Authors name: Cognigy May 6, 2024
Top 4 Conversational AI Uses for the Retail Industry

Online shoppers expect much more than just FAQ bots; they expect on-demand, highly personalized digital support for both their queries and concerns, aiding them across their full consumer journey.

As retailers adopt Conversational AI solutions to meet consumer demands and expectations, they also open themselves to various other advantages, such as AI’s leverageable analytics, resource savings, and seamless integration capabilities, among others. 

Read on as we look into Conversational AI, AI Agents, and the top four uses for Conversational AI in the retail industry. 

Conversational AI and Retail 

Conversational AI is a term used to describe technologies that simulate human conversation. At their core, Conversational AI systems use a combination of natural language processing (NLP), machine learning (ML), and speech recognition technologies to understand, interpret, and respond to inputs. These responses are intended to mimic human-like conversation, making them more intuitive and semantically relevant.

Conversational AI isn’t quite the same as Generative AI, although the two are commonly conflated: Generative AI refers to a broader category of artificial intelligence that, through neural networks and other deep learning mechanisms, can generate new content of various forms. In the context of chatbots, advanced retail AI Agents leverage both Conversational and Generative AI to create highly engaging interactions that are flexible and personalized to the user.

In essence, Conversational AI provides logic, structure, and guard rails — and with it, a degree of rigidity. Generative AI, complementarily, brings creativity and adaptability, allowing for more dynamic, personalized, and contextually relevant responses within the retail environment.

Enter AI Agents that leverage both Conversational AI and Generative AI. These AI Agents go well beyond answering the questions of shoppers; they also handle more nuanced, complex tasks, from order tracking and facilitating exchanges/refunds to providing tailored recommendations and much more. 

The Growing Prevalence of Conversational AI in eCommerce

By 2026, approximately one-quarter of all retail purchases will be made online, equating to trillions of dollars. With more and more shoppers turning to eCommerce, retailers are now requiring reliable and scalable technologies that aid buyers through the full consumer journey. Retailers are experiencing notable results by bringing AI agents on board: a 30% improvement in customer satisfaction (CSAT), 15% reduction in average handling time (AHT) for customer inquiries, and a 99.5% faster response time. 

AI Agents: Top 4 Uses for the Retail Industry 

Cognigy's AI Agents combine both Generative and Conversational AI to offer a range of benefits to the retail sector. The technological advancements of such models yield speed and efficiency, leverageable insights, and 24/7 support. 

1) Speed and Efficiency 

With AI Agents, retailers can streamline customer service experiences through instant responses to inquiries and support requests. This technology allows for quick resolution of common questions — such as product availability or order status — without the need for human intervention, thereby reducing wait times and improving overall customer satisfaction.

Moreover, as these models are capable of understanding inputs and processing information, human agents can work on handling more complex and nuanced customer concerns while delegating routine inquiries and tasks to the AI system. This workflow interconnectedness between human agents and AI Agents works to improve efficiency and offer a high level of service quality.

AI Agents — through leveraging both Conversational and Generative AI — can also automate and personalize customer interactions on a large scale, creating responses that are not only immediate but also highly relevant to each customer's queries and needs. This combination helps ensure that customer service is not just fast but also smart, providing answers and solutions that are tailored to individual preferences and past behavior. 

2) Reduced Redundancies 

In the retail industry, it’s estimated that approximately three hours of daily tasks can be automated. Failing to adopt automation technologies can lead not only to inefficiencies but also to wasted resources. Expanding further on speed and efficiency, AI Agents can significantly reduce redundancies by automating tasks that don’t require human interaction. 

Take the returns process, for example: When a customer makes an inquiry with an AI Agent saying they would like a return on an order, the process is as follows:

  • Qualify and identify: The AI Agent securely confirms the identity of the shopper. 
  • Resolve request: The AI Agent will either automatically handle the full returns process or, in more complex cases, route the call to a human agent. While the customer is communicating with a human agent, the AI agent offers real-time insights and assistance.
  • Wrap-up: Following the interaction, the AI Agent transcribes the communications and creates detailed logs that are generally filed within an integrated customer relationship management (CRM) system. 

This conjunction of both AI and human support creates a seamless customer experience while concurrently taking a load off human agents, allowing them to focus on more complex and nuanced tasks. In fact, this empowerment of human agents has translated into a 50% decrease in agent turnover

3) Leverageable Insights 

The insights offered by AI Agents are relevant for both immediate problem-solving and long-term strategic planning. This applies not only to offering potential customers personalized insights into products and services but also to understanding customer behaviors and preferences more generally. 

The data that AI Agents gather can include purchase history, browsing habits, feedback, and previous interactions with the retailer, among others. 

On the macro level, AI Agents — by analyzing conversations and interactions — can identify trends, highlight common customer pain points, and even suggest improvements to the customer journey. On the micro level, these models can build individual user profiles and tailor interactions and recommendations based on specific user data history, leading to enhanced customer experiences and ultimately increased conversion rates.

From a different angle, human agents can utilize these insights to augment their own customer service interactions. By having access to detailed customer profiles and histories, agents can offer more nuanced and informed support, leading to higher satisfaction rates and improved problem resolution. 

4) 24/7 Smart Support 

Nine out of ten customers say that immediate customer service — within ten minutes or less — is a must. Delayed customer service is not only associated with customer dissatisfaction but also a significant reduction in conversion rates.

AI Agents offer more than just answering questions around the clock, offering 24/7 support across a wide range of tasks, including:

  • Personalized product recommendations: AI agents can analyze customer data to suggest products that align with their preferences and past purchases, providing a tailored shopping experience.
  • Automated complaint resolution: By handling common complaints and issues, AI agents can resolve problems quickly and efficiently, often without the need for human intervention.
  • Real-time inventory updates: Customers can get immediate information on product availability, helping them make informed decisions without delays.
  • Multilingual support: AI Agents can interact with customers in multiple languages, breaking down language barriers and expanding the reach of customer service.

Moreover, AI agents understand industry-specific terms and intents, ensuring they are well-equipped to handle queries related to consumer goods, electronics, media, and other eCommerce sectors — regardless of the time of day. This specialized knowledge enables them to offer more accurate and relevant assistance, thereby enhancing the overall customer experience.

Conversational AI in Practice

Mister Spex, Europe's leading digitally-driven omnichannel online optician, serves over 7 million customers across 10 countries. Mister Spex recently revamped its customer service strategy by integrating an AI Phone Agent with Cognigy, marking a significant milestone in customer service innovation.

Despite Mister Spex's robust forecasting model for incoming calls, they faced the challenge of unpredictable peak times and agent shortages in its contact center, leading to extended hold times for customers. Managing high call volumes didn't align with their customer-centric approach, prompting the decision to automate the phone channel to improve efficiency and enhance customer satisfaction.

Mister Spex implemented an AI Agent trained on common customer inquiries, empowering them to replace the entire IVR logic. The AI seamlessly verifies customers over the phone, retrieves order status from the CRM, and autonomously handles "Where is My Order" inquiries, reducing the workload on the customer service team. Integration with Genesys and Microsoft ensures a smooth interaction process.

The results speak volumes:

  • 70% caller verification rate
  • 30 seconds saved per call
  • Over 50% of "Where is my Order" inquiries are now fully automated!

WISMO inquiries are now managed efficiently, and functional reporting allows for immediate correction of errors, and all of this has been achieved in just a 3-month window. Future plans include expanding the AI Agent's capabilities to cover more automated functionalities, promising even greater efficiency.

Retail Conversational AI With Cognigy

Cognigy is revolutionizing the customer service industry by providing the most cutting-edge AI workforce on the market. Its award-winning solution empowers businesses to deliver exceptional customer service that is instant, personalized, in any language, and on any channel. Through the perfect combination of Generative and Conversational AI, Cognigy’s AI Agents are shaping the future of customer service, increasing customer satisfaction, and supporting employees in real-time. 

Built on the foundation of the world’s leading Conversational AI platform, Cognigy's AI Agents provide next-gen customer service, absorb your enterprise knowledge, and come fully equipped with intelligent IVR, smart self-service, and agent assist. Supplied with dozens of pretrained skills, they work seamlessly with existing enterprise systems, learn from your human agents, and give them superpowers. 

Over 1000 brands worldwide trust Cognigy and its vast partner network to create AI customer service agents for their business. Cognigy's worldwide customer portfolio includes Bosch, Frontier Airlines, Lufthansa Group, Mercedes-Benz, and Toyota.   

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