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The Future of Chatbot Apps

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The Future of Chatbot Apps

Recent advancements in AI have sprouted a new generation of chatbots — and they are already beginning to replace humans in customer service.

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Artificial intelligence has always been something more of a sci-fi dream. Intelligent machines that you can communicate with, just like an ordinary person, always seemed unrealistic and even creepy to some (Skynet, anyone?).

However, over the last couple of years, AI technologies have become so deeply integrated into our lives that talking to a machine is no longer science fiction but simply a convenient way to get things done. That's why chatbots, one of the most popular and accessible ways to utilize AI in real life, have gained such a widespread adoption.

Initially viewed as a fun but useless toy, chatbot apps are becoming increasingly smarter. Thus, more businesses have come to realize the full potential of these handy tools for automating customer service and business processes. But what benefits can chatbots offer business? How do they actually work? Let’s first start with a brief background check on chatbots.

What Is a Chatbot?

A chatbot, or “chatterbot,” is an AI-powered tool that simulates human communication via an in-app chat interface. Depending on the primary purpose of such an app, it can simulate an actual conversation, answer questions, or even perform simple tasks.

girl-with-smartphone-on-the-street-using-chatbot-apps

Let’s say you want to go hiking this weekend. First of all, you need to check the weather forecast. Instead of searching for the information online, you simply type in the question “Will it rain this weekend?” Granted that the bot has access to your location, it will instantly show you the forecast for the upcoming weekend in your area. In addition, it will most likely do so in a fun and conversational manner, resembling more of a real human than a Google search would (at least for now...).

beach-good-weather

This might seem somewhat simplistic — yet it perfectly illustrates the main purpose of a chatbot: making our life more convenient and easy, automating routine tasks, and providing relevant information or services.

A great example of AI-powered chatbot app is Mezi. With its help, you can easily find answers to all kind of questions about traveling locations, hotels, and flights.

Image title

chat-bot-travel-app-mezi-conversation

While the earlier examples of chatbots such as ELIZA (1966) and PARRY (1972) only mimicked a human conversation, the most advanced chatbot right now is capable of performing a vast number of tasks, from searching a database for information to handling various transactions and managing connected devices. Such progress in chatbot technology is mostly owed to the advances that have been made in AI

How Does It Work?

Simple chatbot apps are typically rule-based. This means that they can only understand and respond to specific preset commands. If your command falls outside the command parameters, then it won’t understand you. These chatbots have limited capabilities and can only be as “smart” as they are programmed to be.

yes-no

More advanced chatbot apps rely on what is called artificial intelligence, as mentioned above. Basically, by using “natural language processing,” these programs can understand whatever you say (not just commands) and can tailor answers and actions accordingly. Such bots can become “smarter” (i.e. learn something new when communicating with people) using machine learning.

While rule-based chatbots are very easy to build, they usually don’t add very much value. The only thing they are capable of doing is executing a set of defined tasks when they are told to do so. AI-powered chatbot apps represent greater value as they can do much more than simply follow orders. Yet building this “artificial brain” is no easy task.

Recently, the development of advanced chatbots has been rather simplified. Thanks to a large number of third-party chatbot AI platforms, you don’t need to be an expert to incorporate AI into your app. The most popular chatbot development tools include the following:

  • wit.ai (acquired by Facebook).

  • api.ai (acquired by Google).

  • Chatfuel.

  • Bot Framework by Microsoft.

  • IBM’s Watson.

  • Octane A.

There is one thing you should always remember when using such third-party platforms: manage your expectations. The capabilities of these platforms remain limited in the range of functions and the scale of the platform itself. If you decide to scale your product further, you might eventually still face the need to invest in custom AI development (or at least augment the existing solution with new capabilities).

Why Should I Care?

As we can clearly see from the examples of chatbot development platforms above, major tech companies such as Google, Facebook, Microsoft, and IBM, are betting big on AI and conversational interfaces. Yet, small and medium size companies have also come to realize the benefits that chatbots hold for businesses. According to Oracle, 80% of surveyed sales and marketing executives are already using chatbots or are planning to do so by 2020.

the-state-of-chatbot-adoption-in-businessSource: Oracle Research

Largely due to such vivid business interest, investments in the chatbot industry have grown 229% between 2015 and 2016 (according to Business Insider). Furthermore, Gartner predicts that 85% of all customer service interactions will be powered by chatbots by 2020.

The provided numbers are pretty impressive, especially taking into account the fact that the real chatbot revolution has just begun. To better understand the hype around chatbot apps, let’s take a closer look at the main benefits they offer and some notable examples across various industries.

As follows from the above-mentioned statistics, every business will eventually adopt chatbots. It’s only a matter of time now. But what is making businesses flock to AI and pour billions into chatbot apps?

Last year, messaging apps outstripped social networks in the number of monthly active users. Mostly due to this fact, businesses have come to realize the potential of chat platforms. Chatbots are currently viewed as a fast and simple way to target those three billion active users in the familiar and convenient environment of messaging apps. Besides the increased customer reach, businesses see the following benefits in chatbot apps:

  • Chatbots can create a truly engaging experience and thus improve user retention and build loyalty.
  • Chatbots allow you to source direct insights from the users by providing non-intrusive customer profiling capabilities.
  • Chatbot apps offer advanced personalization opportunities.
  • Bots can serve as perfect impersonators of a company or a product, thus improving brand recognition.
  • Chatbot apps can open new revenue channels (for example, virtual shopping assistants can apply service fees).
  • Processes automation helps businesses allocate resources efficiently and improves overall staff efficiency.

As a result, the use of chatbots can produce significant financial benefits. Juniper Research predicts that “chatbots will be responsible for cost savings of over $8 billion per annum by 2022, up from $20 million this year.”

Some notable examples of the best chatbots that exist across industries include the following:

Industry

 Company

Chatbot

Description

Platform

Finance and banking

Capital One

Eno

A gender-neutral personal assistant that helps users manage their money.

Text messages

Retail

eBay

Shopbot

Personal shopping assistant

Facebook Messenger

Travel

Lufthansa

Mildred

Travel chatbot that helps find the cheapest fares for a flight.

Facebook Messenger

Healthcare

HealthTap

Dr. A.I.

AI-powered virtual “physician” that helps identify symptoms and gives medical advice.

Provided as a part of standalone apps; Amazon Alexa skill

How You Can Benefit From Chatbot App Development

While chatbot apps were initially used by millennials or tech-savvy consumers, the adoption is spreading fast. Right now, every business can use a bot. AI apps have proven to be extremely valuable in customer-centric industries, such as

  • Retail (consultation on goods, prices, best bargains, etc.)
  • Finance (consultation on finance management, reference information, etc.)
  • Travel (automated flight search and booking, price prediction, alerts, etc.)
  • Healthcare (patient data collection, symptoms analysis, automated appointment booking, etc.)
  • Service (personal assistants, scheduling appointments, research and analysis, etc.)

The list can go on and on — yet customer support remains probably the most beneficial area of application for AI regardless of the industry.

To find out how AI-Fueled APIs can increase engagement and retention, download Six Ways to Boost Engagement for Your IoT Device or App with AI today.

Topics:
ai ,bot development ,chatbots ,machine learning

Published at DZone with permission of Valeriia Timokhina, DZone MVB. See the original article here.

Opinions expressed by DZone contributors are their own.

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