Build or Buy: Understanding the Real Cost of a Chatbot Implementation
Chatbot technology is becoming a ubiquitous part of the digital landscape.
Salesforce predicts that 53% of service organizations plan to adopt chatbot capabilities in the next 18 months, joining the tens of thousands of websites that already offer this channel.
The decision to add a chatbot channel might be easy for many companies, but their next decision is a big one: How do we do it? Companies need to consider whether they should build and operate their own tools or rely on a third party to develop and operate it for them. It’s a strategic choice with costs and benefits on both sides, and it’s one that many are grappling with as they enter the arena.
At Sutherland, we advise Fortune 500 companies as they navigate this exact decision point, and not surprisingly, they often come to different conclusions. Numerous factors comprise this critical decision, and all of them come with a real financial expense or an opportunity cost.
Therefore, we thought it would be helpful to share some of our experiences around the costs of building and operating a conversational AI solution, regardless of whether you build it yourself or buy it from a third party partner so that you can get your decision-making process off on the right foot.
The Cost of Maintenance
When adopting chatbot technology, companies can choose to buy an off-the-shelf solution or they can develop their own software, and, while there are different price points for each option, businesses eventually turn their attention to the cost of maintenance after a chatbot is installed.
Companies developing their own chatbots will often designate a selection of their engineering talent to create the project, something that can be an effective way to utilize existing resources.
However, an effective chatbot channel requires continual management, and that comes with a cost. For example, companies need to offer:
- Ongoing oversight to maintain and optimize effectiveness
- Content adjustments to fit evolving or seasonal needs
- Identification and development of new and prescient features
Therefore, the question becomes, “Do I operate this AI, or do I hire someone who is going to operate it?”
If you’re planning to go it alone, you will need expertise in three significant areas: conversational design, NLP training, and data analysis.
Moreover, you need to ensure that these resources, and others required to make a chatbot flourish, will be a persistent presence after the product is launched.
If that talent designation doesn’t make sense, employing a third-party solution might be in your best interest.
The Cost of Integration
A chatbot isn’t an end in itself. It’s a connection point for customers and a gateway to additional services. It’s just one piece of a larger puzzle that includes CRM, transaction management, security and authentication, scheduling, inventory management and tracking, and a litany of other customer-facing initiatives.
Collectively, AI solutions facilitate multiple touchpoints that impact customer experiences, and integrating this technology with these systems comes with a significant design and engineering cost.
In other words, chatbots are incredibly sophisticated, but they may still require a handoff to a human customer service representative, and managing that handoff is part of the cost equation.
More specifically, knowing when and how to handoff is a critical junction for the chatbot experience, and failing to optimize this process can frustrate customers and ultimately negate the benefits of automation altogether.
According to a report by DigitasLBi, 73% of customers won’t use your chatbot more than once if they have a bad experience, so navigating this critical juncture is one of the definitive aspects of a successful chatbot integration.
What’s more, best practices in messaging, chatbots, and NLP are continually evolving, and content needs function as part of a shifting hierarchy. Taken together, this makes successful chatbot adoption a moving target, but it’s one that companies can’t afford to miss.
To ensure a superior customer experience, chatbot initiatives need to be replete with data analytics and ongoing monitoring to assess the effectiveness of integration touchpoints and handoffs.
Simply put, a DIY approach to chatbot integration needs to account for the technology’s integration with your broader IT infrastructure, which produces cascading costs that might be manageable but also might be better offloaded to a third-party operator that can provide a single price for comprehensive services.
The Cost of Operation & Maintenance
Just as your company is continuing to grow and change, so will your chatbot, and regardless of your approach to adoption, there will be ongoing needs and recurring costs.
Companies can expect to spend between $90,000 and $250,000 on personnel alone, and these employees require additional perks like insurance and benefits that further increase the expense.
In short, managing a conversational AI solution comes with a cost, and this expense can quickly become more than many businesses expect.
Operating and maintaining a chatbot requires an intricate understanding of your business goals, a comprehensive ability to derive meaningful insights from data analytics, and continual product design to develop and integrate updated functionality.
Often chatbots are small widgets meeting customers on apps and edges of websites to provide effectively and timely customer communications. However, behind the scenes, this technology is an incredibly complex operation that continues as long as your bot is in operation.
For some, it makes sense to build your chatbot in-house by harnessing your readily-available engineering talent. For others, partnering with a team of experts that provide full-service experience is the best way forward.
Chatbots will definitely define our digital experience going forward, but don’t jump into your project before you understand the cost. Our team at Sutherland is ready to help you decide by providing expert insights into the true cost and potential of your chatbot project.
