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Emerging Trend: Chatbots – What Are They and Predictions for Their Growth

Emerging Trend: Chatbots – What Are They and Predictions for Their Growth

In a market that’s been forced to think mobile-first and where social is the new word of mouth, business owners and marketers are likely to ask, “What are chatbots?” Consumers are looking to purchase products and engage with brands in new and friction-less ways, and digital tools like social, messaging, and video have become key ways to do this. Chatbots are the logical evolution to take these engagements to the next level. Today’s post will offer an overview of the role chatbots have now and the growth you can expect to see in the future.

Chatbots Explained

Chatbots are eponymous to their use: automated robots that interact with users in conversational text via various chat-related programs, such as instant messaging or social media. In the past, they have been overly simplistic, much to the frustration of end users/consumers and marketers/businesses alike, and often applied abusively (e.g., spam accounts on Twitter messaging nonsense messages and linking to questionable or even unsafe sites). However, advances in machine learning and other AI processes (especially IBM Watson) have radically changed the opportunities available, and chatbots are considered to be one of the breakthrough technologies of 2016. A chatbot is often capable of understanding conversational language, making it easy for users to interact with it, and accessing or analyzing large amounts of data, allowing it to provide qualified answers quickly. It can be used internally, to maximize work time, or as a customer-facing application to assist with purchases or service requests. As the underlying technology continues to evolve, we’ll see even more applications into 2017 and beyond.

Examples of Use

One of the easiest ways to comprehend where a technology is and where it’s going is to see how it’s currently being deployed. Here are a few examples from across various industries.

Medical

Backed by Stanford University and partnered with Stanford Hospital, MedWhat is a chatbot app designed to access data from NIH and CDC, engage with patients, and learn from both to most accurately diagnose issues, suggest potential over-the-counter treatments, and determine if medical assistance is required. It’s also accessible to doctors and nurses, giving them access to data and research, and helps to keep patient files updated.

E-commerce

Initially deployed to help remind users about auctions that are about to end as well as whether they’ve been outbid in the critical final 15 minutes, eBay has further developed its bot to operate as a shopping assistant. It operates via Facebook, and it helps suggest items based on what the users say. It also learns user’s preferences to better tailor its future suggestions and allows users to purchase from within the app.

Banking

Royal Bank of Scotland (RBS) developed a chatbot with personality for its staff to use when assisting customers. It’s able to recognize language and process large amounts of data to make answering questions a significantly quicker process. Furthermore, if it can’t handle a complicated situation, it can pass the query to a qualified staff member. It also learns over time to be both more accurate and intuitive.

Growth Predictions

From 2017 to 2021, some estimates peg a compound annual growth rate of about 31% for BFSI services (holding a market share of nearly 41% as of 2016) and more than 38% for retail and e-commerce (holding a 2016 market share of 14%). Chatbots were employed in BFSI to improve customer engagement and increasing value while lowering operating costs. Similarly, the retail and e-commerce sector applied them to secure loyalty and increase sales while lowering the friction hindering the consumer experience. This has been furthered enabled by growing support from major platforms, including Microsoft and Facebook, which give businesses a familiar space to engage customers. These are leaders that influence other brands into joining; popular messaging venue Whatsapp is now the eighth most popular platform for brands to use. Additionally, major AI brands, such as IBM and Google, have released free frameworks and advanced development tools that make it easy and accessible to brands of all sizes.

Interestingly, the chatbot also represents a major shift in how customers want to engage with brands — moving from apps to instant messaging programs. The average retention rate of customers using bots after one month is between 40% and 60%, whereas for app users it’s only 20% to 40%. What’s more, nearly a quarter of mobile app users (23%) are likely to abandon the app after using it just once. There’s also an increasing demand for customer service via text message: 64% of customers who have the ability to send text messages would prefer text to voice as a customer service channel, while 77% of Millennials will have a more positive view of brands that offer text as a customer service channel. A chatbot makes a shift to this type of engagement much easier and cheaper.

The top five industries to benefit most from chatbots in the future are e-commerce, insurance, healthcare, retail, and hospitality. The top five functions to best utilize a chatbot are customer service, sales/marketing, order processing, social media, and payments.

It’s clear to see that chatbots are expected to be a leading tool for businesses in the years to come, but are also powerful tools right now. Don’t relegate this technology to wait-and-see status; start developing a strategy now to deploy a chatbot at the right time in a way that will be most beneficial to your business.