AI chatbots can boost sales, but only when customers don’t know about them

AI thumbnail image 48498xAccording to new research published in Marketing Science, artificial intelligence (AI) chatbots can increase sales by four times more than inexperienced workers.

However, if customers know about the use of an AI chatbot before the machine-customer conversation, purchase rates decline by almost 80%.

Xueming Luo and Siliang Tong (both of Temple University), Zheng Fang of Sichuan University, and Zhe Qu of Fudan University, used field experiment data on 6,200 customers that received sales calls from chatbots or human workers.

Some of the customers that received sales calls from chatbots weren’t told about the use of AI at all, while others were told either at the beginning of the conversation, after the conversation, or after they had bought something.

Undisclosed chatbots were found to be up to four times more effective than inexperienced workers in engendering customer purchases. However, sales rates declined by more than 79.7% when customers were told about the chatbot before purchasing.

According to the abstract of the study:

“The negative disclosure effect seems to be driven by a subjective human perception against machines, despite the objective competence of AI chatbots. Fortunately, such negative impact can be mitigated by a late disclosure timing strategy and customer prior AI experience.”

Luo, a professor and Charles Gilliland Distinguished Chair at Temple University, commented:

“Our findings show when people don’t know about the use of artificial intelligence (AI) chatbots they are four times more effective at selling products than inexperienced workers, but when customers know the conversational partner is not a human, they are curt and purchase less because they think the bot is less knowledgeable and less empathetic.”

He added:

“Chatbots offer enhanced technological benefits, reduced customer hassle costs and increased consumer welfare (offering the product at lower cost because bots save money on labor). This data empowers marketers to target certain customer segments to cultivate customer trust in chatbots.”

AI refers to software technologies that allow computers or robots to behave in ways similar to human beings.


Journal Citation

Frontiers: Machines vs. Humans: The Impact of Artificial Intelligence Chatbot Disclosure on Customer Purchases
Xueming Luo, Siliang Tong, Zheng Fang, Zhe Qu
Marketing Science
Published Online: 20 Sep 2019
https://doi.org/10.1287/mksc.2019.1192