Suchetana Mukhopadhyay
Oct 22, 2019

The evolution of chatbots in marketing

Once a handy tool to automate customer service, they're now increasingly being tasked to do data collection and lead generation.

The evolution of chatbots in marketing

Remember Clippy, that mournful-eyed animated paper clip that would pop up at the corner of your computer every time you opened a Microsoft Office programme through the 1990s? Though Microsoft retired it for good in 2007 after much criticism that the Office Assistant was causing more annoyance than assistance, it is in fact one of the earliest chatbots etched in public memory, one with far more universal reach than its predecessors, Eliza (1966) and ALICE (1995), prototype chatbots whose uses were mainly limited to research purposes.

Since then, chatbots have come a long, long way. While, in essence, a chatbot is quite simply a computer program that automates tasks by conversing with a user through an interface, the development of artificial intelligence (AI) and natural language processing (NLP) has seen chatbot technology evolve by leaps and bounds, helping to understand complex requests, personalize responses and improve interactions.

Clippy, the annoying Microsoft Word assistant


Unsurprisingly, businesses have been quick to realise the potential of chatbots. According to technology company Oracle’s 2016 report titled Can Virtual Experiences Replace Reality, 80% of businesses said they would be using chatbots by 2020. Reinstating this, Avi Ben Ezra, CTO and co-founder of cloud-based chatbot platform, SnatchBot, said in a recent interview: “Whereas in 2017, we were struggling to educate businesses about the value of chatbots, now it’s almost the other way around. We have to make sure that everyone wanting a chatbot is getting the most out of the software, that it’s not just a gimmick but really delivers useful work.” So, with businesses keener than ever to board the bot bandwagon, Forrester Research predicts that, used properly, chatbots could save businesses US$8 billion per year by 2022, by streamlining customer service and bot-based commerce.

From chatbots to marketing messaging bots

This leads us to the rather burning question: How do brands use chatbots properly? While from a business’s point of view, even at its most rudimentary form, a chatbot can be a handy enough tool for reducing personnel costs and customer wait times, to really tap into a chatbot’s true potential, it’s important to understand what consumers are looking for—better engagement, instant gratification, relevant service, 24/7 availability and ability to self-service. And that’s where AI comes in. With improving NLP, chatbots are now equipped to do much more than fulfil simple command-based functions. In other words, brands can now use chatbots not only as virtual helpdesks but also as marketing tools.

This is already happening in several ways. While the previous generation of chatbots were relegated to the corner of company websites, now they are everywhere—on WhatsApp, Facebook Messenger and other messaging platforms, acting as an omni-channel communications interface for a whole suite of devices. In fact, one of the first markets where bots were integrated into a messaging platform was in China, way back in 2013, when WeChat allowed businesses to create bots to enhance customer service. With WeChat installed on almost every phone in China and Chinese consumers already receptive to virtual communication, it led to a mushrooming of utility bots in the country, so much so that even Western brands like Ikea and Microsoft started engaging bots in the Chinese and Asian markets much before they did so in the West.

There were, of course, many advantages of using chatbots on messaging platforms. Not only can bots respond to customers’ concerns, they could proactively jumpstart a sales cycle. As lead quality can degrade over time, chatbots can become effective lead generators, thanks mainly to their fast response times.

By being available on messaging platforms, chatbots are the perfect antidote to app and email fatigue. While customers have shown apathy towards downloading space-consuming apps or opening promotional mails from brands, the instantly engaging nature of a chat conversation causes more consumers to be open to this form of interaction with a brand. Says entrepreneur and marketing SEO specialist Neil Patel mentions in his blog, “People are responding to Facebook Messenger messages in record-high numbers… you can get 88% open rates on your Facebook Messenger bot campaigns.”

Chatbot campaigns

Owing to this high open rate (which Patel says translates to 56% clickthrough rates), brands are coming up with innovative ways in which to use a bot—from growing subscriber lists and collecting consumer data for market research to solidifying brand loyalty. So a few years ago, instead of a tried-and-tested advertisement, Absolut Vodka chose a chatbot for a promotional campaign, in which users responding to the bot could just go to a bar to claim a free drink of their choice and the bot would even book a cab for the ride back home, a rather simple yet effective campaign to spread the ‘Don’t drink and drive’ message.

 

Meanwhile, Emirates Vacations, the tour operations unit within Emirates airlines, integrated a chatbot into its web banner display ad, an interactive chat window that prompted the user “to explore the world without leaving the page”. After the 30-day campaign ended in December 2018, the company saw an 87% lift in engagement compared to its traditional click-through ads. Similarly, beauty retailer Sephora uses not one but three chatbots—two FB Messenger bots and one Kik bot—to engage with users by offering tips and tutorials for a plethora of make-up and skincare products. In a LinkedIn case study, Mary Beth Laughton, senior VP of digital marketing at Sephora, says, “We’re finding that once a Kik user starts a conversation with our Sephora bot, they’re engaging deeply, averaging 10 messages with our Sephora bot per day.”

Not just the big companies, but smaller-scale local brands, too, have found chatbots to be exceptionally well suited for their purposes. Take Lohaco, an e-commerce site in Japan for example. Using messaging platform Line, it launched a customer service bot named Manami-san to answer customer queries, with the AI-driven bot soon garnering a customer satisfaction rating of 90%.
No doubt keen to tap into the rising trend, some messaging services themselves are also launching their own bots.


One such success story is Line Finance, a chatbot that Line launched in Thailand, in collaboration with a major gold shop, to buy gold at discounted rates. With gold being a popular alternative source of saving money in the country, by lowering the bar for buying gold, Line Thailand and the partner gold shop witnessed a substantial growth in the number of transactions.

So, companies looking to enhance consumers’ experience through chatbots have a surfeit of innovative ways to engage their target group—be it through strategically placed interactive tools, through building a chatbot with a unique identity, through alternative campaigns via chatbots or through using chatbots as a proactive tool to engage their B2C channels.

Of course, being tied to technology advancements, chatbots are still limited by certain factors like language barriers in multicultural environments, open-ended questions, etc. But with machine learning evolving like never before, chatbots are becoming much faster, smarter, more intuitive and intelligent by the day. The more accurate and comprehensive the chatbot experience can be made, the more value it will add, not only to the company, but also to the consumer, ultimately creating a seamless overall experience that benefits one and all.

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