Sales Chatbots Tell a Story

You can roughly chart a product’s lifecycle based on how it is sold, and this may be having a profound effect on CRM.

We generally know that product categories start with disruptions but commoditize over time, and because of this, the economy needs to be refreshed with new disruptions to drive it.

Disruption dominates the early phases of category growth, and the best use case is not always apparent. That’s what sales people are for. They can best explain the value and provide the differentiation buyers need for making decisions.

Sign of the Times

As categories expand and gain success, there’s diminishing need to involve sales people. Customers figure out their needs and use cases and demand lower prices. Sales people represent a cost that most vendors gladly would eliminate in favor of a less costly alternative — or if the customer should become sufficiently well educated to purchase the product in a retail setting rather than a more B2B-oriented one.

Sales chatbots introduce a new wrinkle into this well-orchestrated scenario. They’re cheap, and they make commoditization possible earlier than you might expect under other conditions. So they’re like sales people but without much of the cost, and they provide a bridge to higher volume sales. However, there’s an interesting issue lurking here.

As chatbots penetrate industries, we shouldn’t simply attribute their success to the advances of sales technology. Sure, CRM is getting better, but sales bots are also a sign of the times: Many of the products we’ve been learning about for a long time are commoditizing. We’ve figured them out and we want great prices.

Sales bots can accelerate the commoditization curve while also driving greater profits, because they penetrate the sales channel while customers still need sales assistance and are willing to pay for it. Of course, vendors will want to adopt this technology quickly to reap the greatest profits before commoditization once again asserts itself, putting pressure on margins. This is a great example of first mover advantage.

Maximizing Return

Sales bots might not be right for every business or every aspect of one. Before he died, Steve Jobs observed that most markets today have really bifurcated. Where a market once was represented reliably by a single bell curve (like a camel), many markets today are represented by two, just like some other camels. (FWIW they are dromedary and bactrian camels.)

In the two-hump variety, the first curve represents what Jobs called the “good enough” segment, defined as one offering product competency — products that are intuitive and work as expected. Service is handled expeditiously when it’s needed, but the product usually is surrounded by automation and a culture that builds problems out of it.

The other dimension can be classified as “luxury” items. As you’d expect, luxury items are mostly represented by people. They interact with customers and provide personal services. Bots have to be carefully inserted in the luxury model and can’t be seen as taking some luxury service away.

However, bots can be seen as labor saving or as enhancing customer convenience. So we see concierge bots in luxury sales and full-on sales bots in the good-enough market.

This is all a slightly oversimplified overview, of course, but it has a purpose. If you are either a CRM vendor or a customer considering deploying bots, it will be important to understand which market you are playing in.

For the vendor, Jobs’ observation can provide a first approximation of how you might consider deploying this automation. If you are a customer, it’s mostly good news, since bots can be seen largely as labor-saving or conveniences, if they’re done well.

Deployment Is Only the Beginning

Here’s the rub: Overpromising a bot’s functionality could be lethal. People who know tell me that training systems for all eventualities is critical.

In one situation an Oracle customer, the City of Albuquerque, New Mexico, offered an interesting and instructive story in relation to its 311 service. I heard it from Matther Maez, a digital engagement specialist for the City of Albuquerque. Now, a 311 service isn’t exactly the same as sales, but I hope you’ll agree there’s a good deal of overlap when you start considering how machines and people interact.

The city has a nice zoo. It was once called the “Rio Grande Zoo,” but a few years ago it was renamed the “Albuquerque Biopark Zoo,” and it also has an aquarium and botanic garden. Despite the name change, people still refer to the zoo by its old name, meaning that the 311 system had to accommodate both names. Maez told me they had to program 300 variations of those names based on how a question might be asked. There also was the bilingual flavor of the city to consider.

The point is you’re not done once you’ve deployed a system, be it a 311 service or sales bots. It’s something you keep working at, and it evolves as the business does. So, while sales bots might help a vendor reduce its need for sales people, it will at the same time require new skills in IT.