Why Chatbots are Hot

Why Chatbots are Hot

Chatbots are hot right now. It has all the hype. That and virtual reality. But let’s talk about chatbots right now. I’m writing a post on the company blog about chatbots, but I thought I’d put down some thoughts here. Figuring out why chatbots even matter is an interesting exercise. It seems obvious: communications on the Internet is an utter disaster at the moment.

There are four factors. First, online ads downright suck. The ads themselves are not creative, and they are in your face. That is a terrible combination. Agencies and marketers don’t get excited about banner ads and text ads. Unless they are “digital” marketers, and that is all they know. Video and native ads have possibilities, but those executions are bad. Our brains have become dulled from creating banner and text ads. What’s wrong with interrupting the user experience with overlaying ads and tiny close buttons?

More important question is why TV and radio get away with it instead. My main theory is even though we all grew up with interruptive ads on those mediums, we had no alternatives. There was no Facebook or Snapchat to occupy our attentions during commercial breaks. Would TV and radio ads be possible if created today? Another theory is that Americans like breaks in stories. Look at popular American sports: football, baseball, and basketball. They are all situational. One team gets the opportunity to score, and then the next team tries to score. While not entirely applicable to basketball, timeouts make it situational.

If a viewer has watched a few shows on Netflix, how can they go back to live TV? It is painful. The only reason to watch live TV is live events like sports. But social media, which is taking eyeballs from TV ads, makes live TV worth watching. Sharing thoughts on social networks when watching live TV makes it more enjoyable.

Back to why chatbots are huge right now. The second factor is messaging is such a big deal. Business Insider created the chart above showing how messaging usage has surpassed social networks. It’s understandable. As soon as a social network gets big, mom & dad come, the advertisers move in. Then the cool kids migrate to another social network. But the way messaging works, you don’t have to see your dumb uncle’s Trump posts. Messaging allows users the one on one interaction, while interacting with separate small groups. Kids are comfortable with the UX and asynchronous nature of messaging. They are the perfect audience for chatbot-type interactions.

Next, websites and apps are painful. Marketers and agencies design websites and apps without putting the customer at the center. Look at any “digital” agency website. Stuff is flying around, punch the visitor in the face annoying. The websites are a demonstration of how they can grab the visitors attention. Sure. Throw in the bloated nature of websites due to ads and trackers. Why are we surprised ad blocking is on the rise?

The last factor, AI is more accessible. Computing and infrastructure costs have plummeted. The resources to build AI and machine learning are available to anyone. Granted, a lot of what we see are more of decision trees than AI, but it is a start in the right direction. The investments in technologies are already evident. Siri (ok, not so much), Alexa, the multitude of Google products. Plugin architecture of these platforms increases the impact and value of what AI provides. Once users are comfy with AI as their primary interface, they will demand it everywhere. More on this next time.

Let’s hope brands don’t build crappy chatbots and screw up this game-changing opportunity.

Brand as a Service

Why don’t we have Brand as a Service companies? Over at Redef, there is an article about Disney as a Service. In the IT world, the “as a Service” concept isn’t new. Most know about Software as a Service (SaaS),  a cloud-based web application having a monthly or yearly subscription fee. Think Salesforce or Basecamp. 

FYI, I’m using product and service interchangeably. 

In the 20th century, manufacturers and creators have been walled off from the end users. Industries have layers and layers of middlemen who are responsible for distribution and retailers getting the product into the hands of the buyers. This wall has created a supply chain that is problematic in many industries. Media brands have had content creators, distributors, and publishers (TV, radio, newspapers) or retailers (Best Buy, theaters).

As everyone knows, the Internet changed everything. Non-publisher media brands can now engage with customers with no middlemen. Why bother dealing with them now? Part of it is that a shift to directly interfacing with end users is daunting for several reasons:

  • The brand becomes responsible for the whole stack of content creation, marketing, distribution, and post-sale engagement. The financial investment is significant.
  • Such a change will not happen over time. All the partners in the supply chain will voice their concern since it has the potential of cutting into their revenues and they can threaten to boycott the brand. Financial pain for everyone.
  • Even if the investment is possible, the organization structure of brands has to change. Companies optimize for what they are good at, creating content or creating a widget, and pushing the goods downstream. Corporate cultures will have to change, different types of talent will be required. 

But transforming into a Brand as a Service is worth it. Control is lost with each extra layer between the brand and customer and increases the probability of chaos. The brand needs to connect directly with the consumer to provide the best possible customer experience. 

The question is how does a brand decide if it wants to become a hub consumers will seek out, willingly pay for their products and services over and over? The most straightforward answer is that a brand must have more than 2 or 3 products that consumers will be interested in coming back for over and over. 
That’s where Walt Disney was a visionary. He envisioned a set of content and products that would feed, support, and reinforce each other. 

Brand as a Service

Films are the core product, and they feed to create TV, music, and other publications. It is a portfolio of content that is connected and builds on each other. 

Going back a few years, Disney becoming a stand-alone hub would be impossible without the Internet. Still today, such a transformation will be challenging, but it is finally possible for brands that have the connected portfolio of products to control their destiny.

Bot Metrics

These are bot metrics I found Googling. It will be updated as I find more.

While bot metrics can include KPIs like daily active users, being in the early days of bots, it would be better to focus on how well bots work in fulfilling the customers’ experience. Most other metrics related to funnels and sales should still be applicable.

From “Towards a Method For Evaluating Naturalness in Conversational Dialog Systems”

Metric Type Data Collection Method
Total elapsed time Efficiency Quantitative Analysis
Total number of user/system turns Efficiency Quantitative Analysis
Total number of system turns Efficiency Quantitative Analysis
Total number of turns per task Efficiency Quantitative Analysis
Total elapsed time per turn Efficiency Quantitative Analysis
Number of re-prompts Qualitative Quantitative Analysis
Number of user barge-ins Qualitative Quantitative Analysis
Number of inappropriate system responses Qualitative Quantitative Analysis
Concept Accuracy Qualitative Quantitative Analysis
Turn correction ratio Qualitative Quantitative Analysis
Ease of usage Qualitative Questionnaire
Clarity Qualitative Questionnaire
Naturalness Qualitative Questionnaire
Friendliness Qualitative Questionnaire
Robustness regarding misunderstandings Qualitative Questionnaire
Willingness to use system again Qualitative Questionnaire

From “Different measurements metrics to evaluate a chatbot system”:

  • Dialogue efficiency in terms of matching type.
  • Dialogue quality metrics based on response type.
  • Users’ satisfaction assessment based on an open-ended request for feedback.

It’s a fact: customers like to gripe

They found that customer response to positive and negative customer experience is in direct contrast to customer response to a positive or negative customer service experience. Fully 71 percent of people who have positive product experiences engage in word of mouth, while only 32 percent of customers with a negative product experience want to tell other people about it.

Steve Jobs Never Did Market Research. Yes He Did.

We’ll discuss if Steve Jobs never did market research a bit later. First though, Michael Schrage has written a good book: Who Do You Want Your Customers to Become? I’ve been sending everyone, even tangentially related to marketing, links to the book. It is thought-provoking, but after getting back a few emails about it, I realized the book is a bit misunderstood.

At first read (with the hope that this will be magic bullet that will drive sales to astronomical heights), the premise seems to be that businesses should decide what they want customers to be (the transformation), align sales, marketing, and operations departments, and the transactions will flow. The business will tell the customer what they need and the customer will eat it up. 

Clearly that is not how it works. 

What gets overlooked is that customer transformation can only happen if there is alignment with the customers desires. You can’t sell them something they don’t want or need at some level mentally. Customers will buy products or services that improve their lives in some way (real or imagined). Transforming a customer is really aligning what the customer wants to be, with solutions provided by a business. 

Let’s look at some of the examples Schrage provides in the book. Disney had spent decades creating movies princess-type characters. Disney’s customers wanted to grow up to be princesses. Disney wanted their customers to be princesses. Disney packaged their existing movie characters as princesses, promoted them as princesses, and then sold princess-related products. Disney was offering them ways to be a princess. Alignment of business and customers. $$$$$$$$.

The key in transforming customer expectation is identifying what essential attribute your service cultivates in the customer. How does it make the customers life better?

Alignment does not just have to aspirational. Google has been the technical wiz kids of the Internet for 15 years now. They figured out how to make searches faster and better, which changed the customers expectations of how search should work. But customers always wanted faster and better search. Alignment. Win.

Facebook made sharing and connecting people so easy and useful (in terms of feedback from friends), it changed everyone’s expectations of how we communicate and what we wanted to communicate. But it still stems from the fact that people want to share and we are nosey about the lives of our friends.

Shrage points out that Apple and Starbucks tapped into people wanting to be connoisseurs (either for real or status). For Apple, a shiny, sleek, well designed product. For Starbucks, coffee (or a drink with a bit of coffee and lots of milk, lol). We want to be hipsters with the pretty devices and hang out in cool places. 

Back to Steve Jobs never did market research. The thing is, Apple did research. The research subjects were initially Jobs and Woz (skip to 2:20 in video above). They built the original Apple machines that they wanted to build and use. And afterwards, products that Apple folks wanted to use themselves. 

Most companies are not in a position to use their products so thoroughly internally that they can be experts in knowing what their customers want. The nature of certain industries makes this feasible for some companies. Electronics and fashion come to mind. But if a company is not in such an industry, they have to pony up resources to understand their current and potential customers.

tl;dr – do research and figure out what your customers want and then give it to them.