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Chatbots: The New Subscription Box Business Model

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If 85% of all consumer-brand interactions are to occur without human interaction by 2020*, it’s safe to say Bots are here to revolutionise the way we think not only about customer service, but in fact the much bigger picture: business.

Bots As A Biz Model

Cast your mind back to 2014, and you’ll likely remember a subscription box for most products: everything from coffee, wine, and beer to make-up, tampons, and razors could be found neatly packaged and delivered to the doormat for your convenience (after all, running out of coffee on a Sunday morning when your warehouse conversion is served only by a downtrodden convenience shop is pretty horrible). And please don’t take my wry smile as sarcastic nostalgia for three years ago: subscription boxes are still going strong. My personal favourite? Fresh cut flowers through my letterbox. But there’s a new kid on the business model block.

Like subscription boxes, chatbots can be applied to virtually (pun very much intended) any vertical or business. The main difference being the distinction between the delivery of physical (boxes) and digital (bots) products. By now you’ve seen the KLM chatbot as a gold-star example of a major brand using bots as a way to prolong user engagement and reduce customer pain. And as ubiquitous as bots will become as extensions of traditional business this year and next, something else is afoot.

Chatbots, just like subscription boxes, lower the barriers to continuous user engagement, and act, albeit not as a full business strategy, but as part of the product itself, and a means of on-going interaction. As Facebook’s VP of messaging David Marcus has pointed out: “commerce is conversational”. With this comment he strikes to the heart of the matter: this move to conversational interfaces marks the beginning of a new era of commercialisation strategy for start-ups who seek intimate, always-on relationships with their (often millennial) customers. Chatbots offer a new customer interaction model, which will prove incredibly lucrative for those who can crack it in a vertical that delivers true value to the user’s life.

Sound familiar? Well, kinda. The displacement of owned apps as the primary interaction arena has very much begun.

Bots Got Lots (of Advantages)

Brands solving customer pains of all varieties now have a new way to facilitate their mission. The nature of the bot means the customer-brand interaction occurs in the intimate messaging space, where users are accustomed to conversing with their nearest and dearest. As one of the smartphone destinations individuals spend most time with, messaging flows represent a way to engage users without the need to drive them to a brand-owned destination, thus severely reducing barriers to engagement. Can you think of the biggest such barrier seen in recent years? The dreaded app download of course. Bots negate the need for this (in many cases, at least) meaning the beginning of a customer-brand relationship can be as close as one-tap away (clicking to launch a Facebook Messenger chat with a bot will be the biggest fashion to come to display advertising since programmatic ad serving became mainstream). Some smart app-based businesses have cottoned onto this too, and are pre-empting the shift.

Service providers Uber, Lyft, and Just East are all ahead of the app-to-bot transition curve, and have launched Facebook Messenger alternatives to their app-based platforms, in order to capture new customers who are finding app downloads increasingly unacceptable as part of their digital consumption journeys. But what about businesses built solely on the bot model? They’re coming.

The fact that the burgeoning start-ups based solely on the chatbot interface are largely positioned as “concierge services” is telling of the emotional nature of this method of engagement. We are used to conversing through text based message with friends and family, and this mental model automatically instills a sense of familiarity upon anyone (read: any brand) we converse with in this way. Let’s look at 3 examples of businesses doing just that right now.

IRL Examples

The private and precious nature of one’s personal finances marries well with the intimacy of messaging, and the introduction of P2P payments we’ll see roll out across messaging flows in 2018 is testament to this (who else is excited for P2P Apple Pay in iOS11 this autumn?) As such, it’s an obvious vertical to start leveraging this special environment in, which Plum and Cleo are doing to great effect.

As personal finance butlers, these bots plug into your bank account and let you save some moola without it feeling like a sacrifice. These bot services use AI to decide how much you can afford to siphon off on the reg, based on your purchase history and spending habits. Both have garnered a great deal of press coverage, and I can personally attest to the head-turning nature of seeing Plum’s advertising campaign on the London Underground network, that puts the bot front and centre of their brand. Compare this to Moneybox, an app-based service that rounds up every card purchase to the nearest £1 and lets you invest those spare pennies in tracker funds, and it’ll be interesting to see which model wins in market. And by the way, it’s not just B2C models that leverage bot tech.

GrowBot is a B2B team motivation solution delivered as a bot for the Slack platform. It makes use of the pre-existing conversational nature of the environment it’s built for, and weighs in to motivate employees and serve up encouraging statistics to keep everyone going.

Perhaps by now a by-product of such services is becoming gloriously apparent: data capture. With every single user interaction comes a chance for the brand to learn more about their customers, and if they’re smart, this will be fed back into their business model for continual iterative development. Furthermore, the bridging of the offline to online worlds offers businesses new opportunities to understand their users holistically, which in many verticals, such as fashion and FMCG, is basically the holy grail.

What Can We Conclude?

In 2018, bots are set to become the new hot business model. They enjoy wonderfully low barriers to entry, require minimal amounts of personal sharing in the first instance (dependent on the service provided, clearly) and afford immediate presumed intimacy with the user like no other interaction model before them. And not only will they become natural extensions and supplemental customer channels for existing big business; we’re already seeing innovative startups experimenting with them as business models. With a too-good-to-be-true list of advantages, bots as a business model are set to be big. Bot building platforms and boutique agencies that help big brands and non-tech entrepreneurs build theirs are becoming hot property, and it’s not hard to see why. Ben Marinic from SmartChat, one such bot shop, tells me they’re already working with a number of startups who’ve decided Facebook Messenger is their route of choice to engage their audience, as the conversational experience is the perfect way to capture customer requirements and make product recommendations. Just as the subscription box model was a novel and appealing lens through which to view many traditional business concepts (let’s face it, selling commodity household goods in a traditional way isn’t exactly Musk-level innovation), bots represent a new way to capture time-starved, content-saturated users with a deliciously simple way to consume the services that make their lives easier or more fun. So for those entrepreneurs amongst us, the next questions to answer are “what can be served through a bot?”, and “how will we monetise?”

If you wanna chat bots (ha!) or anything else, come say “hi” over on my blog

Gracie Page is creative technologist at Y&R London, a digital marketing mentor at Cambridge University Judge Business School and a Mayor of London Digital Pioneer. She is interested in the intersection between technology and user needs, and believes that technology is a means to an end but never the end unto itself. She has developed work for brands such as McDonald’s, Porsche, Monopoly, Play Doh, BBC, and Babybel.

*Gartner, 2011

Chatbots: The New Subscription Box Business Model was originally published in Chatbots Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.

Source: Chatbots Magazine

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