Published May 03rd, 2017 by

Chatbots: the Face of the New Technological Revolution

Chatbots have emerged as a cornerstone of the upcoming technological revolution but businesses have only scratched the surface of their potential.

When it comes to testing the merits of a chatbot, no challenge is greater than the Loebner Prize. Known as the Olympics of chatbot testing, it was first conceived in 1991 and is widely considered to be the oldest annual Turing test. Competitors are handicapped in that their bots are required to run on a Windows machine. Furthermore, they cannot even connect to the internet. 2016 saw Mitsuku take home the first prize but the chatbot was unable to convince any of the four judges that it was human. In fact, no entrant in the prize’s 25-year history has managed to do this.

Given the obsession with creating the first robot to pass as a human, the perceived lack of progress in developing fully cognitive chatbots has not impressed critics. Given the recent failings at both Microsoft and Facebook Messenger, these views are valid.

Despite this, there is still a huge demand to see chatbots as the point of contact with people. They are a great way to engage customers, are popular with millennials and are able to provide support 24 hours a day, making them a must-have for enterprise customer service.

Furthermore, businesses are still exploring the best strategy for deploying chatbots. Rather than expecting them to offer general conversations, bots can specifically improve long-term relationships with customers and provide more interactive transactions.  

The biggest problem for companies considering implementing their own virtual assistant is the fierce competition between the thousands of chatbots already available. Therefore, it is imperative that companies identify the best solutions. The most effective chatbots use natural language processing as a foundation for intelligence in order to understand what customers are saying. Companies which utilize this technology will enjoy an increased revenue and an enriched customer experience by delivering answers conversationally, helping customers to progress along their buying journey.

A growing demand for chatbots

Chatbots have already started to capture the minds of the younger generations and, in doing so, are encouraging firms to start directing their investments into developing the technology.

60% of millennials use chatbots, showing that the idea of an interactive robot is already ingrained. Meanwhile, half of those who had yet to communicate with one said they were willing to at some point in the future. Given the supposed limitations of chatbots,

such a positive assessment at an early stage of their development is a clear indicator that the technology is here to stay.

In this fast paced world companies will have to move quickly or they could be squeezed out of their markets. The conversational capabilities of chatbots are constantly improving and millennials will begin to handpick which chatbots they enjoy engaging with – like in any other purchasing situation, if the products are comparable in quality and price, the shopper will choose the supplier with better customer service. Just look at how popular Amazon has become.

The increased reliance on instant messaging is another indicator of the importance in developing chatbots now. More than 2.5 billion people in the world have at least one messaging app and that number is expected to reach 3.6 billion in the next couple of years.

Given that customers are spending more time on these apps, logic dictates that businesses will want to be where the people are. On Whatsapp alone, users average around 200 minutes a week on the service. People have multiple options available to them when communicating with their peers and yet this is so far unmatched when it comes to interacting with businesses. Chatbots can bridge that divide.

While messaging apps are on the rise, other outdated forms of communication are losing popularity quickly. Consumers under the age of 24 are using emails 3.5 times less frequently than other means of communication. In fact, 54.2% of people would rather communicate with businesses through messaging rather than email – a clear indication that there is a need for an intelligent chatbot which can provide customers with the instant feedback they desire.

Customers do not just want responses to be instant, they want to be able to receive them whenever they have a problem regardless of the time. More than half of people polled believe businesses should provide customer support 24 hours a day. The key question firms should be asking themselves is how do they respond when one of their customers has a problem at 2 am? It is much more cost effective to use a chatbot instead of hiring hundreds of people to work all hours.

How to maximize your chatbot’s effectiveness

Much of the skepticism around chatbots boils down to the simple fact that people have yet to define their purpose. Rather than looking at them as “another Siri”, bots can help build brand relationships with customers by being effectively marketed in a number of ways.

Chatbots can be viewed as an intelligent intermediary between retailer and consumer. When customers have questions about their order, want to know about special offers or even how to use their items, they can speak to a chatbot. This information will improve answers for future customers as the chatbot’s knowledge base continues to grow. Armed with this data from their customers, bots can advise them about new features or products which will interest them. Chatbots are hugely beneficial when they are deployed with a specific purpose for companies.

At the moment some chatbots are having the same conversation with each customer, thus negating a key selling point of personal interactivity. This is evident with a vast number of Facebook and Kik bots which are unable to switch context within a single conversation. Matt Tepper makes a compelling point when he refers to dumb social versus data-informed social. By correctly utilizing the data you have accrued from customers through the chatbot, companies will be able to tailor their messages in order to extend their relationships. The result is increased satisfaction as customers receive more relevant information from the bots.

Makeup store Sephora’s chatbot through Kik is a great example of applying chatbots to target the younger consumers. The beauty brand bot uses a quiz to gather information about customers which enables it to offer beauty tips and make product recommendations. As clients have to select the bot and start the conversation, they will feel like they are engaging with retailers on their terms and choosing what information they want to share. Chatbots can be a valuable way to build long-term relationships and gather important data on customers to inform future decision making.

The next big step for chatbots will be combining interactions with customer payments. Kik’s founder Ted Livingston raises this when he mentions how restaurants can offer chatbots to view a menu, order what you want and pay on the same device. WeChat has been at the forefront of this and now accounts for 40% of mobile transactions in China compared with zero three years ago. Chatbots can not only build relationships in the long-term but companies can monetize them to bring immediate profits.

How chatbots can coexist with apps:

As the popularity of apps continues to tail off, chatbots are emerging as both a complement and also an alternative to them. While it is debatable whether or not apps are endangered in the long-term, it is clear that they fail to drive sales. The top 15 most popular apps saw a 20% drop in year on year downloads in the U.S. Furthermore, it is not clear that apps are proving useful in terms of driving sales, with only 5% of people saying they always make a purchase after checking an app for information. It is clear that companies need a mobile alternative to enhance the buying journey.

Fortunately, consumers have dropped hints as to what they want from retailers to do this. Customers value personal interaction from their retailers with 59% of customers saying they would engage with a brand that sends them messages. This can be in the form of coupons or limited special offers in their area. To do this requires technology which is able to differentiate between the people they are speaking to in order to provide individual recommendations based on location, age, interest and other variables. Chatbots are able to provide this on a more personal level than apps.

Apps are too popular and simple to use to contemplate the end of them, yet. Rather than viewing them as a competitor, chatbots can complement them to satisfy the increasing demands of the digital client. Chris Shepherd provides an excellent example by referencing the increasing popularity of chatbots on Slack – an app which allows you to message co-workers. If it is approaching lunchtime at work, instead of heading out to grab something, you can speak to the Tacobot and place an order at Taco Bell. This seamless integration is an example of how customers can expect a faster and more personal experience if companies incorporate the chatbot within their apps.

Picking the right chatbot solution

Despite the younger generation’s interest in chatbots, there are particular challenges to address. The good news is that bots which offer robust natural language processing (NLP) can solve these problems.

The biggest area for chatbots to improve in is their ability to understand exactly what the customer is looking for – 55% of millennials identify this as their main concern. NLP allows companies to discover the exact meaning behind customers’ searches rather than relying on keyword matches. Regardless of the slang, misspellings or jargon used by individuals, robust NLP technology will recognize the user’s intent and answer appropriately.

Have a look at these two requests:

Book a ship to France

Ship a book to France

Both questions use the same words but have completely different meanings. Keyword searches will return the same answer for both inquiries. Good NLP technology will recognize that the first question is about organizing travel while the second is about delivering items. The Aberdeen report on “The Future of Self-Service: A Closer Look at Virtual Agents and Cognitive Technologies” shows that use of these cognitive technologies will benefit companies greatly with 66% of companies enjoying a year on year increase in positive social media mentions and 34% greater annual growth in revenue.

In fact, chatbots with properly functioning NLP technology can expect self-service rates of up to 90%. Therefore, companies can expect reduced support costs, improved customer satisfaction and increased revenue.

Chatbots are here to stay

With the increasing demand for bots from the younger generations now is the time to start investing in them. There are a number of things companies should consider when taking this step.

The first is recognizing that customers expect to be provided with 24/7 customer care in a conversational setting. A recent study suggested brands ignore 90% of messages on social media while the other 10% received responses after 10 hours on average. A chatbot will be able to provide answers regardless of the time and message format.

Secondly, understanding exactly what role a chatbot will play for the company is key. Companies fail to maximize their assets by simply expecting them to act as a Siri-lite by answering questions put to them. Instead, exploring exactly how the chatbot can build a long-term relationship with your customer will prove far more lucrative. Companies such as Nike’s Jordan brand have identified this and have created specially tailored bots for their customer. In Jordan’s case, it is in the form of a personal trainer to assist in workouts.

Finally, the skepticism over the true value of chatbots and the increasingly saturated market necessitates an investment in one which uses robust NLP technology. Look no further than the recent plight of Facebook Messenger bots for an illustration of how fragile the technology currently is in certain chatbots, with poor build quality and little R&D to fall back on. Chatbots with NLP will not only answer the questions correctly but will utilize natural language to provide that much-needed personal interaction.

They may not be able to convince us they are human, but chatbots possess brains intelligent enough to build customer relationships like never before.


Joe Lobo

Joe Lobo

Joe Lobo is a botmaster/writer for Inbenta. He is passionate about the latest advancements in artificial intelligence, chatbots, natural language processing and machine learning. When not logged onto his computer, Joe can be found improving his DJ skills, watching/playing any sport or continuing his quest to visit every country in the world.
Joe Lobo

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