The Business Case for Chatbots

When making a business case in favour of a commercial investment, it’s important to carefully consider your argument and cover all the bases. There are likely to be some people in your organisation who have doubts about the value of your proposed investment and who are also prepared to question it. Consequently, you need to be ready.

Here, we show how you can make a systematic argument for the use of Chatbots in a customer service setting. We’ll assist in constructing a comprehensive business case that helps you provide evidence of their efficacy and ability to improve service, while also reducing costs.

  1. People want Chat – Ensuring access to desirable technology

When interacting with customers, modern organisations can choose between a diverse range of communication channels. Selecting the right channels to focus on is key to a successful customer service strategy. So, to build a coherent business case, we’ll need to establish that Chatbots are an essential channel and suited to the needs of both the customer and the organisation.

Fortunately, data is on our side.

The Business Case for Chatbots

Around the planet, approximately 2.5 billion people have a messaging app installed on their mobile device. This is anticipated to rise to 3 billion by 2022 (Statista). Facebook Messenger – currently the most popular and widely used bot platform – boasts 1.3 billion active monthly users and 300,000 active bots. A remarkable 20 billion messages are sent between individual users and businesses each month (Social Media Today).

Elsewhere, Whatsapp – another platform on which Chatbots are becoming increasingly popular – started the year by announcing it had grown its user base by 20% (Messenger People).

These statistics not only show significant growth in uptake for messaging platforms but also greater confidence in chat-based communication in general. While Gartner’s 2017 prediction that, by this year, the average person would be having more conversations with bots than their spouse (Gartner) may not have been bang on the money, the overall trend is certainly in that direction.

Customer surveys back this up, too. 90% of those customers asked said that they’d rather receive a text-based message from a business than a phone call (Business Trends). This trend is particularly strong amongst younger generations. For instance, between 2008 and 2010, the average number of monthly voice minutes used by Millenials fell from 1,200 to 900. During the same period, the number of text-based messages sent more than doubled (Open Market).

What we’re seeing is a cultural and generational shift away from voice-based technologies as the dominant mode of communication, toward a new reality in which chat-based communication tools dominate.

  1. The importance of data in modern society

There can be no underestimating the importance of data to modern organisations of all types and sizes. If you are to improve your products and services in a targeted and efficient way, it’s necessary to take a long, hard look at how you’re capturing data and what you’re doing with it.

The AI revolution and the seemingly unstoppable growth of companies like Google, Facebook and Amazon mean that data is now an increasingly valuable commodity. The role data plays has shifted from being a useful way of better understanding customers to an all-important means of determining business strategy. As a result, your organisation must focus on acquiring, analysing, storing and retrieving customer data in the quickest and safest way possible.

Chatbots can play a key role in this process.

As a point of interface between customer and organisation, Chatbots are uniquely positioned to influence all four of the key focuses listed above.

1. Acquiring – Chatbots harvest data from every single interaction they have with a user. From personal details to important information that could help resolve an enquiry, they’re capable of scraping conversations to a previously unthinkable degree.

The Business Case for Chatbots

2. Analysing – Chatbots can use Natural Language Processing (NLP) and Sentiment Analysis technologies to develop a deeper understanding of customers than any human agent could. This dramatically improves both the quality and quantity of data your organisation is capable of harvesting.

3. Storing – In recent years, there’s been a greater emphasis on digital security in both the public and private sectors. Chatbots remain a highly secure technology that make use of popular security techniques, such as Two Factor Authentication.

4. Retrieving – Chatbots act as an intermediary between the central CRM system and human agents, helping employees retrieve relevant information far quicker than previously possible.

Essentially, Chatbots are a key way of improving your data handling capacity and infrastructure. At a time when the value of data has never been greater, this is an enormously important technology to have at your disposal.

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  1. Making the most of relatively low investment costs

At Inform, the cost of a single Chatbot starts at around £10,000 for a Planning and Building Control service or Parking service. However, the overall cost is likely to depend on the complexity of the bot and how much you want it to do. A more capable and comprehensive Chatbot is more expensive than one that’s built to handle basic tasks.

The Business Case for Chatbots

This relatively low cost is one of the principal reasons that Chatbots are so popular. The initial investment required is reasonable, allowing businesses of all sizes to invest in the technology and ensuring that Chatbots recoup that expenditure quickly. A low initial investment increases the Return on Investment (ROI) and, ultimately, the value of the technology.

It’s also worth noting that the price-per-Chatbot drops considerably if you integrate more than one bot into your customer service system. For this reason, a considerable number of organisations opt to develop two or three bots, each of which is deployed in a different department.

  1. Demonstrating a Chatbot’s Return on Investment (ROI)

As all Chatbots are designed to fulfil a distinct role and operate in specific circumstances, the value of the savings they generate often differs too. At Inform, we can help you calculate how much a Chatbot will save your organisation by examining a range of factors, including average call volumes and enquiry type, amongst other things.

In the meantime, we can look to other available case studies for an idea of how much businesses and public sector organisations are saving through their bots.

A good example is Amtrak’s ‘Ask Julie’ Chatbot (OverThink Group). Designed to be the perfect customer service representative, Julie answers more than 5,000,000 enquiries every year, saving $1,000,000 in customer service costs annually. This calculates as an 800% ROI. Julie has also been credited with a 25% jump in bookings and, impressively, of increasing the value of bookings by 30% through programmed upselling.

A second valuable case study comes from Charter Communications, another US-based business. Their Chatbot was built to reduce live chat volume, as the company was handling approximately 200,000 live chats a month. A remarkable 38% of these chats were the result of forgotten usernames and passwords. Within the first six months of deployment, the Charter Communications Chatbot successfully reduced live chat volume by 83% and generated an ROI of 500% (OverThink Group).

  1. Improving the customer experience and taking service to the next level

However, organisations can’t afford to sacrifice the quality of the customer experience in an effort to make big savings. Lower the standard of your customer service and you’ll only lose customers. Both organisations and customers understand this – 86% of buyers will pay more for a better customer experience and 88% of businesses say that customer experience prioritise is their top priority in the contact centre (SuperOffice).

The Business Case for Chatbots

Consequently, any carefully considered business case has to show that Chatbots improve the customer experience, as well as cut costs.

They typically do so in several ways:

They are available 24/7, 365 days a year. In an increasingly busy society, in which individuals often struggle to find time for themselves during office hours, a significant number of customers are demanding 24/7 customer service. Chatbots enable you to provide it.

Chatbots also work to improve the performance of human agents in contact centres. They do this by assuming responsibility for tedious and repetitive enquiries, allowing human agents to dedicate more of their time to those complex and nuanced tasks that demand it. The ‘bot’s data gathering capabilities also assist by quickly and efficiently collecting, organising and communicating important customer information to agents.

Chatbots complete data-heavy tasks far quicker than human agents. Take the Charter Communications Chatbot mentioned earlier. Not only was this Chatbot able to resolve all of the routine username and password enquiries it processed but, on average, it was able to do so 50% faster than a human agent.

  1. AI is the future and falling behind costs you

AI is the future of digital technology. In the context of the customer service environment, Chatbots represent the first real step towards that future. Though a great deal has been made of the damage incurred by a business when it falls behind with digital transformation, it’s still difficult to put an accurate figure on just how much a passive, slow and reactive approach to development costs a business.

However, you only need to look at the failed kids toys retailer, Toys‘R’Us, to see the worst that can happen when you fail to adjust and to adopt new technologies and digital platforms.

A contributor to Forbes argued that falling behind technologically damages an organisation in three different ways.

1. Reduction in revenue – In a competitive marketplace, a technologically inadequate organisation may be able to hold on for a while but reductions in revenue mean it will eventually fail.

The Business Case for Chatbots

2. Irrelevance – When your technology becomes irrelevant, it’s surprising how quickly the rest of your organisation does, too. Your marketing efforts have no impact, you’re not considered important, and you start to slip from the public conscience.

3. Missed opportunities – When you fall behind technologically, you close several doors and limit your paths of progress. The more doors you close, the fewer options you have and the less agile your organisation going forward.

  1. Combatting common misconceptions about Chatbots

If you’re building a business case for a particular type of technology, you need to be prepared for some push-back from those individuals who doubt the capabilities or value of that technology.

To help, we’ve highlighted two common misconceptions people have about Chatbots and how you can respond and prove the value of a Chatbot to your organisation.

The Business Case for Chatbots

Misconception 1. Chatbots do not automate as many enquiries as advertised

This is a fairly common criticism of Chatbots. However, the assumption is based upon poor statistical analysis and can easily be challenged.

As the hype surrounding Chatbots has grown over the last few years, a greater number of organisations have jumped on the bandwagon and, with no great forethought, developed and released Chatbots that do not live up to their potential. This occurs for two key reasons.

  • First, many companies choose to develop their own Chatbots. While this may be a way to cut costs, it typically results in a substandard product that frustrates customers and does more harm than good.
  • Second, organisations don’t strategically target their Chatbots. Bots in the future will likely be able to handle any job you can throw at them. For now, they’re better suited to processing repetitive, high-volume enquiries, like those regularly seen in Local Authorities’ Revenue & Benefits and Environment departments. A failure to focus on those areas that benefit most from automation results in a less effective Chatbot, skewing the overall statistics for successful automation.

At Inform, our Chatbots are capable of automating 90% of website enquiries and more than 50% of telephone enquiries.

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Misconception 2. Chatbots cannot replace human agents

It is certainly true that Chatbots cannot replace human agents entirely.

However, they’re not designed to. In fact, they’re designed to do the opposite. Rather than completely replacing human agents, they’re supposed to complement and enhance human capabilities.

With Chatbots, you’re trying to build a customer service system that balances the supreme speed, reliability and analytical ability of a machine with the emotional intelligence and sensitivity to nuance inherent in human beings. Each part of the system focuses on its own strengths, while also offering support to the other components, ensuring they’re better equipped to excel.

What Next?

In some ways, building a comprehensive business case for Chatbots is easy – they’re a tool that costs relatively little to develop, is capable of generating impressive savings and improves the quality of customer service you provide. However, it is important that you present a complete case, using all of the points we’ve mentioned above. In many organisations, you’ll only get to make your case once before the opportunity’s lost, so make it count!

Have a question or want further information on improving customer service using chatbots? Our expert team have been providing customer contact solutions for over 25 years. Call us on 01344 595800 or drop us a line.