Why Brands Need a Conversational Interface

The following is excerpted from “Do You Have a Conversational Interface?” written by Bala Iyer, Andrew Burgert, and Gerald C. Kane and published in MIT Sloan Management Review on October 3, 2016.

Without question we live in the age of mobile applications. We spend roughly 25% of our media consumption time on mobile, up from just 12% in 2012. According to Statista, there are nearly 6 million apps available for mobile download. This profusion of choices means it can be difficult for users not only to choose which apps to download, but to manage them all. This “app fatigue” has led to many apps having a very short life on users phones. In fact the top apps have managed to engage users and concentrate their usage time. Users spend 45% of their app usage time on their most favorite app and 84% of their time on their top 5 apps.

Seeing the difficulty in building breakthrough mobile apps of their own, brands should look to the future and create engaging conversational interface on top of the popular messaging apps. The next era will belong to an emerging new channel or “conversational layer” using both text and voice. This conversational interface layer will incorporate chat, messaging, and natural language interfaces to interact with people, brands, services, and bots. This shift is currently evidenced by the massive adoption of messaging apps such as Facebook Messenger, Amazon Echo, and WhatsApp, which together host more than 60 billion messages daily.

Data Supports Increased Messaging

According to eMarketer, messaging apps will reach 2 billion people within a few years. WhatsApp users average nearly 200 minutes each week using the service, and many teenagers now spend more time on smartphones sending instant messages than perusing social networks. What’s more is that individual users have already signalled they are ready for this messaging future. In a recent survey conducted by Dynmark, SMS text messages have a 98% open rate and nine in ten text messages are read within three seconds of receipt. Many consumers have grown comfortable interacting businesses via messaging apps and SMS.

Messaging platforms will alter the way businesses can communicate with their customers. Currently, the conversational interface within well-known messaging platforms such as Facebook Messenger, Slack, WeChat, Kik, and Telegram allow companies to chat with their users.

Bots as Conversational Interface Partners

While mobile chat platforms are interesting, the arrival of artificial intelligence-powered engines called bots or smart agents have made them a powerful tool for sense-making and commerce. Bots use machine-learning techniques to understand text and provide better responses to user queries. They are present in the background, and they make sense of the conversations taking place and convert them into actions using apps, such as scheduling a meeting or ordering a pizza. For example, imagine you are chatting with your spouse using Messenger and discussing options for dinner. Using machine-learning algorithms, a bot can recognize that you are talking about eating options and initiate a transaction with your favorite food delivery app. The messaging platform effectively becomes a distribution channel for software and services without leaving the conversation.

1–800-Flowers recently launched such an experience on Facebook Messenger and has since expanded to Amazon Alexa. Customers can order flowers directly from their experience with the conversational interface. 1–800-Flowers is very focused on customer support and maintaining a relationship with their customers, so the company jumped at the opportunity to be one of the first in the space. Of the tens of thousands of people who have ordered flowers through the chatbot integration, more than 70% are new customers — and these new customers skew toward younger demographics than the company’s existing customers.

What Should Companies Expect?

This new conversational interface represents a new channel from which to interact with your customers, just as the emergence of the web and mobility opened up new routes. Companies should position themselves for the conversational interface layer. Individual users will want to interact with trusted brands to fulfill their needs through natural language interactions. This interaction will occur at the exact time the user demands a product or service, and in the exact terms she thinks of that product or service, in the language and communication methods she typically uses (intent, words, shortcuts, emojis, etc.). Companies need to strengthen these natural language capabilities in their products, apps, and bots to allow users to communicate with them with ease.

Collectively Generations X, Y and Z have signaled their openness to messaging. These individuals will begin to welcome and even expect to engage with their brands via messaging services. But companies should be forewarned and remember that this trusted personal space is precious. Poorly designed interactions can damage the customer relationship. For example, when Microsoft’s Tay posted racist remarks on Twitter, it had to be shut down temporarily. The bot industry as a whole has yet to come up with the “killer bot” that tips the scale for wider adoption, but bots continue to grow in sophistication and power.

What Should Companies Do Today?

Pick a platform. When reaching users, a brand needs to understand where current or potential customers spend their chat time. The platform choice is an important early decision. This is similar to how brands and engineering teams initially opted to launch their products on iOS, then Android, and other mobile OS platforms early on. In order to reach user conversations today, brands will need to decide which platforms to target and build on. Different platforms have a diverse set of capabilities (i.e., user identity, cards, and buttons on Messenger, and work teams and slash commands on Slack) and demographic targets.

Run strategic experiments. It is not clear if customers would use the conversational interface layer for quick responses or for broader conversations. Brands like Amex Finance are using chatbots to provide notifications to customers about their new products or alerts about forthcoming travel dates. These limited experiments would allow Amex to set the bar for the nature of interaction with clients. Other large companies like Orange Telecom and AXA have introduced chatbots into their customer service centers to handle selected digital interactions. The enterprise social networking platform Slack is using chatbots to automate routine managerial check-ins, reducing the need for meetings.

Innovation Is Still Early

Look for innovative uses in other sectors. Simple examples like ordering airline tickets or food are emerging. However, sophisticated bots that understand the context and make intelligent decisions have not yet been launched. In fact, some uses cases such as automated email assistants rely on human intervention to complete tasks.

Companies can also learn from examples outside their industry. For example, a Georgia Tech professor used a bot as a teaching assistant for a programming class. Using machine-learning techniques, the bot was able to handle 97% of the student queries. In online education, where dropout rates are quite high, a high level of engagement with a “tutor” could make a huge difference in retention.
Pilot bots with your customers. Many of the tools that are provided by the messaging and bot platform providers are from the open-source space, and companies can perform low-cost experiments with a reduced set of users to learn more about their conversational interface and add use cases that yield the desired results.

Chatbots and Voicebots: A New Channel

The conversational interface layer of computing may have not yet fully arrived, but it is coming. Many companies have begun thinking and experimenting with how to use this new channel to support their brand and their business. All businesses should ready themselves for that conversational future as their customers will demand and engage with this type of experience. Connect with us to learn more about building a conversational interface, chatbot or voicebot for your business.

Bala Iyer is a professor and chair of the Technology, Operations, and Information Management Division at Babson College in Wellesley, Massachusetts. He can be reached on Twitter at @balaIyer.

Andrew Burgert. He can be reached on Twitter at @andrewburgert.

Gerald C. (Jerry) Kane is an associate professor of information systems at the Carroll School of Management at Boston College and the MIT Sloan Management Review guest editor for the Digital Business Initiative. He can be reached at [email protected] and on Twitter at @profkane.

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