Chatbots are Here! What You Need to Know

By Kristi Colleran - October 21, 2016


Yes chatbots are here! But what are chatbots? How can businesses use them? And more importantly, should my business use them?

Chatbots are Not New

Did you know that 2016 is the 50th anniversary of the very first chatbot? ELIZA, an early natural language processing computer program, was created in 1966 at the MIT Artificial Intelligence Laboratory to demonstrate the superficiality of communication between humans and machine. Ironically, ELIZA’s creators were surprised by the number of individuals who attributed human-like feelings to the computer program. Other notable chatbots since ELIZA, include SmarterChild, who in the early 2000’s developed intimate friendships with over 30 million Instant Messenger users on AOL and MSN; and of course, there’s IBM’s Watson who in 2011 competed on and won Jeopardy!

If Chatbots are Vintage, Why the Sudden Renewed Interest

Four trends have come together to make what’s old new again:

Trend #1 — Era of Mobile: Our population has a level of connectedness never seen before thanks to the convenience of smartphones and tablet devices coupled with the innovation in mobile technology. In the US, 65% of the adult population owns a smartphone. And they are spending 2 out of every 3 of their digital minutes on mobile.

Trend #2 — App Fatigue: While these users are spending more time on their smartphones they are downloading fewer and fewer apps. In fact, nearly half now download zero apps per month.

Source: comScore MobiLens, U.S., Age 13+, 3 Month Average Ending June 2016

Of the apps that are downloaded, according to a Forrester Research Study, 1 in 4 are abandoned after just a single use. For those downloaded apps that remain on their smartphone, the typical user spends the majority of their time in just 5 apps.

Trend #3 — Rise of Messaging Apps: In the last two years, while companies have focused on establishing a presence on social networks (Facebook, Twitter, Pinterest and Instagram), messaging apps (WhatsApp, Facebook Messenger, WeChat and Kik) have surpassed those social networks in terms of the number of active users per month.

Source: Business Insider

Trend #4 — Artificial Intelligence (AI): According to CB Insights, investments in AI have tripled in the last three years and we are starting to see AI-based products and services, like Amazon’s Echo and Apple’s Siri, becoming more and more available.

The exploding popularity of messaging bolstered by AI creates an opportunity for companies to connect with their customers like never before in a way that is contextual, relevant, highly personal and conversational. This is what’s driving the renewed interest in chatbots.

Chatbots of Today

The chatbots of today are software programs. However, unlike software programs such as Word or Excel that live on your laptop and apps like Instagram or Pokemon Go that live on your smartphone, chatbots live on messaging apps such as Facebook Messenger, SMS, Kik, WeChat and others.

Chatbots enable companies to be where there customers are — on messaging.

Early uses for today’s chatbots have typically been for practical purposes such as customer service or information acquisition. Why? Because in many instances customers no longer need or want to speak to a human for simple things like checking store hours or confirming account balances. Today, companies can deliver high quality customer service and reduce costs by outsourcing basic customer service questions to a chatbot.

Unlike humans, chatbots never tire and excel at answering the same questions 24 hours a day, 7 days a week. How is this possible? To do their job, some chatbots rely on sophisticated natural language processing systems, while others use intelligent rules (i.e. if the person says this, respond with that). And then there are those that use both natural language processing and intelligent rules to get the job done. Keep in mind that today’s chatbot technology is rapidly emerging and continually improving. The chatbots of tomorrow will likely be far more sophisticated and able to handle more complex jobs.

Gartner has predicted that by 2020, 85% of customer interactions will be managed without a human.

Getting back to today, to get an idea of how a chatbot works let’s look at one in the real-world. KLM recently introduced a chatbot on Facebook Messenger that, with your permission, allows the chatbot to send your itinerary, boarding pass, check-in confirmation and even delay notifications to you on Facebook Messenger. It also gives you the ability talk to a human staff member in case you have questions that are outside the scope of the chatbot. It’s quick, convenient and low friction. There is no app to download and nothing new to learn.

KLM Chatbot on Facebook Messenger

The KLM chatbot is just one example of how chatbots can open up an entirely new world of opportunities for companies to engage with their customers. We are now seeing many companies across different industries experiment with and successfully use chatbots. Here are some of the other early adopters that you can check out to see how they are using chatbots:

  • Travel — KLM, Kayak and Hyatt help customers book trips, deliver their boarding passes and provide concierge services.
  • Healthcare — HealthTap and Your.MD help people identify illnesses and find health care advice.
  • Retail — H&M, Sephora and Everlane customize the shopping experience.
  • Fast Food — Taco Bell and Pizza Hut help customers order food for faster delivery.
  • Grocery — Whole Foods helps people find recipes and suggests food products based on the listed ingredients.
  • Government — The White House helps people contact government officials, including the U.S. president.

The potential benefits of chatbots are clear:

  • More cost-effective customer service
  • Faster response times
  • Easier business transactions
  • More convenient ways to address prospects and customers in a medium that they prefer
  • New way to engage with prospects and keep existing customers engaged

But does this mean your business should use chatbots?

The Opportunities

Here are 5 opportunities to get you started thinking about how your business could benefit from chatbots:

Opportunity #1 — Always Available: Would you like to expand your customer support hours but face budget and staffing contraints? Good news! Chatbots are economical and can work 24 hours a day, 7 days a week, 365 days a year. And they are always on time, pleasant and never take a personal day!

Opportunity #2 — Ability to Scale: Do you find it challenging to scale your customer service operations during peak times? Or you have an opportunity to expand or grow your business but need to support it? Chatbots facilitate scaling by augmenting your human customer support team. You can use chatbots as the first point of contact to handle basic questions and for triage. This frees up your human agents to address more complex questions and issues. Introducing chatbots in your customer support organization means more customers served!

Opportunity #3 — Frequently Asked Questions: Do your customer support agents answer the same questions about shipping, returns, loyalty programs, nearest stores, operational hours, etc. over and over again? Chatbots to the rescue! A chatbot is well suited for answering your customers’ frequently asked questions and they never tire of them so each and every one of your customers gets the same high quality service.

Opportunity #4 — Reaching Millenials: Are you trying to reach millenials and finding it a challenge? You are not alone! The 80 million millenials in the US are the least-engaged generation of consumers; yet, it’s never been more important to reach them. Millenials have an estimated $200 billion in collective buying power — and will have more than any other generation by 2017.

Chatbots can help! According to the 2016 Internet Trends Report, millenials prefer their contact with businesses be text-based communications (like live chat, social media, messaging) over voice; and, they also happen to really like self-service. In fact, 69% of millennials would like to solve customer service issues by themselves without having to talk to anyone in customer service. Chatbots can meet both of these millenial needs; they are text-based self-service.

Opportunity #5 — Customer Engagement: Like most companies you have probably focused on establishing a presence on social networks (Facebook, Twitter, Pinterest and Instagram) to engage with potential and existing customers. But remember, messaging apps (WhatsApp, Facebook Messenger, WeChat and Kik) have surpassed those social networks in terms of the number of active users per month. Chatbots live on messaging apps and enable you to be where your customers are and to engage with them in a fresh, new way!

Be Intentional

While there is no doubt that chatbots are gaining momentum and they will soon be just another channel for customer support and means of digital communications, be intentional about your chatbot strategy. Start by identifying:

  1. What are simple, low risk, but meaningful use cases that you can use to experiment with a chatbot?
  2. Who are the target customers?
  3. What messaging app(s) do they use?
  4. What are your measures for success?
  5. Who are credible bot strategy, development and maintenance resources that you can rely on?

The investment you make in chatbots today will yield greater understanding and improvement over time. The more you know, the better positioned your business will be to leverage the chatbots of tomorrow to engage, connect with and delight your customers!




Case Study

Drive Event

Deploying Sciensio's Eventbots solution to improve and enhance a major industry trade show.

Get Case Study

We promise that we won't SPAM you.