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How chatbot customer engagement drives b...

How chatbot customer engagement drives business success and customer loyalty

Trending and new

9 min read

21st Oct 2024

Paolo Bargellini

Customer service AI | Conversation starter | All about business efficiency and satisfaction

AI-powered chatbots are helping businesses of all kinds and sizes keep up with customer expectations. Far from simply automating responses, these powerful tools can help organisations deliver quick and personalised communication to their customers, helping them feel valued and important to your brand.

As the competition heats up and AI continues to develop, understanding how to use chatbots effectively for customer engagement has become a necessity if you want to increase customer satisfaction and, ultimately, boost sales.

Let’s look at how you can increase customer loyalty, build trust in your brand, and change your customer engagement for the better with AI chatbots. We’ll also cover tips on how to introduce your own AI assistant and real-world examples to show their impact.

Jump to section

How generative AI has transformed chatbot capabilities Why customer engagement matters 4 ways AI chatbots can improve customer engagement How AI chatbot Mia helped Mytime Active achieve 97% query resolution How to build an AI chatbot for effective customer engagement Conclusion Frequently asked questions (FAQs)

TL;DR

Customer engagement can help to create loyalty, build trust, and boost profits.
AI chatbots are improving customer engagement by offering real-time, personalised communication that can help increase customer satisfaction.
They can handle complex interactions, learn from data, and adapt to customer preferences.
AI chatbots can deliver 24/7, personalised support for your customers, handle tough queries, and deliver a consistent brand experience.
Case studies show businesses have seen measurable improvements in engagement and customer support.
Successfully launching an AI chatbot requires a clear strategy and continuous refinement once live.

How generative AI has transformed chatbot capabilities

Chatbots have been around for a while. However, with recent advances in generative AI and large language models, the technology has shifted dramatically, working faster and at an incredible scale. AI chatbots can be an effective customer service agent available 24/7 to engage with even complex queries, offer personalised responses, and predict customer needs.

With new LLM capability, we’ve seen a big uptake in AI chatbot usage to support customers. For example, data from Ipsos found that in June 2023, 42% of US adults had used an AI chatbot for customer service in the previous 6 months. That’s a clear shift in the market, and for businesses of all sizes, it’s essential to adjust expectations accordingly.

The most advanced AI chatbots can engage your customers in a more natural, conversational manner, offering a useful tool to supplement interactions, particularly with effective chatbot-to-human handoff. AI assistants can learn from previous interactions, enabling continuous improvement.

In our article on chatbot statistics, we saw that 63% of customers said they would leave a company after just one poor experience, while 43% said their experience could be improved. It’s therefore essential to get the process right, and doing so can result in an increase in engagement across several areas.

Why customer engagement matters

Customer engagement is essential for any business looking to thrive in a competitive sector. Here’s why focusing on customer engagement is critical:

1. Cultivating customer loyalty

Engaged customers are significantly more likely to remain loyal to your brand. For example, according to data from IAG Loyalty, 80% of customers are more likely to do business with a company that offers personalised experiences. This loyalty can translate into repeat business and long-term customer relationships.

2. Enhancing trust

Consistent and transparent communication builds trust between a brand and its customers. When customers feel valued, their confidence in the brand increases. This can be seen in data from Adobe, who claim that 7 in 10 customers will buy more from brands they trust, highlighting the importance of engagement in building that trust.

3. Turning customers into advocates

Engaged customers often become passionate advocates for your brand. They’re likely to share their positive experiences with friends and family, amplifying your reach through word-of-mouth.

4. Boosting profits through engagement

Ultimately, strong customer engagement drives profitability. A 2023 study from the Institute of Customer Service “found that those companies that have maintained higher customer satisfaction than their sector average have achieved stronger revenue growth (7% points more) than their peers whose the customer satisfaction score is lower than average. This compares to 4% and 10% respectively in 2017″.

4 ways AI chatbots can improve customer engagement

So, we’ve seen that customer engagement is crucial for your brand, but how can AI chatbots help? Let’s explore some concrete examples of how an AI chatbot could improve customer engagement at your business.

1. Round-the-clock care

Be there for customers night and day with instant responses

AI chatbots are like your customer service team that never sleeps, offering instant answers whenever your customers need them, even outside regular business hours ― 35% of the queries our AI assistants handle come in outside the traditional 9-5.

This round-the-clock service helps to reduce average response time, which is a crucial metric in measuring customer satisfaction. As Vodafone CTO, Scott Petty, recently told BBC News:

“AI is helping customers more easily find what they’re looking for on its websites, with early evidence showing a doubling in the number of successful completed online customer journeys, and a 10% reduction in follow-up calls.”

2. Tailor-made for your customers

Deliver personalised experiences at scale

Generative AI chatbots have an incredible ability to sift through vast amounts of data in real time, which means they can provide personalised recommendations for your customers. Imagine having a friendly assistant who knows your preferences and can suggest exactly what you need? It’s a game-changer in customer experience.

By using advanced techniques like retrieval augmented generation (RAG), you can make sure your chatbot delivers accurate information that truly reflects your brand values. It’s valuable to your reputation to keep a consistent tone of voice, no matter where your customers interact with your business—whether it’s on your website, social media, or messaging apps.

3. Handle the tough stuff

Effortlessly tackle complex customer queries

Advanced AI chatbots excel at handling complex, multi-step interactions, like helping customers resolve technical issues or guiding them through the returns process. Think of it as having a friendly and knowledgeable employee who can walk your customers through challenges step by step, no matter the time of day or night.

You have the ability to train your chatbot, setting clear guidelines on how it should respond. Plus, with real time customer engagement and feedback from your team, the chatbot can learn to better meet customer needs. It can also be trained to pass a more sensitive or complex query to a human agent using live chat, so customers always receive the best support.

4. Keep it consistent

Offer a seamless experience across all channels

By placing your AI assistant across your website, social media, messaging apps, phone lines and beyond, you make sure your customers enjoy top-notch support, regardless of where they choose to interact with your brand. It’s not just about being present on every platform; it’s about delivering the right information every time they reach out.

With access to real-time customer data, your AI assistant can create seamless conversations that flow effortlessly from one channel to another. This means that whether your customers are chatting on your website or sending messages through social media, they experience a unified and consistent brand voice. Ultimately, it makes every interaction feel personal and cohesive, no matter where they connect with you.

How AI chatbot Mia helped Mytime Active achieve 97% query resolution

We’ve seen the potential benefits an AI assistant can bring, but what could success look like for your organisation? Let’s look at Mytime Active leisure providers as an example.

Background:
Mytime Active’s customer service team was overwhelmed with repetitive queries, impacting response times and customer experience. John Branigan, Director of IT & Transformation, turned to us for a solution.

Solution:

In just six months, Mia, a well-named AI assistant, was fully integrated into Mytime Active’s operations. Mia handled a wide range of queries, becoming the first point of contact for customers, providing instant, real-time responses for activities, opening times, and more.

Key results:

97% query resolution: Mia successfully handled 97% of inquiries, resolving 94% of them across 220 topics.
24/7 support: Mia provided round-the-clock assistance, drastically improving customer satisfaction.
Live chat integration: Mia seamlessly handed over complex queries to human agents via live chat, letting the team focus on higher-value tasks.

Breakthroughs:

Improved customer experience: Even tech-averse customers engaged effortlessly with Mia.
Efficiency gains: Automating routine tasks allowed the Mytime team to focus on more complex issues.
Continuous learning: Mia’s performance improved as the AI assistant interacted with more customers, reducing the need for human intervention.

Overall impact:

It took only six months for Mia to transform Mytime Active’s customer service. It helped to improve customer engagement, decreased response times, and freed up the team for more valuable work, making Mia a key part of their long-term strategy.

How to build an AI chatbot for effective customer engagement

When it comes to introducing an AI chatbot in your organisation, it requires a thoughtful, strategic approach. Here’s how you can make sure you’re getting the most out of your customer service AI assistant:

1. Start with your customers’ needs

You’ll want to begin by identifying the specific challenges your customers face. Are they frustrated by slow response times? Do they have difficulty navigating services? Or are there frustrations around an inconsistent omnichannel experience with improvements needed?

Maintain a customer service mindset and use AI to transform your insights, so you can easily determine what your customers need from you. Then, start small with a clear objective, such as lowering call volume or increasing NPS.

2. Invest in the right technology

On AI studio, you’ll have a fully functioning AI assistant tailored to your business within 10 minutes. Our platform pulls from your existing content to create a smart, accurate AI assistant capable of handling 96% of customer queries on average (99.88% at its peak) with natural, 24/7 conversation.

With multiple ways to create your AI assistant—whether auto-generated or managed by our team—you can go live in minutes, not months. AI Studio is designed to scale with your needs, offering seamless integration with your existing systems through API integration.

3. Build in human handover

While AI chatbots are powerful, they work best alongside human agents. When your customers have more complex or sensitive queries, you should make sure there’s a seamless handover to human agents when necessary.

4. Measure and optimise continuously

Tracking the impact of your AI assistant is essential for long-term success – for you and your customer engagement. By monitoring key metrics like deflection rate, resolution time, and customer satisfaction (CSAT), you can rest assured that your AI assistant continues to improve over time.

For example, your deflection rate, which measures how many customer queries are resolved without human intervention, is a critical indicator of success. With our platform, you can start reducing call volume immediately.

Regular reviews of AI assistant performance and insight from real customer conversations help you identify new opportunities to enhance your assistant’s capabilities, guaranteeing that it continues to deliver value by learning and adapting with every interaction:

Easy to use customer dashboard to see popular topics, busiest times of day, and more
Review real conversations in AI Studio, with all PII (personally identifiable information) automatically redacted to protect customer data

Conclusion

AI chatbots are now powerful drivers of customer engagement, capable of delivering personalised, real time interaction at scale. As businesses face mounting pressure to meet customer expectations, AI chatbots offer a reliable and cost-effective solution.

By creating an AI customer service chatbot, your organisation can not only improve your customer satisfaction score, but also improve your internal processes, free up your employees’ time, and create a consistent experience for your users.

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FAQs

1. How do AI chatbots handle customer data privacy while maintaining personalised engagement?: AI chatbots can personalise customer interactions by using data to tailor responses, but it’s crucial for businesses to comply with privacy regulations like GDPR. Chatbots should use secure methods, such as encryption and redaction (removing personal information), to protect sensitive customer data while still delivering personalised engagement. This is applicable even in the most highly regulated industries.

2. What should businesses consider when selecting an AI chatbot platform to enhance customer engagement?: When choosing a chatbot platform to improve customer engagement, businesses should consider the chatbot’s ability to integrate with existing communication channels, handle digressions and follow-up questions, and offer personalised responses. Ease of use, customisation, scalability, and real-time data analysis are key factors for maintaining a high level of customer engagement.

3. How do AI chatbots impact customer engagement for human agents?: AI chatbots improve customer engagement by simplifying routine tasks so human agents can focus on more complex, value-added interactions. Rather than replacing human agents, chatbots handle repetitive inquiries 24/7, flag urgent issues, and centralise information to help them. This leads to faster, more accurate service, reducing burnout and allowing agents to build stronger customer relationships by giving customers an immediate response. By taking on these tasks, AI chatbots help improve both agent satisfaction and customer loyalty, all while still offering empathy in customer service.

4. What ethical considerations should businesses address when using AI chatbots for customer engagement?: You must make sure that your AI chatbots engage with customers transparently and offer fair treatment. You can introduce your AI assistant right from the start of an interaction, even giving it a memorable name and making sure customers can build a personal and familiar connection. Transparency in communication about when customers are interacting with a chatbot is crucial for maintaining trust and ethical customer engagement.

5. What are the limitations of AI chatbots in maintaining high customer engagement?: Although AI chatbots can handle routine and complex queries, they may struggle to engage customers in highly emotional or nuanced situations. Businesses should be aware of these limitations and build clear escalation processes to human agents to make sure that every customer receives the best possible service for their situation, either from the chatbot directly or with handover to a human agent.