Retail

Chatbot Tracker: Chatbot Revenue On The Rise

Since Facebook announced its decision to partner up with companies to create custom chatbots last April at its F8 event, businesses have slowly started to embrace the ultra convenient way to communicate with customers. From Domino’s Pizza to insurance companies like Next Insurance, the decision to join a platform that already has nearly two billion active monthly users is likely not something that takes too much convincing.

As such, it should come as no surprise that the forward movement of chatbots has been propelled in an upward trajectory (at least partially) by Mark Zuckerberg’s team at Facebook. Having a captive audience that likely isn’t keen on downloading various apps for each individual product or service used, Facebook has tapped into an area that puts convenience within a single application. The simplicity of using just one app for multiple companies to reach out to consumers from anything such as customer service support to making a payment is what helps draw consumers in. Likely, it’s also what may keep consumers’ attention and loyalty in today’s fast-paced instant gratification arena.

As features become more enriched and personalized for consumers, chatbots have the opportunity to reign in a whole new way for the operations of business telecoms to operate. Potentially, there’s a chance that chatbots could impact jobs in this sector. This becoming a reality is so palpable that analyst firm McKinsey predicts chatbots could replace as much as 29 percent of the customer service industry. As natural language processing and artificial intelligence becomes more intuitive and advanced, the world of “chat commerce” will likely be the tool that revolutionizes the way companies interact with consumers. This could lead to more effective and streamlined ways of communicating and generate higher levels of revenue.

Recently, chatbot developer company [24]7 shared its projections for the future of its chatbot revenue. By the year 2018, this company alone expects to see a 30 to 35 percent increase, bringing its total revenue up to $400 million. Given this — in addition to Gartner’s prediction that 85 percent of customer interactions are likely to occur without humans by the year 2020 — we may see the chatbot industry as a whole also increase in revenue.

It should therefore come as no surprise that more venture capital firms are looking to invest in the chatbot industry. Between 2015 and 2016 alone, the industry grew by an astounding 229 percent. At this accelerated growth rate, the chatbot world is not something that businesses can afford to ignore. Strategic partnerships to help implement chatbots to help achieve broader business goals is something we may see increase over the next few years.

What’s helping this growth is likely the convenience factor that chatbots provide to consumers. According to mobile engagement company Vibes, while a large portion of consumers feel comfortable, very few have actually interacted with one. In the company’s 2017 Mobile Consumer Report, it was found that 60 percent of consumers like the idea of chatbots, but a mere 22 percent have taken the step forward to chat with one. Hopefully, over time this will balance out.

Vibes’ CEO, Jack Philbin, commented on the chatbot engagement phenomena and the benefits for businesses. He said, “consumers are open to engaging with brands on a mobile in a way that is unlike any other channel. While consumers carefully control how brands can engage with them on these personal devices, they are highly receptive to new and emerging mobile experiences that add convenience and value. Brands that cater to these consumer preferences will see significant dividends, including enhanced reputations and incremental revenue growth.”

In the same report, it was also found that only 19 percent of consumers using smartphone apps to shop actually make a purchase on that same trip. Having a chatbot in place to help facilitate in-app purchases may be a key way to help boost revenue by encouraging more consumers to make a purchase.

At this date, the evolution of the chatbot industry is still in its nascent stages. Many businesses are still discovering the ins and outs of what makes the most sense for their particular business and customers. It’s likely that over the next five years, we will see a significant increase in the types of chatbots used for business interactions alongside various best practices to help fine tune the chatbot arena.

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