Will 2017 be the year of the chatbot?

Discussion
Jan 10, 2017
Glenn Taylor

Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.

If 2016 was the year chatbots entered the retail scene, 2017 will be the year brands will start to realize real business results from the technology, through increased sales, conversion rates or customer loyalty.

While the overall rate of adoption among retailers is still nascent, Nordstrom, 1-800-Flowers, American Eagle Outfitters and Sephora were among those implementing such intelligent assistance tools on messaging platforms such as Facebook Messenger and Kik. Leveraging consumer data with artificial intelligence enabled the retailers to perform a wide range of tasks, including:

  • Launching holiday gift guides;
  • Providing product recommendations;
  • Serving as customer concierges;
  • Assisting the in-store shopping experience;
  • Processing orders; and
  • Sending shipping information updates.

Yet many industry experts believe chatbots could become even more closely integrated into the shopper journey both online and in-store, particularly as consumers become more accustomed to the technology’s possibilities.

“Imagine that you had a chatbot when you walk into a store like Home Depot,” said Kurt Heinemann, CMO of Reflektion. “Your ‘virtual assistant’ via the chatbot could answer: Where are the door hinges? Where are the door knobs? Or imagine that you’ll be able to go into a department store and just type into your phone, ‘women’s blouses in black’ and be mapped automatically to items based on your previous preferences and locally available inventory.”

When deploying chatbots, retailers should consider the following three points:

  • Chatbot experiences must be consistent across channels. Since just 22 percent of U.S. consumers are familiar with chatbots, retailers must streamline the technology so new users can easily engage through their channel of choice.
  • Customer data builds context. Analyzing prior shopper interactions, length of log-in times and time on specific pages can reveal when shoppers are most interested in a chat.
  • Human reps remain vital. Retailers must provide the option to switch to a live representative during a customer service call, especially as the conversation becomes more complex.

DISCUSSION QUESTIONS: Will chatbots become a mainstream tool for retailers in 2017? What are the pros and cons of the technology? What advice would you have for retailers looking to use chatbots?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Give it another 10 years and we'll likely see a significant shift in this direction. "
"Chatbots have potential and I’m curious to see applications evolve, provided they don’t fall prey to our industry’s spamming tendencies."
"We may have other adjacent technologies that morph the chatbot offering even further. For example, mainstreaming AI chip implants or contact lenses..."

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20 Comments on "Will 2017 be the year of the chatbot?"


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Mark Ryski
BrainTrust

Chatbots represent evolution, not revolution. While the technology is promising and the applications many, efficacy always comes down to execution/deployment. Many retailers today are still working on getting their omnichannel house in order, and so even basics like having a robust mobile site or a smooth BOPIS process are still works-in-progress. Retailers need to be mindful of these new and exciting technologies, but also be clear about what their critical few technological priorities are and focus on executing these well before getting too carried away with the latest, greatest technologies.

Ben Zifkin
Guest
2 years 11 months ago

The popularity of chatbots will rise dramatically this year but they likely won’t find their place in commerce for a while. As with most newer technologies there will be early adopters, but almost all technologies need some time to find their home — what they are good at and what resonates with users. Chatbots have several advantages in the retail world, though. First, a new generation of consumers uses chat as their primary or secondary interface. Second, this is an industry that has small, simple, basic interactions with its consumers which fits in well with the current capabilities of bots. Third, there is pressure on the industry to innovate and also to reduce costs. 2017 won’t be the breakout year for bots but it will be critical in helping them gain popularity in the mainstream.

Ralph Jacobson
BrainTrust

I have firsthand experience with these technologies and I see them as being points of differentiation. I also see them as ways to highlight and move more volume across the product portfolio. For example, 1-800-Flowers.com has done a great job with their GWYN application to give great assistance to those who need to make a gift purchase and have no idea what to get for the recipient. The application can also highlight items that neither human call center people nor the shopper themselves may find based upon their inputs into the system, therefore driving revenue from slower selling items. I think this is a great thing and it has huge potential for the future.

Peter Fader
BrainTrust

Nope. Maybe one day, but not yet. The technology is still clunky and today’s grown-ups are pretty set in their ways about their desired shopping experience.

Give it another 10 years and we’ll likely see a significant shift in this direction. That’s fine: a change like this can’t happen overnight.

Shep Hyken
BrainTrust
Chatbots are great when they work. It takes time, testing and more testing to get a system that answers the questions that the customers have. When that happens, customers enjoy the experience. The best chatbots do more than just retrieve information. They understand. That’s where AI (artificial intelligence) kicks in. AI will help make the chatbot experience even better. The goal is for the customer to not know if they are communicating with a machine or a human. A good chatbot system will not only provide the option to switch to a human, but will also seamlessly do so without being asked. The chatbot should be able to recognize customer frustration and automatically let a human step in. Finally, while most people view the chatbot to be used for customer support issues, I love the idea of the in-store assistant. This shouldn’t replace someone on the floor, but should give a customer the choice as it could positively add to the experience and make it easier on the customer. Think of the airlines. You have… Read more »
Susan O'Neal
BrainTrust
2 years 11 months ago

Any example of marketing technology moving toward more humanizing interactions is encouraging (rather than moving toward finding more ways to find and interrupt consumers). Chatbots have potential and I’m curious to see applications evolve, provided they don’t fall prey to our industry’s spamming tendencies.

Lee Kent
BrainTrust

The cool things about chatbots is that they personalize the experience. Giving you “someone” to talk to who actually can help you. The risk is when they take too long to get to your point or are too much on script.

I would recommend that retailers find a way to make their chatbots reflect their brand so consumers won’t be saying, bummer another bot. It’s all about serving the customer and the customer’s experience!

For my 2 cents.

Jasmine Glasheen
BrainTrust
Jasmine Glasheen
Principal Writer & Content Strategist, Jasmine Glasheen & Associates
2 years 11 months ago

Chatbots guiding in-store customers via smartphone are the logical next step in omnichannel evolution. They will reduce time spent in-store and eliminate customer qualms about shopping a brick-and-mortar store (such as being unsure of what’s in stock, or the store being difficult to navigate). Furthermore, accessing the chatbot via smartphone makes the service self-propelled, thus not putting less-than-tech-savvy customers on the spot.

Kim Garretson
Guest
2 years 11 months ago

I don’t think 2017 will be the breakout year. Here are a couple recent critical reviews:

Motherboard reviewed chatbot-enabled messaging app, Kik: “Chatbots are going to end up missing the part where they try to be my friend. Instead, they are just cutting to the chase and trying to sell me something, or push something my way for their own good.”

And Bloomberg on chatbots: “Although the majority of America’s millennials use Facebook, their approach to online shopping is systemic and drawn out, not necessarily in line with the immediate call-to-action button. ‘The average millennial might look at as many as 10 reviews to make a purchase,’ said Nora Ganim Barnes of the Center for Marketing Research. ‘Is Messenger going to work to do that? I don’t think so. I think it’s missing too many pieces that people have come to rely on and enjoy.’”

Max Goldberg
Guest

More retailers may employ them, but chatbots will not go mainstream in 2017. Are consumers really going to download a chatbot for every retailer when it’s frequently easier to ask a salesperson? Will chatbots have the knowledge that consumer are looking for? Retailers should initially keep chatbots simple: enable them to lead consumers to desired items, provide reviews, display pricing and answer basic product questions. As consumers and retailers become more familiar with bots they can be programmed to do more complex tasks, like order out-of-stock products for home delivery. We are still in the nascent era of bots.

Lyle Bunn (Ph.D. Hon)
Guest

A chatbot is a composite of voice interface and database access. Voice is ready for prime time (Alexa, Siri, etc.) as an interface. The leverage of this, and the critical success factor in a chatbot being a customer experience tool versus a promotional device, lies in the decision tree to access planogram, inventory and product information. Dynamic signage and shelf-level display are interim steps toward making chatbots worthy of the investment.

Chris Petersen, PhD.
BrainTrust

A major challenge with most of today’s chatbots is there is no “chat” which is interactive. Most are canned messages in response to a request. For those looking for quick information or directions that might be sufficient at certain points in time, or online, but not for mainstream usage.

Retailers have been struggling to get customers back to stores. The most important differentiator stores have is creating a dynamic experience through staff who can provide all types of interactive assistance.

The AI for chatbots will need to get exponentially better before they become mainstream in retail. One thing is for sure, consumers now control their own experience and they will decide when and if chatbots add value.

Jeff Sward
BrainTrust

Sounds to me like a classic bell curve scenario. We are only in the “innovator” or “early adopter” stage. Not even close to “early majority.” There is a long way to go on this adoption curve. It makes perfect sense in terms of enhancing experiential retailing, but there are lots speed bumps and pot holes to navigate. It’s going to happen, and personally/selfishly I hope that for Home Depot it happens sooner than later. It feels like it could cut my shopping time in half.

Patricia Vekich Waldron
Staff
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
2 years 11 months ago

Chatbots are another way to insert engagement into the messaging platforms (Facebook, texting, etc.) that many of us use for day-to-day communications. I expect apps to morph into these platforms, and chatbots are the first generation technology to do so.

Liz Crawford
BrainTrust

Yes, chatbots will be a mainstream tool — the question is timing. But if it truly takes the 10 years that Professor Fader suggests, we may have other adjacent technologies that morph the chatbot offering even further. For example, mainstreaming AI chip implants or contact lenses with augmented reality. (These things already exist, but are not mainstream). Hey — don’t laugh! Who know we’d be mesmerized by little screens 10 years ago?

Elisabeth Longo
Guest
2 years 11 months ago

This is extremely innovative; it will be interesting to see how retailers adapt to this type of technology.

Sterling Hawkins
BrainTrust

Technology for the sake of technology is never a good idea. The real question here is can AI systems (chatbots, virtual assistants, etc.) drive, support or augment commerce. And I think most of us would agree that they can and they will. Chatbots themselves can be very valuable as long as they’re a component of a larger strategy.

William Hogben
BrainTrust

The greatest value of Chatbots is in customer service — to provide satisfaction before a complaint escalates to a public forum. They might have a marginal effect on sales, or reduce the human cost of concierge type services a little bit — but these are both secondary concerns.

Martin Mehalchin
BrainTrust

Chatbots are taking off rapidly in the customer service function and the business case for them in contact centers is very compelling. That’s where I expect the focus to be in 2017. Rapid adoption in service scenarios will generate the data to help train the AI behind the bot technologies, so we will see rapid improvements there. 2018 may then be the year that we see chatbots spread from service function to broad adoption by retailers seeking to drive engagement and sales.

Vahe Katros
Guest
Vahe Katros
2 years 11 months ago
A former Retail CEO and later a venture capitalist had this annoying question whenever I brought him new technology: “Is this a nice to have, or a need to have?” If I applied that question and thinking to the examples in the story I might have said: “Well for 1-800-flowers, a company that might have gained initial traction by securing a great “800” number, and now sees a future where phone calls are replaced by chat and then shortly after by voice (Alexa was a hit at the CES show and their third-party ecosystem is on a roll) I can see this as a need to have. Especially given the characteristics of most of their transactions. E.g.: Before Call Center: “1-800-Flowers” how can I help? Me: etc etc. After Me: “Alexa, send flowers to my sisters, something nice, around $50.” Alexa: “I have two Addresses for…. Me: “Winchester” Alexa: “What would you like me to write?” Me: “You are the best sister!” You get the drill; that’s a need to have. Regarding the other early… Read more »
wpDiscuz
Braintrust
"Give it another 10 years and we'll likely see a significant shift in this direction. "
"Chatbots have potential and I’m curious to see applications evolve, provided they don’t fall prey to our industry’s spamming tendencies."
"We may have other adjacent technologies that morph the chatbot offering even further. For example, mainstreaming AI chip implants or contact lenses..."

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