- What is a Chatbot?
- Why Businesses Should Use Chatbots?
- Chatbot Trends to Watch
- Use of Chatbots by Different Industries
- Future Global Chatbot Market (by Region)
What is a Chatbot?
Chatbots are computer programs that are designed for communication with human users by the means of an Internet. Chatbots interact in a similar way to instant messaging.
Artificial replications of the human interaction patterns in machine learning allow the systems to learn by themselves without any programming natural language processing.
A chatbot is programmed to work independently from a human operator and it has the ability to answer the questions formulated to it in natural language and give the response back like humans.
The responses provided by chatbots are based on a combination of predefined scripts and machine learning applications.
How Are Human Languages Processed by a Chatbot?
A chatbot works in a similar method like any other application. It has an app layer, a database, and APIs for calling other external administrations. The users can easily access chatbots as it adds intricacy for the applications to handle.
The chatbots can’t comprehend the customer’s plan. Currently, the chatbots are trained based on the past information that is available to them.
Most of the organizations today have chatbots that maintain logs of discussions. The developers utilize these logs for analyzing the queries that clients are asking.
With a mix of machine learning tools and models, the developers coordinate the inquiries posted by clients and come up with a reply that suits the most appropriate answer.
Need of NLP in Chatbots
Natural Language Processing or NLP allows the chatbots to understand the human messages and then respond accordingly.
Suppose, the user has sent a message, “HELLO”, then it is the NLP that allows the chatbot to know that the user has posted a standard greeting message.
In response to this, NLP allows the chatbot to leverage its AI capabilities to come up with the most-fitting response.
NLP Is responsible for helping the chatbots to provide context and meaning to the text-based user inputs, such that AI can come up with the best response.
The advanced NLP has the capability of identifying spelling and grammatical errors, thus allowing the chatbots to interpret the intended messages of the user despite certain mistakes.
NLP ensures a chatbot to respond appropriately to every message that is powerful enough to either make or break the success of chatbots.
Why Businesses Should Use Chatbots?
Today, chatbots are changing the way businesses carry out interactions with their customers, manage the marketing campaigns as well as managing payments.
Following are some of the reasons why the businesses should go for using chatbots
1) Enhancing Customer Service and Support
Chatbots allow businesses to communicate with their customers at any point of time in the day. These bots simulate human conversation and also fix common customer services
2) Automated Simpler Transactions
The chatbots can automate simple payments using the live chat and messenger apps. The chatbots not only save the business owner’s time but also reduce human labour costs.
In future, customers will no longer have to call the customer service department to pay for a service or settlement of a bill
3) Improving User Engagement
Chatbots are built for not just communicating in simple commands but also are capable of having human-like conversations with the consumers.
The chatbots recommend products and services to their customers based on previous behaviours and transaction histories
4) Streamlining Social Media Activities
The chatbots can also increase user engagement on social media platforms. The chatbots communicate with consumers through live chat platforms and solve the commonly faced problems normally handled by the customer service team
5) Improving User Retentions
The chatbots are being constantly evolved and becoming more sophisticated. Language learning tools can improve user retention by managing the customer services issues in a timely and efficient manner along with upselling and cross-selling the relevant products and services
In businesses, the chatbots can automate many day-to-day activities and brands can work on this technology for enhancing the customer service and support processes, automating simple payments, increasing the user engagement, building brand awareness and most importantly improving the retention of users.
This is based on the data collected in the duration- August 2017 to January 2019
Chatbot Trends to Watch
The advancements in the technology are making it possible to implement AI tools in usual products by allowing the chatbots to gain a large consumer base.
The extensive usage of chatbots for large enterprises is allowing them to remain at the top position. The chatbots can remain online 24×7 and provide instant responses to the user queries.
Some of the trends in chatbots that are going to rule the market for 2019 includes-
1) Replacing the Traditional App Interfaces
With a large number of web development services, that have adopted trends associated with the traditional app interfaces are now being replaced by unique interfaces. This has resulted in an interactive text conversation with clients rather than simple navigation carried out by the app UI.
2) Human-like Chatbot Experience
The companies developing chatbots are gradually becoming smart by delivering a human-like experience through the means of a chatbot.
3) Chatbot Powered UIs
The chatbots enable the user interface for quick delivery of information. By chatbot interactions, it has become much easier rather using an app UI tour.
4) In-depth Customer Analysis of Data
Artificial intelligence helps in activities related to data mining and analysis, which can become crucial for customer insights for the businesses.
Thus, the chatbots are now being integrated with machine learning for solving the technical tasks as well.
Use of Chatbots by Different Industries
The banking industry was one of the early adopters to use the chatbots. The use cases of chatbots in banking began with personalized banking with an aim to improve customer satisfaction and engagement.
The banks have enabled the customers to carry out interaction with chatbots for clarifying banking-related queries.
On the business side, chatbots can perform an array of tasks like contract review and analysis, employee engagement, parsing messages and password management
In the insurance industry, chatbots are taking the pseudo-avatar of the insurance agents, virtual hosts, analyst, and all the other roles which can relieve the humans for carrying out far more advanced tasks
Chatbots are bringing changes in the education industry by performing tasks such as personalizing education, helping people.
The manufacturing industry has been struggling with communications and now looks like it is coming up with a solution to tackle this issue.
This sector comprises of assembly lines, distributors, wholesalers. In order to connect people and build interactions, the manufacturers are now adopting chatbots.
Areas such as vendor management and engagement, HR-related tasks and workplace maintenance assistance and product recall assistance are using the chatbots for this industry
The chatbots are constantly working to provide better guest service experience. They can act as a personal travel assistant for the leaders in this industry.
The chatbots are available to round the clock for providing a positive response that can build customer loyalty and satisfaction. Such quality of chatbots helps the hospitality department to keep up the pace with rest other industries
The chatbots in the airline industry are being deployed to send out announcements, make ticket bookings, facilitating web-check-in, making personalized search and purchases, providing information related to flights and also making other arrangements
Future Global Chatbot Market (by Region)
In 2017, the global chatbot market was valued at nearly $369.79 million and is expected to reach a level of $2166.28 million in the year 2024, with a growing CAGR of 31% between 2018 and 2024.
The rise in investments and adoption of artificial intelligence across various industry verticals in government and private are going to be the driving forces of the chatbot market during the forecasted period, i.e. 2018-2024.
The factors that are contributing to the growth in the chatbot markets include- the necessity requirement of high-performance chatbots and the growing popularity of online messaging applications.
Slower adoption rates, high deployment costs and lack of expertise about services can restrain the chatbot market.
The chatbot market is segmented based on- type and end-users. The type segment is further categorized into- support, software, skills, and service assistant. The end-user segment can be further divided into BFSI, healthcare, retail and many more.
During the forecasted period, North America is expected to account for the largest share in the overall market revenue generation. This is primarily because chatbots are increasingly being adopted by the government as well as public organizations.
The Asia Pacific market is projected to be the region with the fastest growth during the forecasted period because the region is growing investments in the fields of technology and development sectors which can be coupled with favourable government regulations.
The expected leading adopters in the region include- China, Japan, South Korea, Australia, and India. Various governments have started using chatbots for addressing the frequently asked questions regarding available services.
Europe is expected to experience high popularity during the forecasted period in the chatbot industry.
Countries such as Germany, France, UK are the leading nations in the region where there are AI-based start-ups that are witnessing exponential growth.
This can be one of the major drivers to attract the growth of chatbots in the region across different business verticals.
Latin America and the Middle East with Africa are likely to witness moderate growth in chatbot markets during the forecasted period.
The shifts in technological preferences by the SMEs along with the increased demand for automated systems can fuel the chatbot technologies in the region.
The chatbots or smart assistants coupled with artificial intelligence have been changing the businesses dramatically for some period now. There is a wide range of chatbots that are available for various enterprises such as healthcare, manufacturing, etc.
The chatbots can reach out to large audiences by messaging apps and can be more effective than humans They can be developed as an information-gathering tool in the coming future.