Why Every Online Business Needs an AI Chatbot in 2024
Have you ever wondered how your favorite brands keep up with the chaotic nature of customer inquiries, especially during peak seasons? The secret might not be a massive customer support team but a silent helper working behind the scenes.
AI Chatbots, one such tool, has proven to be a game-changer for online businesses as they deftly carry out and automate diverse parts of business operations. Remember that time you visited a site, and a box popped up with someone offering to help? That was likely a bot.
There’s a reason for that.
Modern-day businesses have come to understand that their customers want quick and effective communication when it comes to online interactions. The facts and stats show that 33% of consumers find AI chatbots ‘very effective’ at resolving their issues.
But it doesn’t end there. There are a ton of other reasons you’ll find an AI chatbot necessary for your business growth in 2024.
When you’re done reading this piece, you’ll have come to discover why your online business cannot achieve its fullest potential without an AI chatbot. You’ll also learn about the benefits attached to using one and the best AI chatbot tools to leverage for growth.
Settle in; it’s about to be a long but knowledge-packed read.
Social Inbox Now
Manage all social media customer support inquiries in a unified inbox.
What Is an AI Chatbot?
Artificial Intelligence (AI) seems to be the latest technological trend on a global scale, with its impact cutting across multiple sectors, including chatbot technology. Chatbots are computer programs that simulate human communication through text or voice messaging.
The earliest types of chatbots were limited to answering FAQs and simple questions with pre-written answers. However, combining AI and chatbots has created an even more advanced tool. One that integrates Natural Language Processing and Machine Learning with Artificial Intelligence to deliver a futuristic messaging “sidekick” that serves multiple functionalities.
If you’re chatting with an AI chatbot, you likely can’t tell that you are interacting with a bot. They have the ability to respond to queries naturally, sounding just like a human would. Unlike basic chatbots, AI chatbots are designed to learn from their interactions with customers and improve their responses.
AI chatbots understand user intent and can deliver more accurate answers than button-based or rule-based ones. Modern AI chatbots also have other features that make them highly suitable for various applications.
Market Dynamics: Why Now Is the Time for AI Chatbots
As an online business owner, you must handle customer interaction effectively, which is key to customer acquisition and retention. To achieve this, many online retailers employ AI-powered chatbots as a major instrument in moving potential customers down the sales funnel seamlessly.
Keep reading to see more about why AI chatbots have become necessary for online businesses in 2024 (based on market dynamics.)
Rapid E-Commerce Growth Post-Pandemic
Remember early 2020 when outdoor activities came to a halt due to the pandemic? It caused a major shift in business as we know it today.
Many retailers had to move their business operations online while existing online businesses expanded their online reach.
With people forced to stay indoors, the effects of the lockdown on consumer behavior lasted till after the pandemic. Many consumers opted for online shopping during and after the pandemic, leading to progressive e-commerce growth.
To handle the increase in their customer base, a large number of e-commerce business owners have had to employ certain tools like AI chatbots.
AI chatbots, especially, have proven to be efficient tools for online stores due to their functions. One of these is providing efficient customer support around the clock. AI chatbots are capable of handling customer service faster than human agents, even with increased traffic.
They can tackle various levels of inquiries and issues effectively, whether multiple series of tasks or one-time questions.
Consumer Expectations for Instant and Personalized Service
One of consumers’ biggest gripes with online businesses is slow customer service. Nobody likes to be held up on the phone for hours. A report shows that 20% of Gen Z consumers are more likely to abandon a brand or service because of slow online customer service or live chat.
Due to the recent massive shift to online retailing, customers expect prompt and efficient customer support around the clock. Human customer support agents might find it difficult to handle various customer requests and complaints when it comes to online shopping.
Slow customer service leads to a noticeable decrease in customer satisfaction.
With AI chatbots, you can provide instant customer service. Since AI chatbots are more advanced than traditional chatbots, they are more efficient at handling various customer queries. See how Domino’s Facebook Messenger bot offers instant customer service.
A survey shows that 82% of customers would recommend a company based solely on excellent customer service. Personalization is also another factor that makes AI chatbots a vital tool for online businesses. Customers expect a personalized service when they visit your online store. They expect personalized recommendations, interactions, and a personalized shopping experience as a whole.
AI chatbots can enhance personalization through customer profiling, Natural Language Processing, contextual conversations, and dynamic content generation based on consumer interactions.
Technological Advancements in AI and Machine Learning
The earliest chatbots were the basic types that could handle a few queries. Unlike the modern types that could recognize everyday language, the simple chatbots could only process specific keywords.
Button-based chatbots displayed specific options for the user to choose from. The technological advancements in Artificial Intelligence and Machine Learning have led to the development of advanced chatbots.
AI chatbots are now equipped with advanced Natural Language Processing algorithms. This means they can simulate human-like conversations. You must have noticed how interacting with AI chatbots in some online stores feels like interacting with a human customer support agent.
See how H&M’s chatbot offers human-like suggestions:
Many AI chatbots also offer multilingual support, a difficult feat for a single human customer support agent to achieve.
With machine learning, AI chatbots can get better over time. They can self-adapt and improve their output independently as they gain more data and user feedback. It then becomes easy to conclude that AI chatbots are necessary for online businesses.
Increasing Competition in the E-Commerce Space
The rapid growth of the e-commerce industry during the pandemic and post-pandemic has resulted in tough competition between e-commerce stores. Online businesses keep looking for new strategies to gain new customers and retain existing customers.
Many e-commerce stores provide similar products and services, making it easy for disgruntled customers to easily look for alternative stores with better offers. For your e-commerce business to survive, you need to adopt tools and strategies to help you beat the competition in your industry.
By using AI chatbots, you can personalize your consumers’ online shopping experience. From handling customer inquiries to providing speedy support, AI agents can save the day. They can also make product recommendations, upsell and cross-sell to customers, and gather relevant data.
In e-commerce stores, they easily handle orders and provide real-time updates on orders and delivery information. They can also handle customer onboarding, account management, and recommendations.
Since AI chatbots can handle these processes efficiently, they help e-commerce stores survive the stiff competition in the e-commerce industry.
The Cost-Effectiveness of AI Over Traditional Support
Relying solely on human customer support agents in the current e-commerce industry is difficult and expensive. Customers expect instant and round-the-clock support.
Also, there is the need to provide multilanguage support while also handling different customer queries effectively. AI technology can fill this gap. With AI chatbots, you have a virtual agent that can handle multiple queries and feedback efficiently while also being available 24/7.
This is more cost-effective than having to hire multiple human customer support agents. Using AI chatbots, your customer agents will have more free time to take on more complex inquiries that chatbots can’t handle.
A study by Salesforce shows 64% of agents with AI chatbots are able to spend most of their time solving complex problems, compared to 50% of agents without AI chatbots. Also, online store owners can automate repetitive tasks, which also helps to reduce operational costs.
Strategic Advantages of AI Chatbots in E-Commerce
Nowadays, consumers prefer the convenience of buying whatever they need from the comfort of their mobile devices. Despite this, customers expect to receive a personalized and even better service than they receive in physical stores.
On the other hand, online business owners also need cost-effective tools to enhance their interactions with customers, provide support, offer product recommendations, and more.
Let’s see how AI chatbots provide the much-needed balance for customers and e-commerce stores.
Beyond 24/7 Support: AI’s Role in Enhancing Customer Interactions
One of the most popular uses of chatbots is providing 24/7 customer support. However, they offer more than that. Chatbots play a key role in improving how online businesses interact with their customers. Incorporating AI chatbots in your customer service strategy can revolutionize your customer engagement.
Through AI chatbots, you can maintain consistency and unity in your customer support strategy. AI chatbots can handle repetitive processes and suitable queries, while human agents will step in to handle complex queries without needing to restart the conversation.
Rather than the robotic interactions the traditional chatbots were capable of creating, AI-powered chatbots can simulate real-life interactions, keeping customers engaged and interested.
AI bots perform other key functions besides handling customer inquiries and complaints. They can guide the customer through the purchase process and offer recommendations.
Driving Conversions: How AI Chatbots Influence Buyer Decisions
AI chatbots offer another important advantage — driving conversions. They effectively perform various roles that are crucial for visitors to make a purchase decision.
First, AI-powered bots offer instant customer support. For example, visitors to your e-commerce store can easily know more about an order or your shipping policy without having to scour your website for information.
AI bots can also offer personalized recommendations, encouraging visitors to explore your product selection. AI chatbots also assist potential buyers through the shopping journey, helping visitors complete a purchase easily.
Another area where AI-powered chatbots help in driving conversions is abandoned cart recovery. AI chatbots can automatically detect abandoned shopping carts and encourage shoppers to complete the process through reminders or discounts.
Importance of Tailored Chatbot Greetings and Responses
One of the expectations of online shoppers is personalized customer service. Tailored greetings and responses fall under personalization; an aspect chatbots handle well. Have you ever struggled to remember what a customer’s name was? Or what they purchased two months ago? AI chatbots don’t do that.
AI chatbots can make your customers feel welcome because they relate to every customer on a personal level (see the image above, for instance.) Also, through machine learning technology, these bots learn from their interactions with customers, including customer feedback, and improve their responses.
This means they can offer more personalized responses the more they interact with customers and learn from the stored data.
AI-Driven Upselling and Cross-Selling
Upselling and cross-selling are two key strategies that can help to increase sales, and AI bots can do both easily. Upselling means persuading a potential customer to purchase a more expensive version of a product they’re interested in. It could also be an upgrade or a premium option for the product they are interested in.
For example, you can offer higher tiers of the same product option or service.
Cross-selling is offering complementary items to what a potential customer is interested in. Let’s say a customer is interested in beachwear; you can recommend sunshades or other beach-related items.
AI bots can do both efficiently. Smart bots can instantly locate complementary products or upgrades based on what customers are interested in and can recommend them instantly.
Best 2 AI Chatbot Examples from E-Commerce Giants
It’s not uncommon for e-commerce giants to employ AI chatbots for their daily operations or customer assistance. Here are two e-commerce giants and how they use AI bots.
1. Ralph by LEGO
Ralph is an AI chatbot used by LEGO. This chatbot operates on Facebook Messenger and guides customers through the company’s entire catalog. Ralph, the LEGO gift bot, is highly conversational and engaging.
Here’s what it looks like in action:
Apart from answering customer queries, Ralph also offers product recommendations and gifting suggestions for online shoppers.
2. Sephora’s Bots
Sephora is a popular beauty brand and one of the first beauty retailers to incorporate AI chatbots into its service. Sephora has two AI bots: Sephora Reservation Assistant and Sephora Virtual Artist.
The Reservation Assistant bot handles appointment bookings, while the virtual artist bot scans images and recommends color matches for make-up products.
Check out both bots:
The Virtual Artist bot also offers makeup tips and quizzes and can redirect visitors back to the Sephora app for purchases.
Staying ahead of the curve in the e-commerce industry has become necessary due to the post-pandemic online customer boost and the increased competition in the e-commerce space. The adoption of AI chatbots has become necessary for online business owners.
From meeting customer expectations to ensuring personalization and maintaining a cost-effective customer support strategy, AI chatbots enhance customer interactions, helping many businesses revolutionize their customer experiences.
Social Inbox Now
Manage all social media customer support inquiries in a unified inbox.