In looking for new market opportunities, I got involved in chatbot technology. If you are not familiar with a chatbot yet, it is a conversational user interface that delivers either text-based or voice-based information to a customer. This can be down through a website, mobile device or kiosk. A chatbot uses natural language processing (NLP) and domain knowledge. As the chatbot interacts more with a customer, the dialog changes and becomes more natural in its conversational style. This helps the customer feel comfortable with the interaction as they get the answers or assistance they need.
That idea has fascinated me for awhile. When I probed even deeper, I discovered that there is plenty to “chat” about in terms of the opportunity and impact that chatbots are going to have in all types of industries. Now that I am working with this technology and examining how it works, there are numerous chatbot trends that are valuable to other entrepreneurs as they consider various types of technology to include in their startups or even collaborate with in order to help address audience pain points.
Chatbot Growth Statistics
The global chatbot market is led by technology giants like Facebook, Microsoft and Google. According to available research from Transparency Market Research, these three companies accounted for 97.5 percent of the market in 2015. The chatbot market is extremely consolidated because users feel more comfortable using such new technology when it comes from brands that they trust. While industry research notes that it may be difficult for new market entrants, growth will come from strategic partnerships with such brands. The bigger brands will be looking out for ways to grow their use of a chatbot application to provide additional value, so chatbot startups have an opportunity here.
Transparency Market Research also predicts incredible future growth, estimating the chatbot market to be worth $994.5 million by 2024. Advancements in artificial intelligence are one reason for such growth. On a regional basis, Asia Pacific is predicted to come out on top as the leader in the technology infrastructure to expand chatbot services.
New Applications for Chatbots
While chatbots have made great strides in helping companies provide around-the-clock customer support for basic inquiries and service requests, the biggest trend is the development of new applications that make chatbots a potential addition to your own startup strategy.
For example, if you are a retail operation, chatbots are fueling what has become known as conversational commerce, which is a way to enhance the overall experience for customers. It involves facilitating a deeper level of personalization for the customer. This personalization includes product recommendations and updates, order processing, in-store assistance, location-based marketing and personalized storytelling. Because chatbots can gather so much data about a user and process it so fast, the personalized service is almost immediately delivered and improves over time. Besides the personalization, the customer experience is improved because friction is removed from the purchase process.
Chatbots are also helping in other areas that involve human resources. In this case, chatbots are becoming part of creating a more efficient recruitment process. This includes asking candidates questions during the first round of reviews. Besides doing some of the talking, the chatbots can search and review information about each candidate online to personalize the questions and seek out deeper answers that save recruiters a lot of time.
Other Chatbot Trends in Development
Now that I work within the development aspect of chatbots, I see other changes in audience perspective and understanding, which is driving new trends in how chatbots are changing and providing more value.
- We’ve found that people think chatbots are already fully developed to talk to us in a natural language. In actual fact, this is still developing. That’s why the trend has been to move away from this as a focus to minimize those expectations. Instead, the focal point of chatbot development is now building out a more structured system for use and integration. This will help embed the chatbot in more applications. From there, developers can return to the natural language side of the technology or, at the very least, work on this simultaneously.
- More industry-specific chatbots are now in the works. While there is an overriding benefit to using this technology, each industry has unique needs and goals to fulfill. That means that chatbot tools are being created solely for certain industries like HR, retail and media to exploit their true benefit.
- Since chatbots typically started in the areas of customer service and technical support, the trend will continue to evolve this area. This is due to the continued trend toward creating exceptional customer experiences that deliver on expectations and satisfy the customer so that they will remain loyal. What these new hybrid models of customer service will look like is still in the works, but this is a critical area that more startups should start researching to see how they can incorporate chatbots in their own models.
- There is momentum picking up in terms of market traction. More companies from a wider range of industries are inquiring about how they can incorporate chatbots in their businesses before their competition does.
It’s an exciting time to be a part of this new technology because I see how chatbots are providing a significant solution for some of today’s critical business issues. I like the idea of working on a solution that is truly delivering help and making a difference in how businesses are addressing their customers’ needs.
[This post first appeared on the Business Collective – an initiative of Young Entrepreneur Council, which is a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.]
