Welcome back to part two of our three part blog series, Nine Tech Buzzwords Retailers Should Actually Understand.
Our goal in this series is to make the increasingly complex world of technology a little easier to follow by focusing on the key terms and concepts that retailers across the globe will need to understand to stay competitive in a market that is both incredibly dynamic and saturated.
Today, we’ll be diving into three more critical trends and terms that will continue to shape and define the evolution of retail in 2018. We’ll start with our first...
4. Chatbots
Chatbots are voice activated, virtual assistants and are spearheading a new approach to marketing and customer service that heavily values the individual personalization of the customer experience. The technology is becoming more and more pervasive in the everyday lives of the average consumer. Almost 61 million Americans will have used these voice-activated assistant like Siri or Cortana at least once a month in 2017. Additionally, the trend is toward more such interactions, like messaging over the phone or email, as the preferred way of contact. Fueling the trend are stats like this: over 51% of consumers believe the businesses they patron should be available 24/7. Chatbots provide an easy but meaningful solution to address these consumers.
While chatbots still occasionally leave customers wanting more, the artificial intelligence behind them is developing at such a rate that retailers can feel comfortable knowing that the ROI is demonstrable and will only improve with time. Even today, chatbots save companies an average of four minutes and $0.70 per customer interaction.
There are three types of approaches that are used to develop chatbots: pattern matchers, algorithms, and neural networks. Algorithms and neural networks are developing incredibly quickly, and their frameworks are driving the evolution of artificial intelligence. By leveraging AI, chatbots can provide businesses a way to:
- Be available for their customers 24/7;
- Respond to customer inquiries immediately, eliminating wait times for physical queues and call centers, and;
- Capture and recall personalized information from a retailer’s CRM to tailor every automated conversation to the individual customer
For a great lesson in evaluating and successfully deploying chatbots, VentureBeat has published a very helpful read.
5. Robotics
Robotics are disrupting both the storefront and the backoffice. Robotics can automate a plethora of manual activities like cleaning warehouse floors and stocking inventory, and can also augment human workers, providing much needed physical support.
The benefit of robotics for retail is rapidly moving to customer-facing interactions. In stores, technology leaders like Walmart are using robots to ensure shelves are always properly stocked with items customers want. Major brands are also using humanoid robots to create memorable experiences for their customers and help identify the perfect solutions for their needs.
You only need to understand three key statistics to realize exactly why this matters to retailers. First, the average retailer spends somewhere between 12.6 and 15.1 percent of gross revenue on payroll. Second, the average cost of turning over an employee is roughly 16 percent of their salary. And, finally, turnover rates for hourly employees are approaching 67 percent. Quite simply, turnover costs are one of the most controllable inefficiencies a retailer must manage.
Retailers can reduce employee turnover using robots by simply automating the tasks employees don’t want to do. This allows employees to reinvest their time in customer-facing interactions they find personally rewarding - interactions where an employee can help a customer. Making employees happier drives retention and reduces turnover, providing retailers both front and backend payroll savings.
To learn more about how retailers are leveraging robots and explore specific use cases in greater depth, please check out our very own SoftBank Robotics blog.
6. Natural language processing
Both chatbots, robotics, and search engines rely on a technology called natural language processing, or NLP. It’s a specific discipline within artificial intelligence that focuses on how humans verbally communicate, and its goal is to teach computers how to accurately process, understand, and create responses to human speech.
Here’s an example:
“I’m looking for a necktie.”
“I need a grey Etro.”
“What should I get my dad for his birthday?”
All three of those statements - or as computers would think about them: queries - are actually related, and it’s easy for we, as humans, to see how. For computers, however, those three queries look radically different. Natural language processing helps computers develop the rules, pattern recognition, and “cognition” needed to make the connections that human brains do so effectively.
Companies like IBM, Google, and Facebook are making significant investments in NLP technology for one major purpose: to better collect and interpret customer data. As human-to-machine communication becomes more pervasive, conversational approaches to marketing and customer service will provide retailers an enormous opportunity to capture more valuable data through every customer interaction, and NLP will be a critical tool that drives progress toward better customer insights.
For a more in-depth technical overview of the different NLP tools powering your favorite chatbots and search engines, we recommend this read.
A Smarter, Faster, Better Future
The capabilities of technology are increasingly rapidly. For over fifty years now, computers have doubled in processing capability every 18 months or so - something engineers refer to as Moore’s law. This unbridled development is enabling all of us to do more, faster, and more effectively, and for retailers, ultimately empowers brands to deliver an overwhelmingly positive and tailored customer experience.
In the final piece of this series, we’ll be talking about critical terms geotagging, biometrics, and predictive analytics. Please subscribe to this blog, as shortly after this series is published, we’ll be explaining how all these terms you need to know come together to form a new vision for retail.
