17 Aug 2023 By By Alice Davies
The eCommerce landscape is rapidly evolving and businesses are constantly seeking innovative ways to enhance customer experiences. One such innovation that has garnered significant attention and investment is artificial intelligence (AI). We’re not just talking about robots and automated chatbots - but intelligent automation (IA) that’s digitally transforming the eCommerce world. In fact, Gartner has predicted that by the end of this year, artificial intelligence will handle 15% of all customer service interactions in the world. It’s not quite Terminator, but maybe we’re getting there.
AI-powered customer service in eCommerce has become a game-changer, offering an array of benefits - but, of course, it’s not without its pitfalls. We’ll explore the transformative potential of AI in customer service for eCommerce, examining its advantages, potential challenges, and the exciting future it holds.
1. 24/7 availability
One of the most significant advantages of AI in customer service is the ability to provide round-the-clock assistance. Unlike human agents, AI-powered chatbots and virtual assistants can be available 24/7 to answer customer inquiries, process orders, and provide support. This level of accessibility ensures that customers can get assistance whenever they need it, leading to higher satisfaction rates and increased sales.
This doesn’t eliminate the need for human resources, however. Many queries handled by chatbots can’t always be answered, especially with complications or when dealing with vulnerable customers. That 24/7 availability is great for simple requests and responses - but needs human interaction to truly add value. And according to recent research, those human interactions are extremely valuable - 86% of buyers are willing to pay more for a great customer experience.
2. Efficiency and scalability
AI-driven customer service is exceptionally efficient and scalable. Chatbots and virtual assistants can handle a large volume of inquiries simultaneously, freeing up human agents to focus on more complex tasks. According to Mie Bilberg, a digital transformation specialist, 80% of the questions customer service receives every day can be automated.
This efficiency not only reduces response times, but also allows businesses to handle spikes in customer inquiries during peak seasons (such as Christmas and Black Friday) or promotions, without the need for extensive human-power.
AI algorithms can analyse vast amounts of customer data to deliver highly personalised experiences. By understanding a customer's preferences, purchase history, and browsing behaviour, AI-powered systems can recommend products, offer tailored promotions, and provide personalised assistance. This personalisation can significantly boost customer engagement and drive sales.
Data mining is a key element in the AI process for eCommerce companies. Having effective AI, robotics process automation (RPA), and IA tools in place to analyse this data, turning it into actionable insights, is worth its weight in gold (even if it feels like these tools might cost as much!).
4. Cost savings
Implementing AI in customer service can lead to significant cost savings for eCommerce businesses. While the initial setup and integration can be an investment, the long-term benefits include reduced labour costs, lower error rates, and the ability to allocate human agents to more value-added tasks. Over time, these savings can result in a substantial return on investment. According to McKinsey, 79% of respondents to their recent survey stated that integrating AI into marketing and sales has increased business revenue by 79%. Not too shabby.
5. Data-driven insights
AI systems collect and analyse vast amounts of customer interaction data. This data can provide valuable insights into customer preferences, pain points, and emerging trends. eCommerce businesses can use this information to refine their product offerings, marketing strategies, and customer service approaches, ultimately improving their competitiveness in the market.
This data has to be taken advantage of - and if you don’t have the tools and systems in place to collect that data, you’re losing out on precious insights.
While the benefits of AI in customer service are undeniable, there are also challenges and pitfalls that businesses must navigate. Think of it as the good, the bad, and the downright ugly.
1. Lack of human touch
We’re not talking about ‘special services’ here, people. One of the primary concerns with AI-driven customer service is the potential loss of the human touch. While AI can provide efficient and accurate responses, it may struggle with understanding complex emotions or addressing highly sensitive issues. This is especially important for vulnerable customers. Businesses need to strike a balance between automation and human interaction to ensure that customers feel heard and valued.
2. Initial implementation costs
Integrating AI into an e-commerce platform can be expensive. And that’s putting it mildly. Businesses may need to invest in software development, training, and ongoing maintenance. This initial financial outlay can be a barrier for small and medium-sized enterprises (SMEs) that may not have the resources to implement AI-powered customer service effectively. As the market grows and changes, more accessible and affordable solutions will become available - but we’re still waiting for that to happen.
3. Data privacy and security concerns
Collecting and processing vast amounts of customer data can raise privacy and security concerns. eCommerce businesses must adhere to strict data protection regulations, such as the General Data Protection Regulation (GDPR) in Europe, as well as international rules. Mishandling customer data can result in legal consequences and damage to a company's reputation.
According to Salesforce’s latest State of IT report, 71% of IT decision-makers think that generative AI will introduce new security threats to their data and 60% state that generative AI can’t yet integrate with their business’ tech stack. So there’s a lot to be done, especially for those smaller businesses. As a lot of AI and RPA tech is so new, the security concerns we have now might be different a few years down the line, as we start to see the effects.
4. Quality assurance
AI systems, particularly chatbots, can sometimes provide incorrect or irrelevant answers. Maintaining the quality of customer service and ensuring that AI systems continuously learn and improve is an ongoing challenge. Businesses must invest in regular testing, monitoring, and training of their AI systems to avoid frustrating customers with inaccurate responses. We’ve all been there: ‘I’m sorry, I don’t understand what you mean’ *transfers to human agent*.
5. Customer resistance
Some customers may be resistant to interacting with AI-driven customer service. They may prefer speaking with a human agent or feel uncomfortable interacting with a machine. Any kind of business that implements AI needs to be prepared to address these concerns and offer alternatives for those who prefer human assistance. Again, this is especially true of vulnerable customers.
So what does the future look like for eCommerce customer service? There are several exciting developments on the horizon, including:
1. Advanced natural language processing (NLP)
As AI technology advances, NLP capabilities will become even more sophisticated. AI systems will better understand and respond to natural language, including slang, idioms, and colloquialisms. This will make interactions with AI-driven customer service more seamless and human-like.
2. Multimodal interaction
Future AI-powered customer service will encompass more than just text-based chatbots. It will include voice recognition, video chat, and augmented reality interfaces. Customers will have the option to interact with AI in the way that suits them best, enhancing the overall experience. This is fantastic for accessibility too.
3. AI-enhanced decision-making
AI will play a more significant role in helping customers make informed decisions. For example, AI systems will assist with product comparisons, recommend the best options based on individual preferences, and provide real-time pricing information. Basically like having your own personal shopper.
4. Emotional intelligence
AI systems will continue to develop emotional intelligence, enabling them to detect and respond to customer emotions. This advancement will help AI-driven customer service provide a more empathetic and supportive experience, bridging the gap between human and machine interaction. Of course, this comes with its own risks of creating a sentient being that falls in love with customers (and vice versa), but we’ll worry about that when we see it start to happen…
5. Integration with augmented reality (AR)
In the future, AI-powered customer service may be integrated with AR technology. Customers could use AR glasses or devices to receive real-time visual assistance, such as virtual try-ons for clothing or visual instructions for assembling products. Again, accessible and likely to increase sales - and reduce returns. The returns tsunami is a HUGE issue right now for many eCommerce companies - perhaps this is the solution (albeit an expensive one).
6. Enhanced security and privacy measures
To address growing concerns about data privacy and security, AI systems will incorporate advanced encryption, authentication, and transparency measures. This will build trust among customers, reassuring them that their personal information is safe.
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