4 principles to keep customers engaged with your chatbot

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According to Kissmetrics, around 70 percent of a business’ customers leave because they received poor treatment, while only 14 percent do so because they are dissatisfied with the product or service.

If customers care more about how you treat them than about your product, should you leave them at the mercy of algorithms? Well, there’s promise.

Here’s an example: Narvar is a company that specializes in post-purchase customer service for retailers. The company’s chatbots allow users to opt-in for follow-up notifications for their transactions, which typically include inquiries on package status or delivery address and time changes.

Previously, the company sent millions of SMS messages to deliver these notifications but found that less than 1 percent of customers engaged with these because they didn’t believe anyone was reading their messages on the other side. But using chatbots, the company sees almost 100 percent response rates from customers, 65 percent of whom treat the bot the same way they would treat a human, saying things like “Thanks” or sending emojis.

By default, people see chatbots as a bi-directional channel vs SMS which is perceived as a uni-directional push. These chatbots replace and streamline the services provided by call centers and email response teams, leading to cost savings for retailers and more efficient experiences for customers.

But, there’s also peril. Chatbots are programmed by humans, who aren’t perfect. According to Ilker Koksal of BotAnalytics, nearly 40 percent of users stop talking to a bot after the first message and another 25 percent are gone after the second one. Sadly, daily and monthly retention numbers aren’t stellar either, with daily rates hovering between 1 to 2 percent and monthly rates barely exceeding 7 percent.

Bots have the potential to significantly enhance the customer experience, but poor chatbot design can lead to disappointing user experiences. How do you ensure that your chatbots positively engage new users and retain existing ones?

Here are a few guiding principles.

1. Identify the basic unit of conversation

According to Shawn Hansen, CMO of product analytics platform Mixpanel, one key question bot developers should ask themselves is: “What is the wrapper around a conversation?” In other words, what is the basic “unit” of a successful bot interaction?

The answer differs dramatically depending on the type of bot. Simple human exchanges often begin with “Hello” and end with “Goodbye,” yet can vary dramatically in between. Hansen says the top five performing categories of bots are weather, fashion, humor, knowledge-based quizzes, and notification-driven news. These bots all have different conversation units:

• A weather bot often starts with an inquiry and ends with a forecast
• A fashion bot might end with a recommendation
• An ecommerce bot may start with a search and end with a purchase
• A news bot likely ends with links to content

Narvar CEO Amit Sharma also points out that merchandise categories make a difference. For categories like high-profile games and coveted health and beauty products, customers often ask about new releases and start new conversations over existing products they checked in previous transactions.

Price also matters, as more expensive items see between two to three times higher engagement rates than cheaper ones.

2. Drive performance with strategic analysis

3. Use proper benchmarks

4. Prepare for scale

The challenge of retention