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Can chatbots save businesses more than £80 billion?

(Image credit: Image source: Shutterstock/Montri Nipitvittaya)

It is crucial for ecommerce merchants to offer quick and responsive customer service. However, the costs associated with live, 24/7 service across multiple contact platforms can be a significant burden. For this reason, chatbots are becoming increasingly popular among online merchants. When correctly deployed, chatbots are not only cost-effective, but they’re a simple way to improve customer service and decrease the number of chargebacks that merchants tackle. A potentially significant tool considering online merchants lose more than £80 billion annually to chargebacks and chargeback-related expenses, a problem which is growing by 20 per cent each year.

Chatbots: the future of ecommerce?

Chatbots are intelligent bots that perform communicative tasks to go beyond simply searching queries in Google, answering user questions and requests with human-like retorts, bridging the gap between man and machine. Hence merchants are utilising these bots to streamline business-consumer interactions. In a world driven by digital commerce, a chatbot will increasingly be the first interaction a customer has with a business, allowing the user to relay their concerns while the chatbot collates important points. These interactions are increasingly common on social media and direct messaging apps like Facebook Messenger, Kik and WhatsApp.

This system benefits the customer by providing a fast, efficient service channel that directs them where they need to be with as few obstacles as possible. It also benefits the merchant, as chatbots are cheaper than a constantly live human service and require no training, saving massive amounts of time and resources.

According to Forbes, AI apps will account for 85 per cent of all customer interactions by 2020, while TechEmergence claim that chatbots will be the top consumer application of AI during this period. Since Kik users already exchanged upwards of 350 million messages with bots as of early 2017, figures would suggest that chatbots are already being favoured by consumers.

Customer benefits

Modern day shoppers are not willing to wait days for a response to customer service enquiries. Even if a resolution doesn’t come immediately, people want their concerns to be acknowledged. A message as simple as a greeting from a chatbot, along with an estimate of when the customer can expect a response, is enough to reassure shoppers and make them feel respected. This step, simple as it may be, is important to today’s consumers. According to a survey by Qualtrics, four in ten online shoppers believe their feedback is overlooked or ignored. If a customer’s comments aren’t responded to, retailers may either amplify or instigate a negative experience and risk losing customer loyalty.

To improve customer experience, more and more businesses are offering tutorials and other content to supplement products, but even with supporting content, consumers may still have additional questions or need clarification. In these situations, chatbots are ideal. They allow customers to ask questions and, as it engages with the business’s content, intelligently selects appropriate answers in real time.

Merchant benefits

Chatbots operate by using algorithms. So, the closer a question comes to resembling a basic database query, the better equipped the chatbot will be in responding. Not every problem requires deep human investigation. Simple tasks like helping customers retrieve order information, or answering basic policy and procedure questions are ideal for chatbots.

The superior aspect of chatbots is their machine learning capabilities. Every time a user interacts with a chatbot, the bot learns more about that specific user, further streamlining the process. This is particularly useful for merchants, as the more often individuals engage, the more complete the data profile of their customer will be.

Defeating chargebacks 

The immediate benefits of chatbots are clear. The bots are faster, are more accessible for customers, and superior at mining customer data. The long-term benefits are equally important, because they preserve and enhance merchants’ profitability.

By streamlining customer service practices, merchants can significantly decrease chargebacks, because it nurtures benevolence between the customer and the merchant. It reinforces a customer’s loyalty and validates their decision to browse your store online over the thousands of others. Finally, and arguably most importantly, it discourages a customer from seeking reimbursement from his/her bank.

It’s important to note that this is only true when chatbots are properly deployed. Should the bots not be expertly managed, they may have the opposite effect, causing greater customer frustration and more chargebacks.

Potential downsides to chatbots

Overreliance on any single technology or solution is a problem, though, and chatbots are no exception. Although there are huge advancements being made in AI technology, a chatbot that can be trusted with full autonomy is still years away.

While the latest chatbots work using machine learning to improve with additional data, there is still a point of depleting returns. Currently, the technology tends to max-out at 85 per cent efficiency. As well as this, if a business uses a live customer service which seems too remote, it can negatively impact public opinion of that business.

The point of automation is to remove friction from customer interactions, and to simplify and streamline the overall process. Chatbots are only useful if they achieve these ends; otherwise, they are counter-productive.

Machine learning versus human oversight

While chatbots may be the future of commerce, it’s still important to provide 24/7 live service for those who want access to human-based customer service at every stage of their interaction. Merchants need to keep in mind that ecommerce does not have business hours. Online shopping can take place at any time around the globe, and therefore customer service needs to be available at any time as well. One way to achieve this is through “overflow” call centres that handle calls during peak times and outside the traditional business hours.

As well as being on hand 24/7, customer service experts believe that a three-ring rule is essential in dealing with consumers. This means that the phone must be answered in no more than three rings. The longer a customer waits for service, the more likely that individual is to hang-up and request a chargeback. Answering calls within the first three rings reduces the likelihood that the customer will give up on your prescribed channels.

While it may seem obvious, it’s easy to forget to update all phone numbers to ensure that the line a customer tries to get through to is live. If customers call the number listed on a website and find it’s dead, they’re unlikely to try any other customer service channel. Make all phone numbers clearly visible on each page of your site, and ensure that the number is correct.

Effectively managing chatbots

Chatbots are important to create seamless customer interactions, decrease chargebacks and learn more about customers. However, managing chatbots without attention to customer service “best practice” will cause more problems than chatbots resolve.

Monica Eaton-Cardone, co-founder, The Chargeback Company
Image source: Shutterstock/Montri Nipitvittaya

Monica Eaton-Cardone
Monica Eaton-Cardone is a leading businesswoman and co-founder of The Chargeback Company (Chargebacks911, Global Risk Technologies), Europe’s first chargeback management and dispute resolution company. She has vast expertise in technology, e-commerce, risk relativity and payments processing.