will be limited by the retailer’s ability to give it a 360-degree view of the customer. Chatbots need to have instant access to order history, open orders and any other interactions via all channels, including email, website and in-store. Customer service often suffers when a call center agent cannot see a customer’s order history and chatbots have the same built-in limitations.
  2. Privacy: To the extent that people worry about giving up their personal information, users may view chatbots as a potential liability with respect to privacy. However, if the growing adoption of mobile payments offers any indication, consumers will quickly adapt to using chatbots.
  3. Security: Retailers need to combat the notion that chatbots can become potential agents of consumer fraud. Although consumers crave instantaneous and customized experiences, they will be wary of new technology if they don’t feel it is secure. If chatbot technology appears vulnerable to phishing aimed at extracting credit card details or other sensitive data, it may slow the adoption process.
  4. Economic Impact: Just as call center functions were outsourced overseas over a decade ago, there is a similar concern today about job losses brought about by chatbots. With approximately three million call center workers in the United States alone, this is a valid concern that retailers may have to work hard to overcome.

Title image by Maria Molinaro