Let’s face it. The more interconnected the world gets, the more accustomed everyone has become to minimizing human interaction.
While nearly anything can be ordered online, the few times people go into department stores are typically when there’s a need for a very specific item. Customers go in, grab what they want, get out and rarely want to physically speak to anyone. In the rare case customers are in the store for longer than a few minutes, sales people walk up to either try to help or make a commission and are typically rebuffed with a “No thanks, I’m just browsing.”
Satisfying the ever-growing need to not be bothered while shopping since its 1994 inception to the online world, the chatbot has slowly made its way to becoming a mainstay of customer and business interactions. Through the use of chatbots, customers are put in the driver’s seat, interacting when they want and in a manner that appears to not be intrusive. As such, it’s no wonder chatbots have done so well and have become the preferred method of customer service communication exchanges.
To help embolden this assertion, market research firm Technavio just released its Global Chatbot Market 2017–2021 research report, which highlights in-depth analyses of the chatbot market’s revenue and emerging market trends. It also provides all geographical regions and various market segments with up-to-date analyses and forecasts. According to the report, it is expected that the global chatbot market will grow at a CAGR of approximately 37 percent during the next five years.
In its research report, Technavio categorized the global chatbot market into five sections: BFSI; Government; Retail and eCommerce; Travel and Hospitality; and Others. Any time there’s a need to resolve a situation or simply answer a question, the likelihood of chatbot use in these designated areas will undoubtedly be a factor. As such, Technavio’s research revealed the top three chatbot categories, where it was found to be the most useful to the public: BFSI, Government and Retail and eCommerce. The Government category, which includes aviation, health care, railways and tourism, is set to see a CAGR growth of 42 percent alone.
Taking a bit of a deeper dive into the BFSI chatbot category, Technavio’s lead analyst for enterprise application research, Amit Sharma, was quoted as saying: “The BFSI sector mostly uses live chatbots for supporting mobile apps, which is one of the major factors responsible for its market dominance in this sector. Major enterprises, such as ING Netherlands and Tangerine Bank, are implementing mobile chatbot products to enhance their customer experience.”
Among Technavio’s top three categories, the common thread running through all has been the fact that chatbots help to greatly improve the customer experience. As a result of this enhanced customer interaction, there has been a domino effect, greatly reducing operational costs via increasing both efficiency and productivity.
With more and more consumers shopping online, the research showed the amount of those making purchases on the web over brick-and-mortar is set to increase 5–10 percent by the end of 2021. One company taking this to heart already is pizza giant Domino’s with the recent announcement of an update to its bot on Facebook Messenger. Released just before Super Bowl Sunday, Domino’s is taking advantage of Facebook’s already-in-place chatbot system, which gives it a more direct line of access to the social media giant’s 1.04 billion users. In addition to calling or ordering through the company’s online web portal, customers will now be able to order from the full menu via Facebook Messenger with their local store.
Will more retailers follow suit via strategic partnerships to simplify purchase interactions?
Yes, it is likely that this will continue to be a theme moving forward. One of the latest examples of this we have is Starbucks’ recent announcement of its work with Amazon’s Alexa. While the coffee chain’s app ordering was launched last year, this new addition allows Starbucks customers to simply order by speaking into Alexa-enabled Amazon devices. With Domino’s and Starbucks’ foray into the chatbot world, it won’t be too long before other retailers will follow in their service-enhancing digital footsteps.
While creating a chatbot from scratch and hosting it on a retailer’s site may prove to be useful to loyal customers, it doesn’t quite work well for expanding product and service offerings to new people. Simply put, customers want simplicity and convenience. The fewer websites they have to visit to make purchases or interact with a company, the more likely they’ll be to interact on a routine basis. The 37 percent CAGR growth of the global chatbot market within the next five years will likely come from partnerships like the ones mentioned above where forces are joined with applications already in place.