“Alexa, do I need an umbrella today” or “Siri, reschedule my 9 o’clock meeting to noon” are probably the first conversations you would have had with conversational AI. Now, it has seeped into your life to the extent that you use it in most of your interactions, business or otherwise without even noticing them. Conversational AI has evolved as an extended partner for anyone ready to leverage its benefits.
So, when businesses constantly seek ways to reduce overheads and improve business efficiency, it’s conversational AI that steps in to save the day. Businesses know that cutting costs will affect the quality of interaction and a fair amount of dissatisfaction also seeps in. And yet cost control is one of the key elements of any business’s financial strategy. With conversational AI entering the scene, this is rapidly changing.
Right from the first chatbot ‘Eliza’ created in 1966 to today, this transformative technology has changed the face of interaction in a massive way. Streamlining customer support, enhancing self-service, automating repetitive tasks, enabling targeted marketing, optimizing supply chain management, improving HR processes, facilitating data analysis, and offering scalability – these are just some of the ways businesses are leveraging conversation AI to reduce costs while providing a better experience to their customers.
Let’s explore how conversational AI is helping businesses control costs while superseding customer and business interactions.
Understanding Conversational AI
The chatbots, virtual assistants and automated voice assistants you have been interacting with on and off are examples of conversational AI. Based on transformational technologies like machine learning (ML) and natural language processing (NLP), conversational AI answers user queries to provide relevant information or assistance intelligently in a human-like manner. Businesses can adopt it on all platforms and can use it in many similar, yet different ways to reduce costs.
Conversational AI has impressed the business world with its ability to continuously learn and improve through machine learning algorithms and the data it is fed in the form of predefined conversations. Also, while interacting with users, the system continuously adapts its responses through the gathered and learned data, becoming more accurate and efficient over time. This continuous learning process is a fundamental aspect of Conversational AI that enables it to be a cost-effective solution for businesses.
Various Challenges in Cost Controlling
To examine how conversational AI helps in reducing costs, it is first necessary to understand and narrow down the challenges businesses commonly face in controlling costs. Though each business has its unique challenges, some factors remain constant and can be addressed through advanced technologies such as conversational AI.
Sales and Marketing
This is where the mullah of any business lies. However, sales and marketing are also subject to various cost challenges:
- Lead Generation: Constantly generating and nurturing leads is the #1 priority for business growth, this is a labour-intensive, time-consuming task that requires meticulous sifting and despite best efforts, many leads turn out to be dead-end.
- Cost-Effective Advertising: With marketing campaigns demanding a constant inflow of cash, the advertising costs need to be managed optimally without breaking the bank.
- Personalization: In today’s hyper-personalised world, meeting client expectations requires a deep understanding of customer behaviour and preferences, which can be difficult to achieve at scale.
Finance and Accounting
Being the backbone of the business, cost control in finance and accounting comes with its own set of challenges.
- Financial Analysis: Businesses spend a ginormous amount of time in analysing large financial datasets to make informed decisions.
- Manual Data Entry: Manual data entry is time-consuming and prone to errors which can lead to financial discrepancies, compliance issues, and inefficiencies.
- Regulatory Compliance: Ensuring that all financial processes and reporting are compliance-proof and meet the necessary standards is a complex and costly activity.
Product Development
Gathering insights and understanding customer needs are crucial for improving and creating new products. But these can increase costs in various ways –
- Collecting data about new market trends and customer preferences is not easy on the pocket.
- Engaging with customers to understand their pain points is highly effective but is resource-intensive and expensive.
Supply Chain Management
The process of converting raw materials into finished products has several cost challenges including:
- Managing inventory just enough to meet the demand while avoiding overstocking, costly storage or stockouts is a delicate and complex task.
- Supply chain demands timely deliveries, order tracking and coordination which can be repetitive and cumbersome.
Customer Support and Service
Providing top-notch customer support is critical for customer satisfaction and retention. However, it comes with its own challenges:
- Offering efficient customer support 24/7 to customers based in different time zones is expensive and challenging to manage with human agents.
- Customer support agents are often overwhelmed by repetitive inquiries, leading to long response times and decreased customer satisfaction.
Human Resources
The Human resources department has its own set of challenges, including:
- Allocating dedicated resources for employee onboarding and training, especially for new hires, is a costly and time-intensive process.
- Handling repetitive HR inquiries in masses is cost-intensive.
Conversational AI for Cost Reduction in Business Operations
It’s uncanny how efficiently conversational AI can help businesses overcome these challenges to reduce operational costs. The benefits extend beyond cost savings and efficiency; they also result in improved customer experiences, more effective marketing efforts, and better decision-making through data-driven insights.
Sales and Marketing:
Chatbots can significantly impact the bottom line by filtering quality leads for the sales and marketing team. Businesses are also utilizing conversational AI for lead nurturing to increase conversion rates, reducing the cost per acquired customer.
Additionally, chatbots can optimise targeting and automate ad campaigns which can reduce advertising costs and improve the return on investment (ROI) of marketing efforts.
Businesses can also benefit from conversational AI with its hyper-personalised product recommendation leading to more effective marketing campaigns and higher conversion rates.
Finance and Accounting:
Conversational AI is assisting businesses by automating various finance and accounting functions which previously demanded human intervention such as generating financial reports, managing account receivables and payables, generating invoices, managing transactions, payroll processing and identifying frauds. It also helps businesses make informed decisions by providing real-time data insights. These automated functions reduce the chances of error while optimising time and cost.
Moreover, businesses can also resolve customer inquiries on investments, and loans, and provide personalised financial services with the help of a chatbot.
Product Development
Businesses can deploy chatbots to gather customer feedback and market insights to develop in-demand and customised products. Once the product is developed, conversational AI can be utilized to engage with customers for feedback on prototypes and product improvements, reducing the cost of customer research and product testing.
Chatbots can also be employed to enhance customer interaction by offering customer-specific product recommendations based on their purchase history and browsing patterns.
For instance, on the website of a mattress provider, if a customer has a history of searching for back-support mattresses, a chatbot can leverage this information to recommend other related products that align with their physical condition, such as adjustable bed frames or mattress toppers. In this manner, chatbots provide tailored suggestions based on a customer’s specific needs and preferences within our platform, ensuring a highly relevant shopping experience.
Supply Chain Management
Conversational AI helps in making quick decisions by providing real-time information about inventories. It also helps in identifying patterns and anomalies by analysing previous movements of the inventory.
Apart from these, it automates repetitive and time-consuming tasks such as order picking, processing, tracking, and updating order status.
Customer Support Automation
Businesses are leveraging chatbots for efficient 24/7 customer support, reducing the need for human agents during off-hours and ensuring rapid response times. This improves the customer experience and helps maintain customer loyalty. The chatbots are impressively resolving most of the complex customer queries and requests. For the mundane ones too, like booking appointments or managing schedules, conversation AI is efficiently reducing cost and human-reliance.
Human Resources
Many businesses are managing recruitment, onboarding, and training employees more efficiently with the help of conversational AI. Chatbots are pre-screening candidates to pass on only the relevant ones to their human counterparts while the candidates are routinely updated with their application, interview scheduling, and joining.
Apart from training and onboarding, these intelligent chatbots are also able to provide relevant information about company policies and other self-serving options to existing employees.
Conclusion
With 31% of business leaders believing that automation helps reduce labor costs, conversational AI is revolutionizing the way businesses control costs without compromising on efficiency or the quality of service to its users. Strategically placing the valued human labour in core competencies while automating routine tasks for error-free consistency and 24/7 availability allows businesses to scale at an unprecedented rate.
While cost control remains an essential part of business strategy, Conversational AI has proven to be a catalyst for improving the bottom line and staying competitive. And with the ongoing advancements in AI technology, the future looks even brighter for forward-thinking businesses that are ready to evolve and leverage this technology as a cost-effective and customer-centric solution.
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