Measuring ROI: Calculating the Business Impact of AI Chatbots

What Are AI Chatbots?

First, it’s essential to be clear about the language used to discuss tech investments. Most consumers and business people have a general idea of what AI chatbots are, but the picture may be incomplete. At its core, a chatbot is a computer application programmed to simulate a human-to-human conversation. The context can be text conversations, voice conversations, or both. AI-driven chatbots run on natural language processing models and machine learning that help bridge the gap between companies and customers.

Components of Chatbot ROI

To accurately determine ROI, business leaders need to know the cost and revenue related to the chatbot investments. The cost may be straightforward, including the price tag of building or purchasing the chatbot software. Additionally, it could include other facets like additional programming costs, ongoing maintenance, security, upgrades, and integration with other systems. For example, a chatbot might be able to access the customer’s contact or billing information to provide better answers to frequently asked questions.

Cost Savings

A chatbot isn’t typically a sales mechanism. In other words, it doesn’t produce direct revenue. Instead, it’s a means to introduce cost savings and help engender positive customer relations. On the cost reduction side, a chatbot system can support human employees in a call center and reduce the repetitive or scripted workload. While a chatbot may have difficulty understanding nuances and subtleties in conversation, it can handle the bulk of customer inquiries, such as: “When is my bill due?” or “How can I change my address?” Addressing these high-volume, one-dimensional questions can reduce staffing needs and allow them to focus on relationship building.

Loyalty

If you take inventory of the interactions in your contact center, you’ll find that most questions and comments are simple and don’t require follow-up. However, how long customers wait to get an answer can negatively impact customer satisfaction. Over time, these delays can come with a cost. According to PwC, “nearly 80% of American consumers say that speed, convenience, knowledgeable help, and friendly service are the most important elements of a positive customer experience.” By automating these engagements, you can help your customer service team work more strategically, and your customers will respond in kind. Technological advancements mean that customers expect companies to adapt and evolve. An organization that doesn’t take investment risks becomes obsolete and loses footing in the marketplace. However, organizations that leverage specific tools, such as chatbots, message customers that they value their customers and prioritize their needs. Furthermore, a July 2022 Gartner report found that companies that use chatbots in their sales strategy can achieve up to 30% higher conversion rates.

Cost Savings From Using AI Chatbots

Business leaders can make the case for embracing chatbot technology when looking at the facts. Here are a few of the ways chatbots can reduce costs.

Reduce Agent Costs

The most obvious source of cost reduction lies in curbing labor expenses associated with call center agents. If the chatbot can effectively resolve a significant portion of inbound queries, it reduces the demand for call center agents. For instance, the savings are clear if the cost per interaction with a human agent amounts to $5, yet the chatbot expenditure is $0.50 or less.

Address Agent Turnover

Agents using AI-powered chatbots can help contribute to a positive work environment. When they don’t have to handle the most repetitive inquiries, they can invest their time and energy into more complex tasks that allow them to use their skills. This can translate to greater job satisfaction and longer tenures. Hiring and training staff is costly, so retention is good for business.

Reduce Errors, Enhance Customer Experience

Estimating the cost of errors isn’t always cut and dry, but the bottom line is that errors lead to customer loss. When customers are upset, they’re less inclined to make referrals and might leave poor ratings on online platforms. However, accurate orders and information provided by reps can inspire trust. And, in today’s world, trust is currency. A 2023 survey from PwC makes the case for creating a high-trust environment: “Fifty-eight percent of consumers say they have recommended a company they trust to friends and family, and 64% of employees say they recommended a company as a place to work because they trusted it. We’ve also found in previous research that levels of consumer trust are linked to performance.”

Employee Time Savings

The cost-per-contact drops considerably if employees can access the information, they need to resolve questions or concerns. To estimate these cost savings, determine the average salary of employees and the time savings facilitated by chatbot usage.

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