EP12: AI negotiation and why you need it

Al Keck sits down with Rosie Bailey, CEO of Nibble Technology – Nibble is the award-winning chatbot for e-commerce that lets customers make an offer on the product page for instant results. They chat about AI negotiation and why you need it. Covering, how you are already negotiating with AI without realising, AI negotiation allows you to get the right price every time and protect margins for customer conversion and how there is no better way to understand your customers than engaging them in conversation at the point of purchase.

Al: Good morning and welcome to another infinity nation podcast. Today, we have Rosie joining us from nibble. of AI negotiation and why you need it. Welcome, Rosie. Thank you very much.

Rosie: Thank you very much. Lovely to be here

Al: Lovely to have the chance to chat to you about the good, the bad, the ugly of negotiation, which for some people is a bit of a scary concept.

Rosie: That’s a concept I love. Tell us a little bit about Nibble and we met studying at London Business School. We both had a midlife crisis at the same time and went back to school quite late in life after previous careers. Mine was as an investment banker, so I was negotiating deals for Jimmy Choo, Tesco, Unilever, you name it. And Jamie was previously a tech entrepreneur entrepreneur himself, having started in the fashion, luxury fashion world as the CTO of Joseph and moved on from there to be a digital agency.

Al: Brilliant, fantastic, exciting background.

Rosie: Quite complimentary, I think, you know, like, so I’ve done quite a bit more real world negotiation than he has. And I’ve ended up, what I didn’t realize until I left banking is it’s a sales job at the end of the day isn’t it? It’s all about meeting people and persuading them to trust you and then Jamie has the technical background so it works quite well.

Al: Brilliant, so negotiating virtually or via AI, it’s a really interesting concept. I mean I think chat GPT and all those are heavily in the press at the moment. What are the pros and cons?

Rosie: So the way we’ve approached this whole kind of consideration is with a very light touch and with a very positive feel. And I think that’s the most important thing to think about when you think about what we’re doing at Nibble and how that might be a bit different from your perception of AI negotiation. So it is a very clever piece of technology but ultimately interacts with you with a smile and a positivity that’s meant to make you feel happy. And actually it’s looking for that win-win outcome, looking for the retailer to be comfortable with the discount that they have provided to this customer, i.e. it’s well within their limits, usually lower than a voucher code, but also that the customer feels heard and engaged with in a brand tone of voice on your website in a fun and positive way that they walk away going, I got a deal that was just for me.

Al: Is there a risk here to my brand or my reputation if I’m a retailer that by having this type of solution on my website I’m forever discounting, ever giving money away, whereas I could have sold the item or may have sold the item at full value.

Rosie: I think there is. I think there is from any promotional system, tool or strategy that you employ. I think you’ve got to acknowledge that it can be a race to the bottom and actually that’s where most of our client conversations start. Most of our customers, most of our retailers are fed up with how they promote, feel like it is what they call a race to the bottom. And they’ve found themselves in an endless cycle of sale periods and voucher codes. We had one client say to us that she took over a company as CEO and she discovered they had some kind of promotion 50 weeks out So we are a promotional tool, but the reason we’re different is we give everybody much more control. So you might only have it as a nudge for an undecided customer and it would be invisible to the majority of customers. Or it might be something that you use triggered by an email to a VIP customer and it’s just there. Or you might use it very limited time. So, for example, what you could say is I’m going to run a sale period next week, everything’s going to be 50% off, but I’m going to notify my loyal customers that they can negotiate a deal this week and the benefit for them is they get the item at a discount before it sells out in the Black Friday event and the advantage for you is that discount is usually much, much less deep than it is that you put on everything. And so your pricing is arguably more accurate. So it replaces other promotional tools, but because it’s more targeted, it usually protects your margins.

Al: And how does it, I agree with you, I think there’s a lot of discounting that happens. There’s a lot of, you know, it’s 10% here for email signup or 15% for an email signup. And those savvy people who know about Gmail email addresses know a way to just play that system and just get a discount every time, but it doesn’t do the retailer any good because then they have a database full of irrelevant email addresses that are all the same person. So there’s always discounting happening and I suppose it’s considered as part of the overarching cost of acquiring a customer potentially. Although I think there’s more analysis that needs to be done on are they genuinely recruiting new customers whilst giving these discounts. But I think the interesting thing in our discussions is exactly as you say, those that are on top of margin, inventory, can see slower lines, see faster lines, this empowers them to be more sniper, if you like, in terms of where they’re giving discounts, what products they’re giving discounts on, and potentially to the type of audience

Rosie: Yes, yes, I completely agree. I used to sit on the board of a holiday business actually and I think in the travel sector this kind of behaviour is much more normalised and there, you know, they were selling holidays and they brought their average discount down from 15% down to 7%. They still gave quite generous discounts on a weekend away in two weeks time because it should have sold by now and it clearly wasn’t shifting and they’d much rather shift it than have an empty cabin. But it was much more sort of temporary. And I think your customer base get used to that. They know that there’s sometimes a lucky deal and sometimes there isn’t, right? And so they’re not always searching for the standard voucher code that you always email out every two weeks.

Al: I think that’s an interesting one as well because as someone that loves a negotiation, how, what’s the perception here in terms of someone coming to buy from my prestigious brand, rarely do I discount, I went on this chatbot popped up and said to me, hey, you’re thinking about buying this? And starting this discount dialogue, what’s your view on the customer’s expectations of using that brand’s website and future sales?

Rosie: We see different behavior on different brands. So for example, if your average order value is above $100, we see that a customer is three times more likely to say something along the lines of, I’ve seen it cheaper elsewhere, I’ve price checked Amazon. And so that behavior is much more likely on a higher AOV item, and you need to tailor the response to that. And so from that point of view, you have a lot of scope to make that conversation on brand and to your needs. So the other thing is we deal with a lot of customers who are B Corps or sustainable in some way, shape or form, and that’s a very important factor to their brand and to their customers. And we had one situation where a customer came on and said, hey, give me 50% off this item. And the response from the chatbot was, don’t forget it’s fair trade, which means we pay our farmers a fair wage. Could you think about that more carefully because we can’t afford to give those sorts of discounts. And the customer said, fair point, what about 10% off? So we’ve completely moved their expectations and did the deal for a very modest discount. And I’ve just checked the numbers in advance of today. And in the last seven days, our average discount across all of our 350 clients is less than 10%. So we really are about that nudge and that encouragement and a revisiting of brand values. So I think the perception is always like haggling in a Turkish bazaar, and it can be if that fits your brand and you’ve got that fun and that interaction, but if your brand has these serious brand values about, let’s say, fair trade or organic cotton, then we can reiterate those. And usually your customers come to your website because they care about it.

Al: I think that’s another interesting point. So how can you configure the tool or how does the tool, is it configured to meet your tone of voice, your brand values, and your aspirations? I mean, I think that stat there on average margin is immense, whereas from an outside in point of view, I can often see people consider and say, well, this is going to be giving more margin away.

Rosie: Yeah.

Al: What you’re saying there is actually by having an interaction like you would in real life in a store, you know, actually it reduces, it’s reducing the level of margin you’re giving away, thus making more profit.

Rosie: Yes. And we’ve got two large clients, one in the furniture industry in the States and one in beauty here in the UK who also have a US website and both of them have been using nibble since the beginning of the year. Both of them have seen an average nibble discount number so below 10%. Both of them are giving 20% away regularly on holiday weekends because furniture and beauty are very promotional and they’re regularly giving away 15% off of new customers and 10% off of the email list. They both independently come back to me in the last two weeks and said, now we can see that Nibble can offer single digit discounts. We’re going to reconfigure everything on our website. So all of our standard discounts that are visible on our website, like newsletter sign up or new customer discount, we’re going to make them small, like 5%. And then we’re going to reward the customer that chats to nibble with the more generous discount because they’ve bothered to engage with us. Each chat takes about a minute. But you have that chance to have that brand values exchange. You have the chance to get to know what they want and to deliver their needs more accurately. And so as a result, it seems fair to reward them with something perhaps a little more generous, but probably less generous than you’ve been doing already.

Al: Yeah I think that both from a more engaged relationship so starting with the brand values from the off I think that sounds really exciting and fiscally better for the business as well.

Rosie: I think that’s it. Yeah I was I mean I’m an ex-finance person so I tend to focus a little bit on the on the finance side of things. But yeah, it’s supposed to be both. It’s supposed to be both. And we can tailor what offers come in that chat, you know. So, for example, that customer could get a free gift with purchase instead of a straight discount in some scenarios, that sort of thing, which then mitigates that sense of, gosh, I don’t really want to haggle over my prices.

Al: So, it’s not solely able to negotiate with you in terms of product pricing and a product you’re looking at, it can also encourage email signups etc

Rosie: Yes, so at the moment the features that we can offer are things like a bundling solution. So you’re welcome to negotiate on this item but as long as you buy three things today, which we’re finding is very good in beauty, wellness and personal care, because the items are often lower in value. And then we can offer it only for signed in customers, so you VOP customers, you recognize them, you tag them and you make Nibble only available to them. Or we can do things like add a free gift at the end, you know, something like an extra watch strap if you’re buying a watch or a care item for your cleaning your jewelry or something like that.