While 2016 was a breakout year for chatbots, it is worth putting the technology’s emergence in perspective.
Forrester research reveals that very few of the largest organisations have rolled out the digital assistants, with only 13 of the 128 Fortune 500 firms it surveyed offering true chatbots by the end of last year.
So for all the noise and hyperbole, it is worth remembering that chatbots remain in the early adopter stage.
Nonetheless, awareness of chatbots is growing and, crucially, customers are receptive to them.
Morar Consulting’s study suggests that 57% of British consumers are aware of what a chatbot is; over two-thirds (69%) reported they would choose to interact with a chatbot before a human, because they want instant answers; and a third of respondents (35%) said they would like more companies to adopt chatbots.
Crucially, a fifth (21%) also said they would like to be able to purchase goods and services from chatbots.
Payment is potentially the ‘killer app’ for chatbots. Integrating payment capability could drive chatbot adoption to even greater levels, and some have likened the impact that monetising chatbot interactions would have to the success that Apple’s App Store enjoyed after the introduction of in-app payments. BI Intelligence, for instance, predicts that chatbot payments could generate up to $32 billion in revenue for the platforms.
Certainly the platforms are already being developed towards this end. Chat app Kik has already tested payments integration in trials with fast food restaurants. And Facebook announced last year that Messenger can support payments for the 30,000+ chatbots on the platform, working with the likes of Visa, MasterCard, American Express and PayPal to enable purchases.
Speed and impatience
But for the time being, chatbots are predominantly being deployed as customer service platforms.
“BI Intelligence estimates that 29% could be shaved off the cost of customer care with only moderate levels of automation – while actually improving service,” notes Matt Hooper, SVP of global marketing at IMImobile. “Gartner expects 85% of customer interactions to be automated by 2020, while Oracle suggests that 80% of brands will be using chatbots by the same year.
“Out of 1,000 UK consumers interviewed by research company myclever, 46% thought chatbots would unlock “immediacy” – getting a response to a question or issue at once – and increase the convenience of online services. 40% said they would use chatbots as a way of connecting to the right customer service agent for their enquiry.
“Speed and impatience are two factors driving companies to digital transformation, with 71% of customers demanding the ability to solve most service issues instantly. The chatbots that will become most successful will be those that resolve customers’ issues accurately while meeting their needs for speed and convenience.”
Responding to customer queries using automated messages could save $8bn every year across global business by 2022.
The potential to unlock cost-savings is particularly appealing, of course. In some sectors, chatbots could save organisations billions of pounds, with banks and healthcare gaining the biggest cost savings.
A study by Juniper Research suggests that responding to customer queries or advising patients on symptoms using automated messages could save $8bn (£6bn) every year across global business by 2022.
The report suggests that healthcare and banking providers using bots can expect average time savings of just over four minutes per enquiry, equating to average cost savings in the range of $0.50-$0.70 per interaction.
Jack Springman points to a survey by Personetics which found that 14% of financial institutions believe chatbots are 'ready for prime time’ with 60% expecting over 25% of current conversations to be handled by a chatbot in the relatively near term.
He adds: “My own conversations with a number of financial service companies supports these findings. A key learning from these meetings was the scale of ambition. While it might only be 25% of conversations in the near term, many are aspiring to an 80:20 model over the long term with the majority of contacts currently handled by agents resolved by chatbots (augmenting self-service enabled via the website).”
But could chatbots expand beyond this 80:20 model? Could they in fact replace human agents altogether? The likelihood of this rests on the development of artificial intelligence (AI), which is required to handle more complex enquiries.
“There are two main types of chatbots. One is built around a simple decision tree and the other is built around AI,” notes Tom Ollerton, innovation director at We are Social. “The first is currently a better user experience because all the user has to do is press buttons - and is based on simple choices. The second is built around natural language processing where the machine has to understand what the human user is saying to it, process and respond appropriately. It’s a complicated, expensive task. It’s slow to build and currently often provides a poor user experience, though progress is moving apace.”
Despite these challenges, Jerry Daykin, global digital partner at media agency Carat, also agrees that progress is being made.
There is a technology revolution happening at the moment with bots.
“Machine learning in particular can help rapidly scale the range of enquiries that a chatbot can respond to, observing how humans act in thousands of scenarios and building out a replicable understanding of their own,” he says. “We're still very early in the evolution of true AI but we've already seen glimpses of computers capable of very advanced thought processes and strategy; there's little doubt that in time they'll have the processing powers and understanding to tackle nearly all enquiries, even with the nuance of emotion and language. Whether users will embrace this efficiency, or react against the lack of human contact, awaits to be seen and we are some way off any truly seamless experience like this.”
Indeed, for the time being, chatbots simply are not sophisticated enough to entirely replace human presence – if indeed this would ever be desirable.
“The day when chatbots handle all customer queries and contact centre agents are completely replaced is a very far off day. I believe people in the contact centre industry have a bright future and to write them off entirely would be to ignore the strategic importance of human interaction to a brand,” warns David Rowlands, contact centre director UK and EMEA at 8x8. “The successful contact centre of the future will be able to harness the best of both the human and automated worlds, to give customers the service and experience they want.”
And chatbots – even in their current stage of development – can still fulfill an important role within the customer journey.
“There is a technology revolution happening at the moment with bots, but the mainstream chat industry is still not advanced enough to replace human beings. However, chatbots are great at helping users find answers to questions that have already been answered and that’s often the majority of queries that come into a CRM,” says Tom Nickalls, product manager, Jadu Continuum CXM.
Jo Allison, consumer behavioural analyst at Canvas8, adds: “In the immediate, chatbots’ potential to improve customer service is very exciting. The majority of customer service today is either conducted through costly call centres or almost universally unpopular automated phone services. Interactive Voice Response (IVR) has some of the lowest satisfaction ratings by consumers.
“Likewise, dedicated social media channels aren’t proving that effective for customer service. A study conducted by Sprout Social found that almost 90% of messages that require a response are ignored by brands, with an average wait of ten hours for those that do get a reply – consumers expect a reply within four.
“While chatbots are only used in the very early stages of primarily text-based customer service at present (65% of consumers say they want to message businesses because they think it’s fast and convenient), their roles and capabilities are set to improve dramatically. The eventual aim with bots is likely to be to allow people to reach a range of services and companies through one AI point of contact.”
And perhaps these point of contacts will be dramatically different from our present generation of chatbots. Ollerton may have seen what the future has in store.
He explains: “One of things to come out of SXSW a few weeks ago was how in the future brands will be represented by an avatar built around AI technology. I saw an amazing demonstration from a company called Soul Machines of a 3D female face explaining to people with disabilities how local government services could help them. It was beautifully done, with the voiceover from Cate Blanchett and is the first example that I have seen of a brand (government) being represented by an avatar.
“People can talk to it and it reacts both to what it hears but more cleverly it can read facial expressions and react appropriately. It’s essentially a hybrid between a chatbot and Amazon Echo. Five years from now, you might well find yourself speaking to an avatar that represents adidas, for example, a 3D rendered human who will understand every nuance of your voice, facial expression and body language, etc. Bots are the foothill of that journey.”
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.