AI Chatbots Transforming Business Operations

Gen AI Pushing the Boundaries of AI ChatBots!

AI Chatbots- Image Credit: Unknown

👋 Hello hello! Welcome to the new episode of FuturiX. Thanks to 2,861 subscribers to our LinkedIn newsletter, UNLOCK and special gratitude for subscribers to FuturiX. We’re still small in number, but for something greater which is learning together about how technology convergence will shape the future of our world.

TL;DR

• The chatbot market is evolving rapidly, driven by increasing demand and advanced technology.

• Embrace omnichannel interactions and leverage enterprise data to enhance conversational AI. Conversational AI, driven by chatbot technology, has emerged as a powerful force in the market.

• By and large, customers are increasingly happy to use chatbots for routine customer service operations, like checking business hours, confirming a store’s location or tracking the status of an order.

• The cost of adopting chatbots is expected to decrease.

• The expansion of natural-language understanding will open up new use cases and drive overall adoption rates.

• Chatbots offer benefits for businesses can include instant intelligent responses to customer inquires, personalized customer experiences, affordability, lower training costs, and operational cost savings.

• Chatbots can enhance the customer experience through sentiment analysis, self-service capabilities, omnichannel interactions, and potential for higher sales. Additionally, they reduce wait times and provide better quality customer care.

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The New Age of Conversational AI is Here – But It’s Potential Will Continue to Evolve Rapidly

Since the release of ChatGPT in November 2022, AI chatbots and generative AI have captured the attention of the technology world. These intelligent systems have shown tremendous potential in disrupting various industries, including marketing, business development, sales, and customer support.

At the core of these advancements lies natural language processing (NLP), a technology that enables chatbots to understand not just the words they read or hear, but the intent behind them. Businesses are now leveraging the power of AI-powered chatbot technology to transform their operations and elevate customer experiences. In fact, approximately one-quarter of businesses used chatbots for their customer service needs according to a report in 2022.

History of Chatbots- Image Credit: Unknown

According to analysts, the global chatbot market is projected to grow at a compound annual growth rate (CAGR) of 25.7% from 2022 to 2030, valued at $525.7 million in 2021. This phenomenal growth is attributed to the rapid adoption of chatbots by online enterprises and e-commerce businesses, aiming to reduce operating costs and enhance customer service.

🤖 What are AI Chatbots?

Despite the name, chatbots are not cold machines with monotonous voices. AI chatbots are the result of advanced computer programming that simulates authentic human interaction and conversation. Building a computer system capable of hosting such conversations has been a goal pursued by researchers and developers for decades. A highly advanced customer interaction program is a chatbot for the customer service industry, which can not only respond to the basic inquiries but is also configured to fulfill a wide range of functions, such as:

• Recommending products and offers

• Processing payments

• Carrying out surveys

• Collecting data

• Checking in for a flight

• Booking doctor appointments

• Laying out step-by-step product usage instructions, to name a few

Under the umbrella of the Fourth Industrial Revolution (4IR) or Industry 4.0, AI chatbots and virtual customer assistants (VCAs) represent the cutting-edge technologies of our time. An AI Chatbot Development backed-up to Artificial Intelligence simulates a conversation with a user utilizing Machine Learning Solutions and Natural Language Processing, combined with a present rule-based response.

The Birth of Conversational AI: First Gen Chatbots

There have been different generations of chatbots. When chatbots first entered the CX space, many were advertised as a powerful, AI-driven solution for customer service, they relied on simplistic NLP models to uncover customer intent, then churn out scripted answers in response to recognizable keywords; maybe a fancy FAQ at most!

Difference of Rule-based chatbots and NLP-based chatbots (Figure Credit: )

Early rule-based chatbots failed to meet user expectations and negatively impacted the user experience. According to a Forrester survey, 54% of US online consumers believed interacting with a chatbot had a negative impact on their quality of life.

Yet, even when upgraded chatbot solutions began to emerge, many businesses still steered clear. Why? Because their sophisticated models required teams of designers and developers, computational linguistic specialists, and experts in knowledge management. The expense of creating a custom chatbot, combined with the negative perception among consumers of these tools prompted many companies to explore alternative routes. As the marketplace continued to evolve, and consumers began to demand more convenient, personalized, and meaningful experiences from companies, investment in new strategies for strengthening the potential of chatbots increased. Advancements in NLP, NLU, ML, and robotic process automation (RPA) brought new capabilities to the chatbot landscape. Basic FAQ-style bots transformed into emotionally driven, intuitive tools.

Everything changed by November 2022. OpenAI released ChatGPT, and it took the world by storm. However before this, people had already started using chatbots. In fact, a Gartner Customer Service and Support (CSS) survey conducted earlier in 2022 revealed 54 percent of respondents are using some form of chatbot, VCA or other conversational AI platform for customer-facing applications. But what differed? AI-based chatbots try to understand and interpret what its conversation partner genuinely wants. Think of them as your most ambitious and eager employee, one that needs no caffeine or sleep to keep the conversation going with your customers around the clock.

One of the biggest developments has been in the democratization of conversational AI – i.e. in addition to the low-code/no-code tools, the cost of the technology is also now much more affordable. What was once available to large enterprises in terms of cost profile and the skillset needed is now becoming more mainstream and mass-market.

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My next episode on AI-Fi Substack covers the “Rise of A.I. companions”. In case you’re interested in Sci-fi related content looked at from a technological perspective, join my Substack here:

Meanwhile, I invite you to watch this documentary on AI companions on the YouTube channel ColdFusion.

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How will customers respond to A.I powered chatbots?

The chatbot industry is experiencing rapid growth, with adoption rates set to increase significantly. According to Mordor Intelligence, North America's chatbot market is projected to have a CAGR rate of 24.6% between 2021 and 2026.

But what are the actual benefits of chatbots, and how will customers respond to them? In the following figure, you can see some of the potential benefits of chatbots.

What are the potential benefits of chatbots for millennials and baby boomers

Here I have categorized the potential benefits and values of AI chatbots for business and provided insights and data which can help articulate a better picture.

1. Instant Response & Real 24/7 Availability: Unlike human agents who may have limited availability or response times, chatbots can provide immediate assistance round the clock. They can handle customer queries, provide information, and address common issues instantly, without any delays. This ensures that customers receive prompt support at any time, enhancing their satisfaction and overall experience.

   • Before transferring a discussion to an agent, bots may resolve many problems with little response times.

   • The ability of chatbots to learn and solve complicated issues is progressing, which means the dependence on human operators is continually reducing.

Look at the following chart showing the Customer wait time when using live chat worldwide in 2022, by industry.

🗝️ Key points on chatbot availability and response time

• 73% of customers say that valuing their time is the most important thing companies can do to provide them with good customer service. (Source)

• The average wait time for live chat support is 46 seconds. (Source)

• Organizations with higher wait times tend to have higher customer satisfaction ratings. (Source)

2. Personalizing the Customer Experience: In addition to offering personalized suggestions and offers, chatbots may also initiate proactive client relations. Customers prefer to stay with a platform for more extended periods with higher involvement and bring more business. Chatbot tools can integrate with existing CRM systems and other services to track behavioral information about customers, and offer personalized suggestions on which products to buy, or how to solve certain issues. They can also leverage machine learning capabilities to gradually improve these recommendations, adjusting their service to suit different consumer segments.

3. Affordability & lower training costs: Implementing an innovative chatbot is way too cheap and faster than bringing on board a thousand employees. Organizations have already started saving from customer communication expenditures 30-40 percent of costs. Apart from this and the cost associated with training customer support employees for call centers, consider how long it would take them to become and expert! Now, you can train your own chatbot way faster, with a significantly lower cost tailored by top-level expert attitude, characteristics and behavior.

4. Lowering operational costs: AI chatbots with RPA (Robotic Process Automation) technology can use automated workflows to complete various tasks on the behalf of employees and customers. This could include filling out forms, checking in with customers after a purchase, or even making changes to a subscription or profile.

5. Better Customer Experience & Sentiment analysis: Through a combination of NLP, computational linguistics and ML tools, chatbots have developed a deeper understanding of human emotion. They can detect how a customer feels at particular points of the customer journey and use this information to determine next-best-steps for service. This will significantly increase the experience that your customers have during your product journey. Also, imagine a Chinese, Japanese or Korean customer contacting you and the chatbot automatically switches the language to their specific tone and language! It’s fascinating right?

🗝️ Key points from better customer experience

• In a Zoho study, 43% of companies said they had a better understanding of their customers within a year of using live chat. (Source)

6. Self-service chatbots : AI-powered chatbots now having the ability to capture and sum-up notes from calls and other interactions. This will save an advisor time in wrapping up a call or interaction and focus on other value-added tasks. Chatbots can recognize when they might not have the capacity to serve a customer or solve a problem on their own. When this is the case, they automatically escalate a conversation to the right member of staff across any channel, passing on a conversation transcript to provide context. However, we can hope that as time goes by, AI chatbots are able to solve all the problems customers face without the need to be transferred to a live support agent.

🗝️ Key points from self-service chatbots

• Comm100 found that conversations fully handled by chatbots received slightly higher satisfaction ratings (87.58%) than those that had to be transferred to a live support agent after a chatbot couldn't answer the question (85.8%).

• That finding may be more about the irritation of being transferred than about the bots, of course. In fact, 29% of customers are frustrated by scripted, impersonal responses in live chat.

7. Omnichannel interactions & potential higher sales: Chatbots aren’t just a tool for website messaging and social media conversations anymore. Today’s businesses can build “virtual assistants”. This leads to new opportunities when creating intelligent IVR systems. Being able to talk to someone right when they need to make a decision can really help customers complete a task or a transaction. According to research from Forrester, "69% of U.S. online adults shop more with retailers that offer consistent customer service both online and offline."

   People are less willing to pick up a phone to ask a question when shopping online. Even as far back as 2010, 44% of online consumers said that "having questions answered by a live person while in the middle of an online purchase is one of the most important features a website can offer."

🗝️ Key points from omnichannel presence and increasing sales

• 53% of customers are likely to abandon their online purchases if they can't find quick answers to their questions. (Source)

• 40% of buyers who use live chat are ore likely to make online purchases (versus 22% of buyers who had never chatted). (Source)

• 79% of businesses say that offering live chat has had a positive effect on sales, revenue, and customer loyalty. (Source)

Messaging apps have surpassed social networks in active monthly users!

8. Shorter lines and better quality customer care: Comm100 report found that companies with satisfaction ratings above 90% had an average chat duration of 11 minutes and 47 seconds. Those with lower scores had an average chat duration of 8 minutes and 42 seconds. But, wait that’s too long! Imagine having your customer support staff spending so much for a single customer! You would either have to employ tens more, or lose customers due to long waiting lines! But, with the advances in AI chatbots, chat becomes a chance to really converse with your customers and care for their problems, identify their needs and on the long run, keep them!

In its 2020 Live Chat Benchmark Report, Comm100 reviewed more than 56 million live chats and and found out that the average wait time for live chat support is 46 seconds. What Comm100 also found was that organizations with higher wait times tended to have higher customer satisfaction ratings than those with lower wait times. This might mean that longer response time was probably due to providing higher quality answers. So, another benefit that we’d expect from AI chatbots, is to provide quality, data-driven, personalized responses.

🗝️ Key Points on better quality customer care

• 95% of customers value thorough, high-quality support more than speed. (Source)

• Companies with satisfaction ratings above 90% have longer live chat durations at an average of 11 minutes and 47 seconds (versus 8 minutes and 42 seconds for sub-90% ratings). (Source)

• 95% of people say they would prefer slower support if it meant the quality of help was higher. (Source)

Future of AI Chatbots

Juniper Research predicts that the chatbot industry is predicted to reach a value of $142 billion by 2024 globally. Demographic shifts also play a role, as Generation Z prefers interacting with chatbots over human representatives, and a majority believes more companies should utilize chatbot technology. According to a recent survey by Tidio, 56% of Gen Z respondents thought more companies should use chatbots in general. [Read related article: How to Empower Your Customer Service Team.]

Companies are actively turning to AI for increased revenue and customer satisfaction. In the future, bots may become the face of customer service across various platforms, solving problems instantly and handling complex or emotive issues. This is the future of the contact center. The combination of increasing customer demand, higher expectations, and improved technological capacities will lead to significant changes in the chatbot market. The normalization of chatbots as a solution for various business needs has already begun. Before you begin creating you AI or chatbot strategy, you would want to avoid the chatbot trap and consider the following when assessing this strategy:

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• Can it talk, text or chat? Conversational AI should be omnipresent across voice, text, and web channels, accessible through platforms. Prioritizing seamless omnichannel interactions is essential.

• Can it learn? Conversational AI should leverage enterprise data, including chat and voice transcripts, transactions, and other interaction history, to learn and improve. It should possess the ability to converse, suggest, recommend, and engage based on these learnings.

• Can it understand? Conversational AI should understand complex human speech, including slang, abbreviations, mispronunciations, and other imperfections, similar to how humans do. It enables technology to navigate and comprehend the nuances of real human conversation.

• Does it know? Conversational AI, through integration with enterprise systems, should have knowledge of user identity and previous transactions. It can utilize this information to enhance current interactions, streamline processes, and resolve issues in areas such as customer service, IT, and invoice processing.

• Can it transact? Conversational AI is secure and capable of handling complex transactions that go beyond simple clicks. It can replace humans in tasks such as purchasing life insurance, processing healthcare claims, troubleshooting Wi-Fi, and approving supplier invoices.

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