January 23, 2019
Conversational marketing or conversational commerce has been on the rise in the past 12 months to the point where e-commerce brands can no longer ignore this topic.
Many e-commerce brands large or small are adopting this new way of marketing to achieve significant business outcomes.
By definition, conversational commerce is the intersection of messaging apps and shopping. According to Shopify, this term was coined in 2015 by Chris Messina who is the former Developer Experience Lead at Uber.
Conversational commerce is powered by artificial intelligence chatbots within messaging apps like Messenger, Instagram, and voice assistants such as Amazon Alexa and Google Home.
In this article, you'll learn everything about conversational commerce, how it started, how it got popular, why you should think about using it, and everything you need to get started with this new way of marketing right away.
As we previously mentioned, conversational commerce is powered by chat and voice bots and to find out how we got to this point, we need to take a look at when the first chatbot was created.
The first chatbot was created in 1966 by Joseph Weizenbaum. This chatbot was named Eliza at first and then became Chatterbot later on.
The purpose of Eliza was to simulate conversations with real people. Eliza did such a great job that some of the users thought they were chatting with an actual person. But that wasn’t the end.
Joseph had to put Eliza to the test by testing Eliza on the Turing Artificial Intelligence Test. This is a test of a machine's ability to exhibit intelligent behavior equivalent to, or indistinguishable from, that of a human.
Eliza passed the test and became a sensation after it was programmed to impersonate a non-directional psychotherapist in an initial interview.
After Eliza, came many more advanced chatbots such as Parry, in 1972, created to simulate a person with paranoid schizophrenia.
Jabberwacky in 1988, one of the first attempts at creating an AI-powered bot, mainly used for entertainment.
Dr. Sbaitso in 1992, which assumed the role of a psychologist when interacting with users.
A . L . I . C . E in 1995, also known as Artificial Linguistic Internet Computer Entity, was one of the first bots with Natural Language Processing, meaning it was able to apply heuristic pattern matching rules to human input to have a natural conversation.
Smarterchild in 2001, an intelligent bot on SMS networks programmed to have fun and personalized conversations.
Then came a game-changing bot. IBM’s Watson in 2006. Watson was designed to compete in Jeopardy by leveraging Natural Language Processing and Machine Learning.
Watson won Jeopardy in 2011 against two former Jeopardy champions because of its ability to process large amounts of data.
After 2006, as technology advanced, we started to transition into voice-activated bots.
Siri was acquired and introduced in 2010 by Apple as a personal assistant with the ability to leverage Natural Language Understanding to answer questions and perform quick tasks such as opening applications, finding the nearest restaurant near you and booking reservations, and many more, all through voice search.
Siri set a new standard for AI-powered voice assistants in 2011. Then Samsung S Voice and Google Now were both introduced in 2012.
Samsung S Voice and Google Now were very similar in capabilities but Siri gained a lot of popularity because of its voice and personality.
While Apple and Google were competing on this front, another big player was planning to completely take over the entire industry. In November 2014, the e-commerce colossus, Amazon, announced Alexa alongside the Echo. The Echo is an Alexa-integrated and AI-powered smart speaker capable of taking a magnitude of commands called skills.
One unique feature that stood out about Alexa is her ability to order and reorder products through your Amazon Prime account.
This was, in fact, the beginning of true conversational commerce.
When Windows XP was introduced in 2001, it gave life to a few social networks such as Myspace in 2003, Facebook in 2004, Twitter in 2006 and later on as internet adoption skyrocketed worldwide, more social apps such as Messenger, WhatsApp, and Instagram were introduced.
These apps got popular at an exponential rate as they allowed more and more people to connect with their friends and family from all around the world.
As of 2018, messaging apps became the most downloaded apps in the entire world. WhatsApp is leading the way with over 1.5billion monthly active users, followed with Messenger with over 1.3b monthly active users:
These social apps altogether paved the way to instant communication and instant communication has become a standard today.
As internet adoption skyrocketed, it didn’t only affect the lives of the consumers. Many brands, especially in the e-commerce space grew massive cult followings on these platforms. These fans are looking to keep up to date and engage in meaningful conversations with their favorite brands.
But brands got so big that it was unmanageable to keep track of every single interaction with every customer on multiple platforms.
That’s when these messaging apps, one by one, started to roll out automated messaging and marketing systems to help brands have meaningful conversations with thousands or millions of customers all at once, instantly.
It started out with Twitter, Facebook Messenger in 2016, Instagram, and lately WhatsApp in 2018. And many more apps such as Skype, Slack, Discord, Telegram and Kik who all allow bots on their platforms.
Conversational commerce started to pick up steam.
Conversational commerce was up in the air the 2015s when Amazon Alexa was launched but when Facebook Messenger opened their API in 2016, the few marketers who tested it saw amazing results.
Facebook allowed brands to market to its 1.4billion monthly active users on the Messenger platform. Brands can build lists on the platform just like a regular email list and send out updates and promotional messages to their subscribers, all through automated messaging.
Here’s why marketing on the Messenger platform is different than any other forms of marketing and why conversational commerce works. Almost everyone who has a Facebook account has a Messenger account.
Remember around 2013 when Facebook constantly bugged you to get your Messenger account set up so you can message your friends? Well, when your Facebook account is connected to Messenger, all your Facebook data is synced to the Messenger platform as well.
Facebook has allowed marketers on the Messenger platform to access to some of those data points when you subscribe to a brand. Brands get your:
These data points can be used to personalize the marketing messages they send. For example for The Beard Club bot, our team decided to personalize an image that is sent to new subscribers. The image says “Grow Your Beard FIRSTNAME.”
Now females can’t grow a beard so we set up that message to only send to new male subscribers and females get a completely different message. That’s just one example of leveraging data to personalize your customer’s experience.
This level of personalization and activity on the Messenger platform is the reason why our clients are averaging:
These kinds of numbers are unheard of on any other marketing channels. That’s the power of conversational marketing
At the beginning of 2018, there were over 100,000 chatbots on the Messenger platform alone. By the end of 2018, that number grew to more than a half of a million bots with over 8 billion messages being sent per month.
Now the real question is, are consumers finding the bots useful?
According to a study by Drift, 15% of consumers said they have communicated with a business through a bot in the past 12 months. These are numbers from the year of 2017 since the study was released in January of 2018.
Now, let’s talk about why consumers want to use bots.
There are problems with traditional online experiences. 34% of consumers said that websites are hard to navigate and 31% said they can’t get answers to simple questions.
When asked “If chatbots were available (and working effectively) for the online services that you use, which of these benefits would you expect to enjoy?”
64% of consumers would use a chatbot for 24-hour service followed with 55% saying they would use a chatbot for getting instant responses and answers to simple questions.
Now, it’s no secret that consumers want instant messaging. Instant messaging is the new standard and brand should aim to serve their customers almost instantly.
I know what you are thinking. What about voice bots?
At the end of 2018, NPR alongside Edison research published The Smart Audio Report which tells us that 21% of people in the US 18+ own a Smart Speaker. That’s 53 million people.
In 2017 62% owned one smart speaker, 21% owned two and only 17% owned three or more. In 2018, 30% owned more than three speakers.
From 2017 to 2018 the number of smart speakers in the US households grew by 78%. Right now at least 20% of all searches are voice searches and Gartner forecasted that by 2020, 30% of web browsing sessions will be done without a screen.
As you can see voice search has seen exponential growth over the past 2 years and that is because voice search allows consumers to browse hands-free and without the need to see. Voice search extends the utility of web sessions to contexts such as driving, cooking, walking, socializing, exercising and operating machinery, says Gartner.
By now, you have seen the trends in consumer behavior, heard all the good things about conversational marketing and seen all the massive impact it’s having in the e-commerce space.
So where do you start?
I’ve seen many brands set up conversational user experiences just for the sake of setting them up. That is the wrong approach. When setting these experiences, you need to figure out 3 things:
Bots, regardless of how cool you think they are, are meant to solve a problem for your brand. When it comes to setting up these experiences you need to realize what problem you are looking to solve first and if bots are the right solution for that problem.
Once you have figured out that a bot can solve the problem at hand, the second step is figuring out exactly what type of bot you should build or what you should optimize for.
We have found out that there are four main ways for e-commerce brands to leverage bots:
The biggest mistake I see brands make is trying to optimize for all four use cases at once. Things can get messy really fast.
I recommend starting slow. Maybe optimize for customer acquisition first as a test to prove ROI. Once everything is proven to work then move on to other use cases.
It’s always cheaper to do things internally but that doesn’t mean it’s always the right way to do things.
Many bot projects are unfinished internally and our team always gets unfinished projects from brands and that is because their decision maker thought they could just implement everything internally.
Building conversational experiences is a full-time job and if you do take it on internally, it’ll take time away from other things. Always make sure your team has enough bandwidth prior to offloading it to them.
The alternative is to hire a vendor. The vendor will consult you to strategize then develop and launch the bot for you. Three things to look for before hiring a vendor:
Follow these steps and you should be well on your way to hiring a great vendor.
Conversational commerce or conversational marketing has been a hot topic in the e-commerce space. I took you all the way back to the beginning to how we got here today.
Technology doesn’t go backward. With worldwide internet adoption skyrocketing, messaging apps and smart speakers seeing abnormal growth year over year, it’s only going to strengthen the fact that this new way of marketing is here to stay.
Large to small businesses are seeing amazing results and it’s not secret that if you implement everything step by step as outlined above, you’ll see significant business outcomes.
We help our clients get 15 - 20% conversion rates and recover 10X more abandoned carts.
We help brands on Shopify leverage data-driven personalized marketing to quadruple conversion rates and recover 10x more abandoned carts.
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