Chatbots are a competitive differentiator for smaller businesses

Rather than reject chatbots as sophisticated tech for big businesses, smaller companies can benefit from introducing the technology

Chatbot technology is often dismissed by small and medium-​sized enterprises (SMEs) as overly complicated, cost prohibitive and better suited to bigger firms.

However, SMEs are wrong to be so hasty. Chatbots, interactive software platforms located in apps, live chat, email and SMS, can save smaller companies time and money, provide scale at little cost and generate new sales leads.

This delivers enormous productivity gains at low cost, meaning firms get a quicker return on their investment

Edward Winfield, Content Guru

According to Alf Rehn, professor of innovation, design and management at the University of Southern Denmark, chatbots are a great way for SMEs to start experimenting with technology that is far less complicated than perceived, but which can reap big rewards in the future.

“Tagging chatbots as artificial intelligence can overwhelm people, yet most, even the best, use very simple technology,” says Professor Rehn. “Most have narrow agency and understand a very definite subset of things, like where parcels are or a company’s returns policy,” he explains.

Firms can incorporate chatbot technology into their websites, apps and other channels to work alongside sales and customer service teams for huge efficiency gains and cost-​savings.

For example, one employee can manage five machine agents, giving a total workforce of, say, three people and fifteen machines. The bots can manage the simple and most common customer requests, while a sales operative can support customers with more complex queries.

“This delivers enormous productivity gains at low cost, meaning firms get a quicker return on their investment,” says Edward Winfield, UK sales director at Content Guru, a cloud communications company.

According to a report by Juniper Research, by 2023 chatbots will bring $11 billion in combined cost-​savings for retail, banking and healthcare business sectors as a replacement for customer service representatives.

In fact, when implementing customer service chatbots, smaller businesses have an advantage over larger competitors because they are nimbler and closer to their customers by nature, says Gertjan Dewaele, product innovation director at Ingenico ePayments.

“Chatbot technology really makes a difference when providing customer intimacy in what can be quite an impersonal digital world,” he says.

In the hospitality industry, for example, a customer can use a chatbot to purchase a one-​night stay at a hotel. The bot can then follow up later with the customer via email or social media messenger to inquire about their stay.

“This level of personalisation, from the initial interest right to completing the sale and post-​sale, leads to better conversion rates and higher customer satisfaction. Bots can then learn patterns of behaviour and target customers to offer products or services of most interest to them,” says Mr Dewaele.

Ingenico has seen a six-​fold boost in conversions of browsers to paying customers while using chatbots compared with a mobile website, he adds.

According to Ubisend, a chatbot building company, its customer Vanarama, which leases vans, generated more than 30,000 sales leads and closed over 500 sales independently using bots.

Chatbots are not new technology, but they are now more accessible to smaller companies for both price and ease of use, and can be a key competitive differentiator. Take-​up of the technology has been slow by SMEs, but it is definitely here to stay and companies that don’t get to grips with it now risk losing out.

That said, it is important to get it right. In the beginning, businesses should ensure they have a clear idea of what they require a chatbot to do, and be prepared to put in the effort and investment to train it and integrate it into the company, says Professor Rehn.

“I recommend companies start small; find a simple use-​case, do it and then think about the next implementation,” he says. “This is a good time to experiment because it’s an inevitable journey over the next five or six years, with the technology getting smarter and more advanced.”