How Conversational AI Makes Online Shoppers Spend More

Infographic on Conversational AI Chatbots
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Online Shopping in 2020 & the need for Conversational AI

If there is one thing the year 2020 has taught us, it is how we can adapt in the face of a global pandemic. With countries going into lockdown and businesses having to close their doors, people turned to online forms of shopping to get their needs. Online purchases have seen a jump by 6% to 10% across many categories and Conversational AI plays an emerging role in the same.

Industry wise statistics on Online Shopping

Source: UNCTAD and NetComm Suisse eCommerce Association

 

With this significant shift from in-store shopping to online, many companies found themselves at a disadvantage. How can they provide excellent customer service when most of their customers are online? Given that companies that are customer-focused gain 60% more profit than companies that don’t care about their customers.

 

A great customer experience stems from having a knowledgeable sales assistant or clerk who can find what the customer is looking for, recommend other items based on their preferences, as well as recommend things that work well with what the customer is buying. So, for example, if the customer wants to buy a red dress, the sales associate can recommend a pair of shoes, a purse, and a coat that go well with the outfit. If the customer can’t decide on what phone to buy, the sales assistant can provide all the information and compare different models for the buyer.

 

Providing consumers with a superior customer experience is crucial for brands to build and maintain customer loyalty. Companies that take extra care to ensure their customer service is of high quality can bring in 5.7 times more profit than companies with sub-par customer service.

 

To solve that issue, many companies, such as Amazon, Sephora, Duolingo, and Starbucks, employed the use of AI solutions, namely, conversational AI.

 

So what is conversational AI, and how does it work?

 

What is Conversational AI?

Conversational AI is any technology that you can speak with, either by text or voice, and some examples include Siri, Alexa, and chatbots. These AI interfaces allow users to interact with a virtual customer representative to get the help they need.

 

Company Examples for Conversational AI Chatbots

Chatbots can be found on many websites, and they help answer the user’s simple questions. With a virtual assistant handling the easy tasks, live representatives have more time to deal with the more complex issues of the customer.

 

 

Conversational AI Chatbots and Online Shopping Payment Sources

An AI bot allows customers to have their inquiries answered 24-hours a day, seven days a week. Having constant assistance at any time provides the customer with a better shopping experience.

Chatbots can be designed to work, depending on the required capabilities. But the most crucial aspect of an AI bot is its ability to carry on a dialogue, which is done with the use of natural language processing, or NLP for short.

 

What is NLP and why is important?

NLP refers to the ability of a computer to understand human language to take action. For example, when you ask Alexa to “reorder batteries,” Alexa will be able to go check previously bought items, find the order for batteries, and make a purchase order, all without you having to do anything.

How it works, generally speaking, is by breaking down sentences into small elements and then trying to understand the relationship between them to create meaning. Unlike the generative chatbots, NLP infused bots can simulate human-like conversations, which allows for carrying on open-ended dialogues.

NLP is not only used to help humans communicate with the machine. It allows AI to learn the customer’s preferences to recommend products based on the individual’s search. It does that in conjunction with an AI recommendation engine.

 

AI Recommendation Engine

Shopping is a necessity in our lives, be it for retail therapy or buying household items. When we shop, we often rely on recommendations from family and friends, as we trust them to know something we might need or enjoy. That is what makes recommendation engines so useful. They can predict a user’s preferences, and then provide the user with recommendations based on their likes from what they searched, looked at, bought, rated, etc.

 

Recommendation engines also provide the sellers with insight into customer behaviors and trends. For example, if the system notices an increase in the viewership or purchase of a specific item, it can ping the system to order more. It can also push the item to customers who viewed similar items.

 

We can see the power of personalized recommendations in some of the big companies that employ them. About 75% of what people watch on Netflix comes from product recommendations. And about 35% of what people buy on Amazon also comes from product recommendations.

 

AI bots, in combination with recommendation engines, are the perfect AI solution in e-commerce to increase profit and revenue. Chatbots act as the sales assistant in physical stores while recommendation engines act like the shop counter guy, trained in up-selling or cross-selling items to a customer.

 

AI (Artificial Intelligence) Trends in Online Shopping

Key Takeaways

The world is slowly shifting from in-store shopping to online. Predictions state that it is likely to see some forms of in-store shopping dropping by 5-7%, while others might grow by a small percentage, 2-3%. Retail executives should plan for a future that incorporates AI solutions to maintain revenue and profit. There is no denying that a satisfied customer is good marketing. Providing consumers with personalized recommendations and 24-hour assistance increases customer experience, thus increasing customer retention.

We at UnitX offer a range of Digital Transformation and AI solutions to help you grow your retail business by reducing costs, increasing revenue and enhancing customer experience. Check out our Solutions Brief and connect with us.

 

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