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Bots in retail: the time is now | 1
Bots in retail:the time is now Microsoft Enterprise Services [email protected]
2 | Bots in retail: the time is now
Bots in retail: the time is now | 3
Contents
Foreword 5
Introduction 6
The retail industry today 7
Bots, artificial intelligence, and 8machine learning
Why now, and why retail? 8
Bots and your business: what can 10it do for you?
Getting to market 12
Real-life examples 13
What now? 14
4 | Bots in retail: the time is now
Bots in retail: the time is now | 5
At the same time, established industry players face disruption
from new market entrants with more agile, cloud-based
business models that have customer service built into their
very core and are infinitely more efficient.
As retailers attempt to tackle these challenges, thoughts
naturally turn to technology to address some key questions.
What if your sales staff knew what a customer wanted before
they even started shopping? What if you could resolve half
your product support queries without an employee having
to get involved? What if you could have a 24-hour tailored
customer response service that scales infinitely in line with
your business as it grows?
Many companies have already begun harnessing the power
of artificial intelligence, machine learning and bots to engage
their customers and drive down costs. Tens of thousands of
bots have been launched in the past year alone from some
of the leading high-street and online brands. The good news
for those retailers that have not done so yet is that bringing
a bot to market can be quick and simple, enabling brands
to harness this transformational technology to reshape the
customer experience whilst optimising operations in a matter
of weeks.
Read on to discover how investing in bots is already paying
off for a wide range of retailers and how you can bring a bot
to market in just five weeks thanks to Microsoft’s
tailored proposition.
I hope you find the insights in this eBook a useful addition to
your own transformational journeys.
When we speak to retailers about their digital transformation journeys, two topics arise time and again: customer experience and operational efficiency. Brands are continuously looking for new ways to engage customers in an era where access to information and different purchasing options are more prevalent than ever.
Cindy Rose, CEO, Microsoft UK
6 | Bots in retail: the time is now
In 2016, we surveyed1 more than 1,000 business and IT leaders from a wide range of UK organisations to understand how they were responding to rapid economic, societal, and digital changes.
Among retailers, more than 50 percent thought that their
current business model would be outdated in less than
10 years. More than half also thought that the retail sector
would be significantly or moderately disrupted in the next
two years. Only in the financial services sector did we see
a higher proportion respond in this way.
The answer, according to all respondents, lies in digital
transformation. As promising as that sounds, the reality of
transforming a business to take advantage of emerging
digital technologies is complex and unique to each
organisation. So why should a company invest in such a
transformation? What might it entail? And what would the
concrete outcomes be—other than remaining competitive?
Retailers have two main drivers behind their digital
transformation efforts:
• Improving the customer experience
• Becoming more efficient
While retailers differ in how long they’ve been pursuing such
programmes and how much strategic importance they place
on them, they lag behind other industries when it comes to
two technologies: artificial intelligence and digital assistants,
or “bots.”
More than 50 percent of retailers surveyed thought their current business model would be outdated in less than 10 years
1https://www.microsoft.com/en-gb/about/ent/digital-transformation-report/default.aspx
Bots in retail: the time is now | 7
Changing shopping habits and increased access to information mean that established retailers have to adapt to stay relevant. Many didn’t, and their high-profile demises have served as warnings for other retailers that the established way of operating couldn’t continue.
The industry faces disruption from low-cost retailers that
compete on price, and high-cost retailers that compete by
providing excellent products, with a customer experience to
back up the price point. According to our survey1, 18 percent
of retailers also expect competition from other sectors,
and 10 percent expect it from new entrants with disruptive
business models.
As technical barriers to entry have lowered retail startups
have been able to gain a foothold through established
marketplaces like Amazon and ASOS. While one small
challenger is unlikely to have much effect, 50 or 100
of them can have a devastating cumulative impact.
The customer experienceAccording to analyst firm Gartner2 customer
experience is “the new competitive battlefield,” and
89 percent of companies now expect to compete
mainly on the basis of customer experience, up from
36 percent in 2012. Most companies would claim to
be customer centric—in fact 80 percent3 do—but
of those, only 8 percent have customers who agree.
In an era where a customer’s experience of a retail
brand happens through multiple channels, companies
need to ensure that the experience is consistent and
rewarding. Fortunately, because many customers
interact with brands digitally, they create a wealth of
data that brands can use to improve the experience.
What many companies lack, however, is a way of
handling and understanding that data to take action.
The efficient retailerIn a market that continues to be highly competitive,
driving down internal costs is critical for retailers. With
many operating hundreds of branches and interacting
with thousands of suppliers, complexity can create
inefficiency. Technology has long promised solutions
to these problems, and retailers have always been
quick to adopt ways of automating processes—from
barcodes and electronic point-of-sale technology to
online stores and enterprise resource planning systems.
We stand on the verge of what many are calling the
fourth industrial revolution. Cloud computing, big data,
and artificial intelligence represent huge shifts in how
humans use technology to make previously impossible
tasks not only achievable, but cheaper.
The retail industry today
1https://www.microsoft.com/en-gb/about/ent/digital-transformation-
report/default.aspx
2Gartner Customer Experience Action Plan https://www.gartner.com/
marketing/customer-experience
3http://www.bain.com/bainweb/pdfs/cms/hotTopics/closingdeliverygap.pdf
8 | Bots in retail: the time is now
There are three reasons why now is the time for retailers to consider incorporating bots into their business.
1 Great for customersNo one can have escaped the buzz about digital assistants
over the past couple of years. Consumers have embraced
them, which is good news for businesses.
● Bots are never too busy to speak to a customer and can
run 24x7.
● They are easy to scale. You can deploy as many as you
need, meaning customers don’t have to spend long
periods on hold in a queue or searching through a website.
● They have better memories than humans. This means
customers avoid having to explain their story
to multiple advisors because the bot has all their data.
Bots, artificial intelligence, and machine learning Artificial intelligence (AI)Although its definitions are broad, artificial intelligence
(AI) is essentially the ability of computers to make
rational decisions, similar to the way a human would.
This has been a goal of computer scientists for decades,
but only now are we seeing a surge of interest in the
field thanks to advances in computing power and a
stronger theoretical understanding of how to handle the
data that a computer needs to “think.”
Machine learningClosely related to AI, machine learning lets computers
learn to perform tasks without being explicitly
programmed to do them. It is a critical component of
AI, and has seen recent advances for the same reasons.
BotsBots can replicate the effectiveness of your best
advisors, cutting frustrating wait times using the power
of the cloud with infinite scale, and reducing operating
costs. An example of this is Microsoft’s Cortana—a
digital assistant that can recognise human speech,
interpret requests, and deliver information or perform
tasks based on what it is asked to do.
Why now, and why retail?
Bots in retail: the time is now | 9
2 Control the explosion of dataHighly digitised organisations such as retailers create
gigabytes of data a day. External data sources like supplier
systems and social media only add to this, and the volume,
variety, and velocity of incoming data will only increase.
Making sense of this requires automated tools that can
process the data and derive useful insight from it at the right
time for the right user. Harnessing data also helps deliver
a better customer experience. If a customer walks into a
physical store, sales staff won’t know anything about them or
their needs. Bots have access to both the data you hold on a
customer, including past interactions and purchases, and any
other data they allow the bot to access, such as their social-
media profiles. By mining this data, bots can have a more
relevant conversation with a customer.
3 Drive down costUsing bots isn’t about replacing people with machines, it’s
about helping people do their jobs more efficiently. Instead
of a human in a contact centre spending their day answering
simple customer queries, a bot could do this, leaving the
human free to handle more complex cases, or improving the
bot’s performance.
Using bots isn’t about replacing people with machines, it’s about helping people do their jobs more efficiently.
Why now, and why retail?
10 | Bots in retail: the time is now
Bots and your business: what can they do for you?
Scenario A: product supportSome retailers already have bots that do this. They exist
mainly as part of a brand’s website or app, and provide an
automated chat service to help users resolve issues faster
for greater customer satisfaction. Their intelligence is often
programmed based on existing customer support workflows
or FAQs, and many have access to customer databases to
provide a more personalised service to the user.
If a customer needs to be transferred to a human advisor, the
handover is smoother because the bot can provide an instant
view of the situation, which the advisor can easily understand.
Scenario B: the purchasing journeyWhen browsing a retail site, users can talk to a chat bot to
describe their needs. This is especially useful in areas where
consumers can be overwhelmed by choice, or don’t have
enough information to make an informed decision. The bot
can interface with systems to book appointments at physical
stores, reroute enquiries to human sales advisors, and use
background information about a customer to provide a
more personalised service. This could be information the
company already holds about that user’s past purchases
or, if a customer grants the bot access to their social-media
profile, the bot could quickly start to build up a picture of the
customer’s personality and their tastes. This allows the bot to
provide more appropriate offers when up-selling or cross-
selling, which can potentially boost sales.
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Scenario C: intentional selling Bots can serve as a helpful interface between a consumer
and a digital product. Take mobile phones. Customers will
often turn off their data roaming when they go abroad, but
many don’t realise that they have roaming included in their
tariffs, or could buy data packages for less that they thought.
In this scenario, bots encourage customers to get better use
of a service, and brands can benefit from wider up-selling
opportunities. Clothing retailers have also started offering
personal-stylist bots, which give advice to customers about
how they can combine items to achieve their perfect look.
Scenario D: new starter on-boardingLarge retailers have established processes to bring new
starters into the business, but the admin still takes up
valuable hours for managers. Bots can help users set up
accounts, get familiar with IT systems, and complete
relevant training—all using natural language that people
can understand and respond to.
Bots encourage customers to get better use of a service, and brands can benefit from wider up-selling opportunities.
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Getting to market
8/10 executives1 recognise the importance of using digital channels to create a consistent customer experience, but less than 35 percent feel confident to execute these initiatives.
Building bots is less complicated than many retailers think,
thanks to development frameworks. These help to provide
bots with the intelligence they need and integrate them into
existing technologies so that consumers can discover and
interact with them easily. The Microsoft Bot Framework was
launched in 2016 to help developers kick-start their digital
assistant projects. Here are some of the reasons why it’s the
framework of choice for developers around the world.
Easy to integrate with customers’ favourite channelsThe framework makes it easy to add bots to communication
channels that are already popular with customers, including
Skype, Facebook Messenger, SMS, and email, as well as your
website and app. Developers need to build a bot just once,
then connect it to multiple channels.
Quick to buildThe Bot Framework is currently in preview phase and its
open-source code is freely available to developers, who can
program the bots in a language that suits them. In addition
we run an early adoption programme for customers that
delivers a working prototype bot in just five weeks.
Simple to findRight now, there’s no standard way for consumers to find
bots they can talk to. The Bot Framework allows developers
to make their bots discoverable via search, so they appear
natively on results pages. Bots made in the framework can
also be found by other assistants like Cortana. In the latter
scenario, Cortana interfaces with the bot, so consumers might
not know they are talking to a bot at all. Consumers can even
add it as a friend on their favourite communication platforms.
Powered by years of intelligenceMicrosoft Cognitive Services was launched at the same time
as the Bot Framework. These APIs provide powerful service
extensions to make your bot smarter through Cognitive
Services such as Language Understanding Intelligent Service
(LUIS). Translation for automatic translation to more than 30
languages, and FormFlow for reflection generated bots. It
also has access to a rich suite of knowledge from Cortana
and Bing, which have been answering and learning from
real-world customer queries for years.
1https://www.microsoft.com/en-gb/about/ent/digital-transformation-report/default.aspx
Bots in retail: the time is now | 13
Skyscanner and Skype have collaborated to build a travel search chat bot for the Skype platform.
Skype users involved in a group conversation can simply
add the Skyscanner bot to the chat and interact with it
naturally, as if it were another group member.
They can use the bot to search for flights and see prices
and route options directly in the chat. The bot then provides
a link where users can go to complete the purchase.
Skyscanner and Skype
“ Working with Skype on creating our bot was a natural fit for us: travel is an inherently social activity, and so it seems completely fitting that we’ve worked with Skype – the world’s largest peer-to-peer communications platform and the first messaging platform to offer bots which can interact as part a group chat environment, to give users the ability to share the experience of finding the best flights together.” David Low, Head of Bots and Conversational Search, Skyscanner
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We have a fast-track scheme to get you up and running within five weeks in three simple steps:
1 | Strategy briefingIdentify business challenges that can be addressed with solutions based on
the Microsoft platform
2 | Design led innovation workshopEstablish a delivery plan to achieve your vision
3 | Development sprintFocus on solution design, development, and deployment using a consolidated
and accelerated approach
What now? To discover more about how your business can benefit from bots, AI, or machine learning, contact us at:
Bots in retail: the time is now | 15
CASE STUDY: AI at Sibos 2016
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16 | Bots in retail: the time is now
