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Editor’s Note: This post has been updated with fresh content and links.
Original Publication Date: June 12, 2018

In the age of artificial intelligence, the chatbot is just a small piece of the conversion rate optimization (CRO) pie.

But that pie just keeps getting bigger and bigger.
 

An adorable depiction of a user and chatbot talking to each other

An adorable depiction of a user and chatbot talking to each other

 

What Are Chatbots?

A chatbot is a service, powered by rules and sometimes artificial intelligence, that you interact with via a chat interface. The service could be any number of things and it could live in any major chat product (Facebook Messenger, Slack, Text Messages, etc.).

For example, you want to buy a gift from American Eagle online, but you’re not sure what you want. You would go to their website, search until you found what you wanted, and then you would purchase it.

If American Eagle makes a bot, instead of all that hassle, you would simply message American Eagle on Facebook. It would ask you what you’re looking for and you would tell it. Simple.

This mirrors the type of experience you would get when you go into the retail store without the pain and hassle of actually going to the store location.
 

Two different American Eagle chatbot experiences that provide target audiences with information and inspiration.

Two different American Eagle chatbot experiences that provide target audiences with information and inspiration. – image source

 

Why Should Advertisers Target Messaging Platforms?

First, the user base. Apps like WhatsApp, Slack, Skype, and their competitors are growing their user numbers in leaps and bounds.

Facebook Messenger alone has more than 1.3 billion monthly users.

According to Sensor Tower, worldwide iOS and Android downloads of Facebook Messenger grew 5.66% from 145.3 million in Q1 2016 to 153.5M in Q1 2017.
 

The increase in Facebook Messenger use over one year

The increase in Facebook Messenger use over one year – image source

 
With these platforms’ growth, demand for virtual chatbots that can automate simple conversations and solve user problems is much higher.

How Do Chatbots Provide An Advantage?

Chatbots are already serving the digital marketplace. Chinese WeChat bots, for example, can already call a cab, make appointments, send money, check in for a flight, and carry out a myriad of other tasks.
 

Check out the WeChat interface.

Check out the WeChat interface. – image source

 
Online chatbots save time and effort by automating customer support. 60% of U.S. adults who are already online use online messaging, voice, or video chat services.
 

Google Trends shows the rise in search interest for “chatbot” over the last 5 years.

Google Trends shows the rise in search interest for “chatbot” over the last 5 years. – image source

 
Gartner forecasts that by 2020, more than 85% of customer interactions will be handled without human-to-human contact.

Also, 72% of people today use fewer than seven apps per day, which means there are fewer opportunities to reach them with Display ads. Less user time in other apps and more time in messenger apps makes chatbots are an obvious choice for continued personalization:
 

It looks like non-messaging apps aren’t getting as much use today as they did before.

It looks like non-messaging apps aren’t getting as much use today as they did before. – image source

 
This could be caused by the opportunities provided by chatbot systems going so far beyond giving responses to customers’ inquiries. They can be used for tasks such as collecting information about users, organizing meetings, and reducing overhead costs.

With how much chatbots can do, it’s no wonder interest in them is growing exponentially.
 

How Do Chatbots Work?

At the core of chatbot technology is something called natural language processing or NLP. This is the same technology behind the voice recognition systems used by virtual assistants such as Apple’s Siri, Microsoft’s Cortana, and Google Now.
 

How chatbots relay information

How chatbots relay information – image source

 

Chatbots read and process the text given to them by the user (a process known as “parsing”). Then they craft a response based on a complex series of algorithms that attempt to understand what interpret what the user said and, more importantly, what they mean and/or want. The bot then chooses from a selection of appropriate responses to relay to the user.

Some chatbots offer an uncanny conversational experience, in which it’s challenging to figure out whether the “person” you’re speaking to is a bot or a human being. Others are much easier to spot, like this little guy trying its best…
 

Yeah, I’m pretty sure this is a bot.

Yeah, I’m pretty sure this is a bot. – image source

 
By the way, if you REALLY want to see chatbots in action on your landing pages to better understand how they can drive conversions…
 

Get Your Proposal

 

Why Should You Care?

You might be wondering “Why does anyone care about chatbots? They look like simple text-based services.”

It’s because for the first time ever people are using messenger apps more than they’re using social networks.
 

Notice that in this BI Intelligence graph, the “Big 4” continue to outgrow the rest.

Notice that in this BI Intelligence graph, the “Big 4” continue to outgrow the rest. – image source

 
As Niko Bonatsos, Managing Director at General Catalyst put it:

“~90% of our time on mobile is spent on email and messaging platforms. I would love to back teams that build stuff for places where the consumers hang out!”

And this quote from Peter Rojas, Entrepreneur in Residence at Betaworks, explains it another way:

“People are now spending more time in messaging apps than in social media and that is a huge turning point. Messaging apps are the platforms of the future and bots will be how their users access all sorts of services.”

 

The inevitable app uninstall overtime per Quetra

The inevitable app uninstall overtime per Quetra – image source

 
Jillian D’Onfro from Business Insider says:

“Only 1,000 of the one million apps in the iOS App Store or Android’s Google Play Store have 50,000 or more users. That’s only one-tenth of 1% of all apps.

“And although many people have lots of apps on their smartphones, Quantcast reports that as many as 50% of people who download an app only use it once!”

 

How Chatbots Affect Conversion Rate Optimization

Chatbots are great for CRO because humans actually open up more when they know they’re talking to a bot.

Alison Darcy, Woebot’s CEO and founder, says that chatbots create a more accessible and available space for mental health tools:

“We know that, often, the greatest reason why somebody doesn’t to another person is just stigma. When you remove the human, you remove the stigma entirely.”

This is why, at KlientBoost, we don’t inform customers up front that a person will contact them to get their information and share pricing for their offer.

Chatbots also benefit consumers, who are increasingly interested in this technology. An International Conference on Internet Science study pinpoints some of the reasons why people prefer to talk with chatbots.

According to this research, the main factors that motivate people to use chatbots are:
 

Productivity

Chatbots provide assistance or access to information quickly and efficiently.
 

Mastercard’s chatbot helps you manage your bank account quickly.

Mastercard’s chatbot helps you manage your bank account quickly. – image source

 

Entertainment

Chatbots keep people entertained by giving them funny tips, plus bots help kill time when users have nothing to do.
 

Social and Relational Factors

Chatbots fuel conversions and enhance social experiences. Interacting with bots also helps to avoid loneliness, and it gives a chance to talk without being judged.
 

Curiosity

The novelty of chatbots alone sparks curiosity. People want to explore their abilities and to try something they haven’t tried before.
 

The Value of Chatbots

Cutsey responses, however, don’t make a chatbot successful. Understanding the visitor’s/customer’s needs does.

People want to get the information they need as soon as possible with as little friction as possible. One of the main selling points of bots, as previously mentioned, is that they offer instant access to value while eliminating friction.

There’s no sign in or sign up processes like in an app or on a website — and if the bot can already see your social profile, it can personalize information to you instantly.

Itai Leibowitz, Facebook’s Product Manager for the Messenger platform, writes:

“Businesses that take people’s messaging behaviors and preferences into account are the ones that tend to see the most success.”

Additionally, a bots’ user interface (UI) is standard, so there will be no new UI to learn. First time users can get immediate value and solve their problems more quickly.
 

Common Simple Chatbots

Depending on how the bot in question is created, we can divide chatbots into two groups: working in accordance with pre-set commands (simple chatbot) and intuitive (smart or advanced chatbot).

Simple chatbots work based on pre-written keywords that they understand. Each of these commands must be written by the developer separately using regular expressions or other forms of string analysis. If the bot can’t understand the user’s input, it responds with messages like “sorry, I didn’t catch that”.

Here’s some examples of simple chatbots:
 

Weather bot

Get the weather whenever you ask. Weather Bot by OpenWhisk is a prime example of this.
 

News bot

Ask it to tell you whenever something interesting happens. You can see this in the image below of CNN’s chatbot.
 

Food bot

Food lover? Figure out what to eat with these chatbots.
 

CNN’s news chatbot in action

CNN’s news chatbot in action – image source

 
Smart chatbots, in contrast, rely on artificial intelligence when they communicate with users.

Instead of pre-prepared answers, the robot responds with adequate suggestions on the topic. In addition, all the words said by the customers are recorded for later processing.

However, the Forrester report “The State of Chatbots” points out that artificial intelligence is not magic, and it’s not ready to produce marvelous experiences for users on its own.

On the contrary, it requires lots of work.

 

Common Smart Chatbots

To break it down more clearly, here are a few examples of smart chatbots:
 

Life Advice bot

I’ll tell it my problems and it helps me think of solutions. MeditateBot helps you stay calm by walking users through meditation exercises. DoNotPay is a free legal assistance bot for people in diverse situations.
 

Finance bot

These Messenger bots target people interested in finance in general. You can see an example of this later in this post with Mastercard’s chatbot.
 

Scheduling bot

Get me a meeting with someone on the Messenger team at Facebook.
 

Friend bot

In China, there’s a chatbot called Xiaoice, built by Microsoft, that over 20 million people talk to (awww).
 

Xiaoice in action and translated

Xiaoice in action and translated – image source

 
The range of possibilities is still growing. Recast has put together a comprehensive list of thousands of apps sorted by category.
 

So many chatbots to choose from.

So many chatbots to choose from. – image source

 

Chatbots for Lead Generation

Roughly four out of five online adults in the United States are on Facebook. More importantly, Facebook Messenger is one of the most popular mobile messenger apps.

Nearly 11% of the global population relies on the app on a monthly basis. So when it comes to lead generation, Facebook Messenger is a great platform to start with.

Chatbots can be a very valuable solution if you offer a product or service that requires a high level of pre-purchase consideration, such as car sales, real estate, or SaaS.

 

Using Chatbots To Spur Conversions

Because your potential customer is researching which product to buy, it makes sense to build a chatbot that helps answer the big questions that keep a customer from converting.

For example, somewhere in the conversation, your chatbot can offer a downloadable guide. The customers just need to provide their email address, and possibly their name, and the guide will be sent to them.

If your chatbot has already provided value to the consumer, your salesperson can build on that positive interaction when she reaches out to discuss the sale.

EveryoneSocial does a good job of offering content after answering questions.

“We’re seeing great success generating and qualifying leads through bots. Turning static web forms into engaging and personalized conversations is delightful for prospects.
“It’s a great way to let your brand voice shine and interact with your audience in a way that feels natural. With bots, we’re generating 40% better-quality leads for 30% less than through a landing page.”

– Connor Cirillo, Conversational Marketing Manager.

 

Financial Institution Chatbots

Financial institutions that provide individuals or businesses with loans are a lead-based business. They’re always looking for applications.

So how do you get people interested in getting a loan? Offer a loan calculator. And after running the calculation in the chatbot, open up a conversation and offer a guide in exchange for their email address.

The same tactic can work for the financial planning industry. Advertise a guide on Facebook that would interest potential investors and then take them into the chatbot when they click the ad. From there, capture their email address.
 

Rehab Facility Chatbots

If you’re a rehab facility or anyone involved with mental health, wellness coaching, etc., it could be beneficial to open up a conversation through a chatbot.

Since the stigma of talking to a real person is gone, it’s possible to warm up your potential customers through a non-threatening conversation with a robot. This can lead to heightened interest in your offer and a conversion in the form of sharing their contact information.

They may not have been sure before the chatbot conversation, but they’re more confident in their decision afterward.
 

Home Services Chatbots

These bots can help with automating quotes and lead-gen for potential customers. Try giving free home improvement advice through a chatbot to potentially turn those top of funnel leads into bottom of funnel leads.

By giving advice freely, you quell the customers’ fears so that they can decide to choose your service over competitors.
 

Appointment Chatbots

The no-brainer here is appointment-setting bots. If you’re involved in an appointment-heavy industry (hair salons, dental offices, etc.), you can leverage a chatbot as a method for current customers to book spots on your calendar.

Simply opening up a dialog with your customers via Facebook Messenger will allow you to proactively reach out to them to see how they’re doing, to solicit reviews/feedback, and to run “refer a friend” promotions.
 

Results from Chatbots

What’s the point of all this if we can’t back it up with data and results, right?

Cristian Rennella, the VP of Marketing & CoFounder of oMelhorTrato, personally shared some interesting results from his use of chatbots.

“After 9 years of work and growing from 0 to 21.5M users, I can assure you that the MOST important Facebook trend that will come to 2018 will be AI that will help with campaign performance.

”Every day greater access to different AI tools is generated especially the Google platform called TensorFlow. Our internal team is using it thanks to Deep Learning to generate sales through our own chatbot on Facebook after the client clicks on our advertising. Thanks to this strategy our conversion from Facebook advertising improved by 27.1%.”

 

Facebook ad for oMelhorTrato that customers click

Clickable Facebook ad for oMelhorTrato

 

The clicked ad starts a chat with the chatbot.

The clicked ad starts a chat with the chatbot.

 
Todd Kunsman from EveryoneSocial shared some data with us as well:

“We actually just started playing around with Drift as a chatbot end of March. With April being our first full month, we have seen a few direct demo meetings booked through it and quite a bit of interaction of interest in our blog posts through the bot as well.

”Those blog posts I chose to include in the bot have lead magnets within them, so we also get attention on the right blog posts quicker and get conversions that way as well. Both March and April were two of our strongest months ever of leads, which along with all our marketing efforts, our chatbot also has helped.

”For March, we had a 20% overall lead increase (and our highest converting month), with that being the first month of the chatbot being active. That was the only new strategy added in the month.”

 

EveryoneSocial guides you through the process based on what you are interested in.

EveryoneSocial guides you through the process based on what you are interested in.

 

Clearly, bots are worth considering if they are helping these established companies push their reach further than they did without chatbots.

Clearly, bots are worth considering if they are helping these established companies push their reach further than they did without chatbots.

 

Chatbot Best Practices

It’s important to understand how your bot interacts with your customers. Whether you code the bot yourself or use a template, here are some key tips that will help you keep your user’s experience top of mind.
 

Don’t Lie To Your Users

People aren’t dumb. If you over promise or tell them your bot is something that it’s not, they’ll figure it out eventually.

You want your bot experience to feel like a human conversation, but you can’t dress up a dog as a horse and expect it to function the same way. People will get suspicious and it’s a lot harder to close a deal with someone that doesn’t trust you or the validity of your services.

So be up front and let people know they’re talking to a bot. People are more forgiving when expectations are set out transparently from the get-go.

Finally, let your customers know the capabilities and limitations of your bot, so they don’t try to use your bot for anything and everything.
 

Onboard With Conversation

Since people aren’t quite used to speaking with inanimate objects yet, use buttons to ease your users into the conversation. A few button clicks can help them close in on their objective before providing a typed response. This path moves users forward in the system, building trust before asking them to engage in conversation.

Making all buttons and commands actionable effectively guides your customers into a more natural, written exchange.
 

Design For Human Emotion

We’re used to robots being bland and boring. Adding touches of personality to your chatbot, however, can boost user engagement and make your bot more fun. Use friendly, inclusive language to make users feel like they’re chatting with a colleague.

Also, don’t be afraid to repeat inputs back to users to check for understanding. This garners trust with your users and can help increase repeat business.
 

When The Bot (Inevitably) Breaks

If you can build it, it can break. Unless your bot is completely templated and operates solely through button clicks, your bot is going to break at some point or another.

It’s important to come to terms with this and come up with a plan B. Show that you understand the customer’s pain and offer solutions on how to handle the situation and reroute users to safe areas within your system.

And whatever you do, do not leave a blank empty space on your bot. Incorporate an error message to alert users that something is not right, so they don’t sit there waiting and hoping for something to load.

Lastly, when the machines stop working, who do we talk to? We want to talk to a person in charge. Offer human intervention when things go awry to instill that trust in your customers.
 

Help Users Help You

You’ll never be able to predict everything your customers want. With that in mind, modern functionality can empower your users to give feedback directly through the bot.

You can, for example, let users submit articles when they ask for something your bot doesn’t have the answer to. And you can ask users if the results your bot gave them are what they were looking for. If they aren’t, let them tell you what they want.
 

Wrap-Up

If your bot works properly and focuses on what the user wants over cutsey language, it can be a very powerful tool. At this rate, they’ll only get more powerful as time goes on.

Since this technology is still new, many business owners are just beginning to understand what benefits chatbots can bring to them. The best chatbots have not yet been created as the capabilities continue to increase every year.

Take advantage of being ahead of the curve and start building your own today.

Have you seen success with chatbots? If so, we’d love to hear about these successes and the strategies you used to achieve them in the comments below.

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