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Chatbots are computer programs that simulate conversation with human users typically via web sites and web-based apps such as Facebook.
The global chatbot market is expected to surpass $994 million by 2024, a compound annual growth rate of 27%.
In 2016, Gartner predicted that chatbots would power 85% of all customer service interactions by 2020. Many businesses have already discovered the benefits of incorporating chatbots into their customer service interactions.
On this graph from Google Trends, we see the interest over time for the term “chatbot” as searched for by people worldwide. (Note that the y-axis numbers don’t represent number of queries, rather peak interest — a score of 100 is the time of peak interest, a score of 25 would be a quarter of peak interest, etc.)
This bit of technology is becoming essential for businesses in an era where customers expect businesses to answer questions and resolve problems quickly (even instantly).
Most common types of chatbots in 2019
There are several different types of chatbots available. It’s important to understand the different options, so you can implement a chatbot that works well for your business.
1. Scripted chatbots
A scripted chatbot uses a predetermined list of questions to respond to customer inquiries. Scripted bots are rules-based and programmed to perform specific actions or provide information based on the user’s response. Scripted bots can also present users with a list of options from a pre-populated questionnaire, as seen in the below example from Ometrics.
[Image source: Ometrics]
2. AI chatbots
AI chatbots use natural language processing (NLP) to parse user queries and a provide an intelligent response. This is the same technology used by voice recognition systems such as Siri and Cortana.
An example of the clever use of an AI chatbot is Caspar’s Insomnobot 3000. Caspar, a company that sells mattresses and related sleep accessories, created Insomnobot 3000 for users who are having trouble sleeping. Users can text the bot on their cell phones if they can’t sleep. The bot simulates real human conversation, as demonstrated in the screenshot below.
[Image source: Caspar]
3. Customer service chatbots
Service (or action) chatbots obtain information from a user and then compete an action based on the information provided. For example, a service chatbot might book a flight or hotel room, take a food order, or purchase tickets to an event. These types of chatbots are currently the most widely used in the customer service industry.
The following is an example of a customer service chatbot that plugs into Facebook. The bot makes it possible for customers to order food via Facebook Messenger.
[Image source: Loyalty Bots]
4. Voice-enabled and contextual chatbots
These are the most advanced types of chatbots and include AI tools such as Alexa, Siri, Cortana, and Google Now.
The problems that chatbots solve
Chatbots help businesses answer customer questions, provide information, book appointments, make purchases, and route more complex problems to human personnel.
Companies wary of using a chatbot to interact with their customers may be surprised to learn that people don’t seem to mind chatbots, provided they can get help quickly. A HubSpot survey found that 40% of consumers don’t care if they’re being helped by a person or an AI tool to resolve simple requests such as changing a billing address — as long as they get help quickly and easily.
What are the most common uses for chatbots in 2019?
Chatbots with integrated ecommerce capabilities are a growing trend in online retail (e.g., if a shopper on Best Buy is looking at refrigerators, the chatbot can direct the user to buying guides in this category).
Nearly 50% of respondents in the HubSpot survey indicated that they would buy items from a chatbot. Bots can also make personalized product recommendations based on a user’s browsing activity, shopping cart items, and more.
2. Instant messaging
With billions of people worldwide using messaging apps such as WhatsApp and Facebook Messenger, chatbots have become essential tools to help companies manage messaging interactions with their customers.
Case-in-point: More than two billion business-related messages are sent through Facebook Messenger each month and there are over 100,000 bots on Messenger.
From a consumer’s perspective, expectations are high when it comes to messaging businesses. More than 60% of U.S. respondents in Facebook’s survey indicated that they expect a faster response when they message a business (versus reaching out via a traditional mode of communication).
3. Customer service
Good customer service is all about responsiveness. As outlined above, instant messaging chatbots are one way to solve the problem of getting back to your customers quickly. Chatbots can be available 24 hours/day, provide quick answers to certain questions, and help customers resolve issues and complaints quickly.
Chatbots don’t replace people (yet)
It’s important to keep in mind that chatbots won’t fill all your customer service needs. A 2018 survey by CGS reinforces this sentiment, with 50% of respondents indicating they preferred corresponding with a human being over a chatbot.
Chatbots are simply a tool to help you manage communication with your customers and prospects. They can be clunky and cause frustration and should be implemented as part of a complete customer relationship management strategy.
People still want to talk to other people, so until AI technology evolves to the point where it can actually replace a human being, you need to make sure you have human representatives standing by.
Jacqueline Dooley is the Director of Digital Strategy at CommonMind.