Geo 101: What Marketers Need To Know About Chatbots

Advances in artificial intelligence and natural language processing are helping bots to drive more engagement than ever.

From geo-targeting to voice search, technology is opening up a world of possibilities for marketers. But it’s also complicated, as new capabilities and use cases seem to emerge every day.

With the goal of breaking down some of the most important concepts to provide a better understanding of the basics — and a jumping off point for exploring how far the power of location may take us — we introduce the next installment of our GeoMarketing 101 series: what marketers need to know about chatbots.

What Are Chatbots?

Put simply, a chatbot refers to a computer program designed to simulate conversation with human users, responding to texts or other forms of digital chat.

Chatbots able to respond to a to a greeting (“hello, how are you?”) or a simple query have been around for a while, and plenty of older Millennials probably remember the SmarterChild bot of the 90’s in particular. But today, advances in artificial intelligence (AI) and Natural Language processing (NLP) concurrent with the rise of voice-activated intelligent assistants, like Amazon Alexa, have given chatbots stronger conversational abilities by allowing them to learn over time, thereby beginning to expand the possibilities for their use.

With that in mind, it’s fairly easy to see how these bots can be a boon to marketers. Consumers often have far more questions for businesses — ranging from inquiries about products to seeking help navigating a website — than human employees can deal with in an efficient or profitable manner. With bots becoming “smarter,” marketers are increasingly using the technology to engage customers in-app, answer questions, and help build the personalized, one-to-one relationships that today’s consumers seek.

As Trevor Hardy, chief executive at The Future Laboratory, explained to retailers at this year’s Retail Week Live, “we certainly think the future of retail is about service, and about the human element of service — but [it doesn’t all] have to be provided by humans.”

How Chatbots Can Drive Engagement

Messaging apps draw over 4.1 billion users worldwide, indicating that the appetite for this type of communication is functionally universal. But perhaps the more striking figure is the reliance on messaging apps — both for communicating with friends and with brands — amongst the youngest segment of the population: A majority of Gen-z teens (52 percent) say they spend three or more hours per day on messaging apps, but texting doesn’t rank in their top three mobile activities at all, according to Think With Google.

These statistics indicate a strong potential willingness to communicate with brands via text-based means. But in considering how (and whether) to implement chatbots part of a marketing strategy, brands may wonder if consumers are turned off by the idea of knowing they’re conversing with a bot. Does the technology make users feel like they’re getting a personalized response to their questions — or does it seem inhuman?

AI chatbots are still in their infancy. But recent examples underscore the idea that bots can actually drive as high — or higher — engagement than personal brand representatives themselves. Take, for instance, the example of CoverGirl’s “KalaniBot,” a chatbot inspired by one of the brand’s key influencers, actress and model Kalani Hilliker. Far from seeming impersonal or “scaring off” fans, the KalaniBot actually saw 14x the engagement of the live Kalani when she was just doing some promotion on Instagram and Snapchat.

The same trend appeared to hold true in the banking sector as well: While the company declined to release exact figures, HSBC earlier this year reported having driven a marked increase in engagement with the launch of its chatbot — which outperformed banner ads across platforms.

As Masthead Media’s Amanda Pressner Kreuser put it in an article for Inc., “the evolution of chatbots makes them ideal for marketing or as an alternative way to distribute media. If they are scripted well, these bots can mimic a conversation with a customer in a tone that reflects the brand’s identity.”

So, if marketers can identify a clear purpose for deploying chatbots — communicating with millions of customers of a global brand (like Sephora, for instance), or reaching Gen-Z shoppers through improved messaging options — statistics indicate that the technology is a smart bet for driving engagement. And with the rise of connected intelligence and voice search linked to marked advancements in AI, the future of chatbots is likely to be much more sophisticated than we can imagine today.

Read more:

Millennials Are Ready To Embrace AI

How Pitney Bowes Is Using Chatbots To Anticipate CRM Problems

NatGeo And 360i Show The ‘Genius’ Of Using Chatbots As A Marketing Tool

About The Author
Lauryn Chamberlain Lauryn Chamberlain @laurynchamberla

Lauryn Chamberlain is the Associate Editor of A New York City based journalist, she specializes in stories related to retail, dining, hospitality, and travel.