The Chatbot Revolution

Posted by Bethany Frank on 07 Nov 2016

From WeChat to Snapchat, messaging apps are an irreplaceable part of daily life for millions of consumers. American smartphone users, in particular, spend more time on messaging apps than most of their counterparts around the world, including those in other tech-centric countries like the UK, Japan, and India.

No longer just basic communication tools, messaging apps have evolved into full ecosystems of their own. Consumers are starting to prefer these closed, privacy-enhanced environments over the more public spheres of social networking sites. According to a report published by Business Insider, messaging app usage surpassed the usage of social media sites in early 2015 and has increased steadily since then. Recent trends indicate consumers are also willing to conduct activity extending far beyond simple conversation within such apps, prompting many businesses to change their online engagement strategies.

Chatbots, or computer programs that simulate human conversation, are fueling this shift in consumer behavior. While functionality tends to vary from one chatbot to the next, most are able to carry a conversation and fulfill various requests in a way that feels natural to users, enabling consumers to do things like check the weather or hail a cab without leaving a chat window.

Top messaging apps like Kik and Facebook Messenger recently opened up their platforms to the developer community to build custom chatbots. Facebook made headlines again when it enabled end-to-end encryption and announced that chatbots on its platform can now accept payments, making the popular app an ideal channel for businesses to pursue new e-commerce opportunities.

Plenty of businesses, especially those that cater to millennials and other tech-savvy demographics, already use chatbot technology to better serve their customers. Due to their cost-effectiveness, chatbots are quickly replacing human assistance in customer service and other contexts. As demand for speed, convenience, and flexibility increases, they can help businesses provide immediate customer service within the digital environments consumers prefer.

Chatbots have the potential to remove much of the friction in traditional e-commerce by creating a more connected experience. Presenting consumers with information or assistance where they already spend time decreases the chances of distraction along the path of purchase, making them more likely to spend. Natural language processing (NLP) and other machine learning techniques will eventually make chatbots even more intuitive.

Uber is one of the earliest adopters of chatbots and a prime example of how businesses can use the technology to provide superior service. The chatbot is automatically triggered when a user mentions phrases such as “need a ride” in any conversation within Facebook Messenger. Users then have the option to start a new conversation with the Uber chatbot and complete the request for service, or decline.

Shortly after launching chatbots integrated with Facebook Messenger, Amazon Alexa, and IBM Watson’s Concierge service, 1-800-Flowers president Chris McCann reported that over 70% of the orders received through the bots are from new customers. The company designed its chatbot experience to be as user-friendly as possible — it only takes about a minute for customers to work through the prompts and place an order for flowers or gifts.

The constant evolution of technology often leaves consumers seeking a better payments experience. While certain use cases are limited to industries like retail, payments are one area where any business can utilize chatbots. Offering the option to make payments via popular new channels such as Facebook Messenger can help businesses increase customer satisfaction and stay ahead of the competition.

Chatbots are still in the earliest phases of development, and their full potential remains to be seen. As the technology becomes more sophisticated, chatbots could fundamentally alter how businesses and consumers interact with each other. Although still a novel concept, consumer adoption of chatbots is on the rise, and usage is likely to increase as more businesses harness the technology to offer additional value and improved service.

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Bethany Frank Senior Marketing Associate Bethany specializes in content and events as part of Alacriti's marketing team. She's a graduate of Rutgers University and has a background in writing, broadcasting, and digital media. Fascinated by the intersection of technology and human nature, Bethany is out to explore what drives consumers in such a fast-paced, digitally connected world.

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