7 Benefits of Adopting Chatbot by Small and Medium Business

Anastasia Morozova
Chief Operating Officer

Nearly every business deals with key performance indicators (KPIs) every day.

To increase your company’s profitability, you need to improve the measurable values that indicate how successfully your organization is achieving its business goals.

In this race, companies strive to find new and more efficient ways of how to improve their KPIs. In this article, we will consider how chatbots can help you increase your business metrics.

Organizations measure their KPIs using specific data that allows them to get a clear image of their progress.

Instead of assuming that customers may appreciate their services or products, businesses can, for example, determine that 79% of customers are likely to buy from them again compared to 52% last year, and 74% are likely to recommend the brand to their friends and family.

This is more accurate information than subjective judgment. Metrics can allow you to determine existing issues and help solve them efficiently.

In fact, low KPIs are warnings that let you know that you should change something in your business. Thus, you should determine the reasons why these metrics are going in the wrong direction and make the necessary steps to solve this problem.

In the competitive markets, low KPIs don’t necessarily mean you’re doing something wrong. They can mean that you’re doing something with low efficacy. In this case, you should apply modern methods of improving your business performance.

One of these innovative technologies are chatbots, virtual assistants based on a messaging platform. They provide a chat interface for interactions between a chatbot and user.

Chatbots functionality includes but is not limited to typical customer support, shopping, booking tickets, scheduling events, and collecting data from different applications within one enterprise.

Sometimes powered by artificial intelligence (AI), chatbots can bring significant benefits to both medium and large enterprises. For instance, we will focus on increasing primary key performance metrics.

Sales Revenue

what are the benefits of artificail intelligence

Sales revenue is the most important metric of any commercial organization. This indicator shows whether your product or service is in demand, how effective your advertising campaign is, how competitive you are, what chances you have to remain in the market.

Sales revenue is an income volume received by selling products or services. Generating revenue is a major objective of any business.

When tracking sales revenue, you should remember that this value can rarely grow continuously even with perfect management, marketing, and other conditions since, depending on a type of business, various factors like seasonality or inflation can influence the KPI.

How to measure:

To calculate sales revenue, you should summarize all the income received from sales, without returned products or service refunds.

How chatbots can improve it

It’s easier to see how chatbots can improve sales revenue using an example of online stores.

Ecommerce businesses, which use chatbots to promote their products to their target audience, can increase the average paycheck by offering up-sells and cross-sells. As a result, these organizations generate more sales revenue.

They can do it even more efficiently by using AI-enabled chatbots. What are the benefits of artificial intelligence for virtual assistants?

AI-powered chatbots act as smart recommendation systems that deliver personalized offers to customers. Based on determined user preferences, customized offers are those products consumers are most likely to purchase.

Since customers will buy more, a company will generate more revenue.

Net Promoter Score

chatbot for small business

See also: How Chatbots Will Reduce Business Operating Costs

This metric shows how high the quality of your products or services is and how satisfied with your activity your customers are. Net promoter score (NPS) reflects how many people would recommend your product or service.

  • Those who have chosen the score from 9 to 10 are loyal customers called promoters who recommend your services or products to their friends and family and will actually generate word of mouth about your company.
  • Those who have chosen the score from 7 to 8 are satisfied customers called passives who will switch a brand when they get a better offer.
  • Those who have chosen the score from 0 to 6 are somehow disappointed or unsatisfied customers called detractors who may paint your brand’s image in a negative light and discourage other people from buying from you or using your services.

How to measure:

To determine the number of promoters, passives, and detractors, you can conduct a customer survey. This survey should contain a question “How likely are you to recommend our products (services) to your friends or family?” with a ten-point scale.

When is the best time to send this survey? You can experiment with this, but we would recommend that you send a   follow-up email once a customer receives their order.

To calculate the Net Promoter Score, subtract the percentage of Detractors from the percentage of Promoters.

How chatbots can improve it

When customers express their dissatisfaction, they are more likely to be disappointed with your approach to solving their problem than with the quality of your products or services.

Most customers understand that you may make mistakes, but the important thing is how quickly you solve their problem, how approachable you are, and how much you care.

Even after unintentionally being late with delivery or making a mistake while providing your service, you still can turn a detractor into a promoter by fast reacting to the problem and trying to make a customer happy.

That’s why you should concentrate more on your live chat. This is where chatbots can come in helpful. A chatbot customer support runs 24/7 and eliminates the human factor.

Chatbots can quickly solve repetitive customer problems despite how disappointed and angry these customers are.

Customer Acquisition Cost (CAC)

benefits of chatbots

See also: How Chatbots Can Drastically Improve the Customer Service

Customer acquisition cost is a metric that shows how much money you spend on attracting a single customer.

You should remember that an adequate CAC value varies across different industries. The more expensive your products are, the higher CAC can be.

How to calculate:

To calculate the cost of customer acquisition, you should divide all the money spent on attracting new customers (marketing costs) by the number of acquired clients within a specific period.

If you spent $7,000 on acquiring customers in April and, as a result, attracted 50 new customers within this period, then your CAC is $140.

How chatbots can improve it

Improving your customer acquisition process with chatbots provides a deeper understanding of customer’s needs.

Promoting your products or services is all about forming both interest and awareness around your brand. You can’t attract those customers who know nothing about your organization.

Chatbots can increase your brand recognition by using two methods.

With the 24/7 availability, chatbots enable your target audience to access the information about your products at any time. Those who would like to learn quickly about your products or services are only a short message away from getting the necessary information.

The great thing about chatbots is that they deliver information without any user effort. Up to subscribe to a company’s news list? Just enter your email. Need to know more about payment options? Simply enter “payment options” without the need for browsing an endless FAQ webpage.

Furthermore, chatbots provide human-like conversations that softly lead users to your content. Powered by natural language processing (NLP), chatbots can include hyperlinks to casual conversation.

The more users learn your content, the more awareness around your brand there is.

As a result, you spend less on attracting each customer, which leads to a lower CAC.

Customer Loyalty and Retention

artificial intelligence chatbot

High customer loyalty is essential for generating sales. The more loyal to your brand your customers are, the more likely they will buy from you again. In addition, customer loyalty helps you acquire new clients.

Retention rate reflects the number of customers who keep using your products after a certain period and even make repeat purchases.

How to measure:

To calculate the retention rate, you should use the following formula:

Retention Rate = ((X-Y)/Z)) x 100, where:

  • X = the number of clients at the end of a certain period;
  • Y = the number of new clients attracted within the same period;
  • Z = the number of customers at the start of this period.

How chatbots can improve it

Retention rate is all about how loyal your customers are to your brand. Increasing retention rate means increasing customer loyalty.

Besides the quality of your products or services, the primary factor influencing customer loyalty is how you interact with your clients and in what manner you communicate with them.

Chatbots have great customer service potential. Powered by AI and NLP, they provide personalized content and ensure the personal approach to customer inquiries.

Satisfied customers are more likely to make repeat purchases from your brand or keep using your services.

Qualified Leads Per Month

chatbot benefits

With the growing number of sales, you’ll be able to invest more in your promotion campaign. However, more leads don’t always mean you’ll have much more sales. Unfortunately, not each lead becomes a customer.

Thus, you should calculate the number of qualified leads per a certain period.

Qualified leads per month reflect whether you’re focusing on the right target audience that has the maximum potential to become your new clients. If this value is decreasing, you should reconsider your advertising campaign and marketing strategy.

How to measure:

The most common types of qualified leads are marketing qualified leads (MQL) and sales qualified leads (SQL). These two metric types differ by the department qualifying them: marketing and sales accordingly.

To determine MQL, you should just calculate the number of leads that have a significant potential to become clients. For instance, MQLs are those leads that have clearly described a problem you can solve and have the required budget and leads for whom your solution is out of their price range are not qualified.

How chatbots can improve it

Think about your lead generation channels that include a website, push notifications, blog, and email. All of them are one-way communication channels. They can be invasive.

What about communicating with your target audience instead of broadcasting messages?

Another great thing about chatbots is that one NLP-enabled virtual assistant can communicate with numerous customers simultaneously in a human-like manner.

As a result, with a chatbot, your company’s conversations can be scaled more effectively while keeping a personal approach to each inquiry.

Lead to Client Conversion Rate

artificial intelligence chat app

Unfortunately, leads don’t become customers on their own. To turn them into paying clients, your sales representatives should contact these leads and encourage them to make a purchase.

Lead-to-Conversion mostly indicates the performance of your sales team. However, other factors also can influence this metric, for example, the quality of your services or products.

Leads may not become a customer because they might be unexcited with what you’re offering.

How to measure:

The lead-to-conversion percentage can be calculated by dividing the number of new leads by the number of new clients within the same period.

How chatbots can improve it

The more steps users have to go through to make a purchase, the less likely they actually to buy an item. That’s why the length of a shopping process matters.

Chatbots make sales steps shorter. For example, eBay’s chatbot called ShopBot helps users find products they need within their budget on eBay. In addition, the chatbot makes the shopping process easy and interactive for customers.

The study by Twilio shows that 9 out of 10 consumers prefer communicating with a brand via messaging platforms. It’s like telling a brand representative what you need and just choosing what this person offers.

It’s a way better than browsing through a website in search of suitable items. The chatbot will conversationally guide a customer taking into account one’s preferences and needs.

Furthermore, chatbots can significantly simplify the checkout process by enabling users to proceed with a purchase without leaving the chat interface and a need to go to a corresponding webpage.

Monthly Website Traffic

chatbot for medium business

Monthly website traffic is a great indication of your brand awareness. The more users visit your website, the more leads it will generate.

How to measure:

Monthly website traffic is the number of users visiting your website per month. To calculate this metric, you should use tracking tools like Google Analytics. Moreover, this tool can help you understand how users find your website, how they interact with it, and many more.

How chatbots can improve it

To attract more users to your website, you can apply a more effective content marketing strategy. It means you should better promote your content using such methods as guest posting, sharing content via social networks and email, etc.

However, manual content promotion is less effective than marketing automation approaches. This will allow you to focus on more complex tasks while generating simultaneously a significant flow of visitors to your site.

For instance, with online artificial intelligence chatbot called Botletter, you can form a sequence of text messages automatically sent to each new subscriber. Thus, you can encourage new subscribers to read regularly your new blog posts by sending them a link to a high-quality content like a white paper or free webinar.

When configured correctly, your marketing automation chatbot can significantly increase your monthly website traffic by sharing useful content at the right time. Instead of spamming users, you can provide them with the best value when they need it.

Final thoughts

With artificial intelligence and natural language processing, modern chatbots are smart enough to replace entirely customer support representatives when it comes to repetitive tasks.

In fact, the list of benefits of chatbots for business is nearly endless, but the most important part is that chatbots can help companies significantly improve their key performance indicators.

Commercial organizations will be able to save a lot of money while generating more revenue using chatbots on a 24/7 basis.

If you are looking for ways to increase your business’s profitability and have an idea for implementing a chatbot, don’t hesitate to bring it to life with Jasoren – we know how to assist you to achieve your goals.

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