Chatbot Relevance

Part
01
of three
Part
01

Chatbots - Relevance Now, Use, and Types of Companies Using Them

Chatbots are relevant now because they offer companies significant cost savings, they help companies improve customer engagement and experience, and there are advances in artificial intelligence and natural language processing that enable the development of more effective chatbots. They are being used most often in customer and after-sales services, customer relationship management, and sales and marketing. Chatbots are prevalent among companies that operate in the healthcare, communication, and financial service industries.

Why Chatbots Are Relevant Now

  • In 2017, consulting firm Accenture polled 97 chief information officers (CIOs) and 255 chief technology officers (CTOs) from 12 countries, namely, Australia, Brazil, China, France, Germany, Ireland, Italy, Japan, Singapore, Spain, the United Kingdom, and the United States. Based on this survey, of CIOs and CTOs worldwide, 56% report that chatbots are disrupting their industry, 43% say chatbots are already being implemented by their competitors, and 57% believe chatbots have a high return on investment (ROI).
  • Software company Salesforce, conversation marketing expert Drift, social media agency myclever, and survey authority SurveyMonkey Audience surveyed 1,051 adults in the United States in 2017, and found that the majority of adults in the country associate chatbots with the following benefits: quick answers to simple queries (69%), 24-hour service (62%), and convenience (53%).
  • According to technology consulting firm Juniper Research, chatbots helped companies in the United States save $20 million in 2017.
  • There are several market forces driving the growing relevance of chatbots, says professional services firm Deloitte. On the demand side, there is increasing pressure on traditional contact centers to reduce turnover rates and operating costs, and there is growing consumer demand for self-service. On the supply side, there are technological advancements in the areas of artificial intelligence and natural language processing, and chatbot development platforms are maturing.
  • According to software development company IQVIS, chatbots enable 24/7 customer support, timely responses, customer engagement improvement, and customer service cost reduction. IQVIS reports that chatbots can reduce customer service cost by 30% to 70%. Chat interaction costs only $8 to $10 per session, while phone interaction costs anywhere between $35 and $50 per session.
  • Based on IQVIS's report, chatbots are associated with the following salary savings in the United States: insurance services (60%), financial services (46%), sales (36%), and customer services (30%).
  • Market research firm Mordor Intelligence reports that the global chatbot market was already worth $864.9 million in 2017. According to the firm, this market is growing at a relatively high compound annual growth rate of 24.1%.

How Chatbots Are Being Used

  • According to Accenture's worldwide survey of CIOs and CTOs, chatbots are most commonly implemented in after-sales and customer service, customer relationship management, and sales and marketing. The following figures show the percentage of CIOs and CTOS worldwide who have already implemented chatbots in certain functional areas: after-sales and customer service (77%), customer relationship management (54%), sales and marketing (40%), audit, finance, and accounts (11%), human resources (8%), finance (8%), supply chain (5%), research and development or product development (3%), manufacturing (3%), and information and communications technology (3%).
  • Prominent chatbot use cases, according to digital solution provider Cognizant, include the delivery of personalized or customized offers, products, and services in financial services, the delivery of government services, the delivery of product recommendations, product information, and store location in retail and e-commerce, and the delivery of travel assistance in travel and hospitality.
  • In the workplace, chatbots and intelligent assistants are being used to support the following tasks: typing with voice dictation (46%), team collaboration (26%), employee calendar management (24%), email management (14%), customer service (14%), information technology help desk management (13%), and data analysis (10%). This is according to information technology marketplace Spiceworks, which polled over 500 information technology professionals across Europe and North America.
  • Among consumers worldwide, chatbots are most commonly used for tracking an order (60%), finding basic information (53%), and asking basic questions (49%). This is according to software company Pegasystems Inc., which polled 3,500 consumers from around the world.
  • According to professional services firm Ernst & Young, chatbots have helped users with tasks in the following areas: customer service and support, e-commerce, personal assistance, productivity, entertainment, and information gathering.

What Types of Companies Use Chatbots

  • Accenture's global survey of CIOs and CTOs reveals that informational chatbots are most common in the health, communications, and banking industries. According to this survey, the percentage of CIOs and CTOs reporting use of informational chatbots is as follows: health (64%), communications (59%), and banking (50%).
  • Based on Spiceworks's survey, the use of chatbots or intelligent assistants in the workplace is more common among large businesses than among small and mid-size businesses. According to the survey, 24% of large businesses use chatbots, while only 16% of small businesses and 15% of mid-size businesses use chatbots.
  • Product support platform Boomtown, however, has a different finding. Using a sample of over 20,000 global businesses, it found that it is the smaller companies that deploy chatbots more frequently. Of businesses with chatbots, 39.2% have 1 to 10 employees, 32.0% have 11 to 50 employees, 16.3% have 51 to 250 employees, 3.6% have 251 to 1,000 employees, and 8.9% have over 1,000 employees.
  • According to Boomtown, chatbots are slightly more prevalent among business-to-business (B2B) companies than among business-to consumer (B2C) companies. Of sites with chatbots, 58% are B2B sites, while only 42% are B2C sites.
  • Boomtown also found that chatbots are overwhelmingly more prevalent in the internet software industry than in other industries. Of sites with chatbots, 65.1% are in the internet software industry, 8.4% are in the professional service industry, 6.6% are in the healthcare industry, 3.9% are in the discretionary consumer goods industry, 2.7% are in the media industry, 1.9% are in the consumer staples industry, 1.7% are in the hotel and leisure industry, and 9.7% are in other industries.
  • According to Ernst & Young, chatbots have been used in the following industries: banking and insurance, enterprise, retail, travel, food and restaurant, education, accounting, news and media, toy industry, law, healthcare, and movie industry.
Part
02
of three
Part
02

Chatbots - Relevance For The Future and Return On Investment

Chatbot adoption and use are expected to increase among several market verticals to automate repetitive tasks, deliver value, and free manpower and human skills. Chatbots deliver significant ROI and savings in cost, time and effort in different sectors including HR, healthcare and banking among others. These and other findings are outlined below.

CHATBOTS RELEVANCE IN THE FUTURE

Chatbots Adoption

Chatbots and Human Workers

  • PricewaterhouseCoopers (PwC) reported that a third of workers worldwide are concerned about losing their jobs to automation.
  • 38% of US jobs and 30% of UK jobs are at risk of automation in the future.
  • Forbes reported that by 2020, 1 million knowledge-work jobs will be taken over by virtual agents, chatbots, software robotics and machine learning-based tools.
  • On the other hand, 331,500 jobs that require human mental agility and skills will be added to the US workforce.
  • This is the result of automation (including chatbots) taking care of "low-hanging fruit" or repetitive tasks, leaving more complex jobs to humans.

Chatbots and HR

  • PricewaterhouseCoopers reported that by 2030, the role of HR will be redefined by automation including chatbots, outsourcing and self-organizing teams.
  • IBM stated that ROI on enterprise chatbots will be quickly realized as dependence on HR call centers are reduced.
  • 55% of chief human resources officers (CHRO) surveyed by IBM said that they expect AI and cognitive computing to disrupt the HR industry.
  • 66% of surveyed CEOs said they expect cognitive solutions including chatbots to deliver value in their HR within 3 years.

Chatbots and A2P Messaging

Success Rates in Banking and Healthcare

  • By 2022, messaging-based banking chatbots are predicted to have a success rate of 93% per interaction.
  • By 2022, healthcare chatbot interactions are expected to have a success rate of 75% (up from 12% in 2017).
  • This is because chatbots are tailored to healthcare inquiries such as diagnoses based on predefined answers.
  • Juniper also said they expect chatbots to advance into more sophisticated health diagnostics such as analysis and monitoring of mental health.

CURRENT ROI AND CASE STUDIES

4+ Minutes Saved Per Inquiry Call

  • Juniper Research determined that over 4 minutes are saved per chatbot inquiry compared to traditional call centers in the banking and healthcare sectors.

$1 Million Saved Per Second

30% Saved in Customer Service Costs

  • Every year, businesses receive 265 billion customer support requests and spend $1.3 trillion servicing them.
  • Chatbots can cut 30% in customer service costs, according to research from Business Insider Intelligence cited in Chatbots Magazine.

Chatbot ROI Examples

  • Amtrak's chatbot Julie produces 800% ROI through simplified rail bookings and resolution of 5 million customer inquiries per year.
  • Charter Communication used a chatbot service to handle over 160,000 monthly live chat requests and had a return of 300% ROI for its chatbot service within 6 months.
  • Tree Ring freed up manpower by using a chatbot service and reported a 15x ROI through a 10% increase in its pipeline value.

FUTURE ROI

$8 Billion Saved In Customer Support Costs

$0.70 Saved By Banking Chatbots

Part
03
of three
Part
03

Case Studies - Successful Chatbot Implementation

Lemonade, eBay, and Northwell Health are three companies from different verticals that are using chatbots successfully. Lemonade Insurance's AI chatbot set a world record by paying out an insurance claim in 3 seconds.

Lemonade Insurance

Chatbot

  • The company was launched in 2015 along with its online chatbot, Maya, that interacts with customers willing to take out a policy or making a claim.
  • Maya, the artificial intelligence bot, crafts the perfect insurance for customers online, which makes the process much faster and easier.
  • Success Metrics: With Maya, the chatbot, Lemonade is able to process the customized insurance option delivered to customers online is a faster way wherein the company claims that through with the assistance of Maya it takes around 90 seconds for the customer to get insured and about 3 minutes to get claims paid.
  • The company also announced that it has set a world record for the speed and ease of paying a claim: 3 seconds and zero paperwork and able to achieve a better customer engagement with easy interaction with the bot and having better experiences of payout in 3 seconds where usually insurance companies are bound to payout in 30-45 days.
  • With Maya, the artificial intelligence bot, the company is able to reduce the entire process of insurance policy issuance to 5 minutes, along with making the entire customer conversation process very personalized and reduces unease.

eBay (e-commerce)

Chatbot

  • With ShopBot, the customers can find the items they desire at the price they want in better and quickly.
  • Nine months after the implementation of the chatbot, it was found that it raised the engagement and retention level to three times as the customers were likely to ask questions about the product more frequently than those only using the website for information.

Northwell Health (Healthcare)

Chatbot

Research Strategy:

To obtain the information and insights on the case studies of companies that are using chatbots successfully by driving engaging customers in a positive manner and increasing any return on investment wherein the companies belonging through different verticals such as healthcare, insurance, legal, e-commerce and others we primarily searched through relevant news articles from IT and other sectors which report successful stories on various companies innovations including chatbots. For the same, we searched through articles from CNBC, PR Newswire, Tech Crunch, Venture Beat, among others.

By examining these sources, we were able to identify the above-listed case studies of Lemonade Insurance, eBay, and Northwell Health, which operate in insurance, e-commerce, and healthcare, respectively, and are from varied business sizes (small, medium, and large, large enterprises). Further details on each of the company, including details on the chatbot, deployment, working, and success metrics, have been provided by researching through their press releases and related news articles.
Sources
Sources

From Part 02
Quotes
  • "A recent analyst report from Juniper Research found that by 2022, chatbots and NLP will save companies about $8 billion per year in customer supporting costs, which is a far cry from the $20 million in estimated savings for 2017."
  • "For every second chatbots can shave off average call center handling times, call centers can save as much as $1 million in annual customer service costs."
  • "The Watson Conversation platform enabled Autodesk to build this virtual agent that delivers significant productivity and efficiency gains, including: – A 99% improvement in response times: Cutting resolution from 38 hours to 5.4 minutes for most Tier 1 inquiries"
  • " A drop in per-query cost from $15-$200 (human agents) to $1 (virtual agents)"
  • "265 billion customer support requests are made every year, and it costs businesses a whopping $1.3 trillion to service them."
  • "According to Chatbots Magazine, businesses can reduce customer service costs by up to 30% by implementing conversational solutions like virtual agents and chatbots."
Quotes
  • "Julie has produced an ROI for Amtrak of 800%."
  • "That’s 166,000 chat requests per month that Charter no longer had to worry about. And a 300% ROI within six months."
  • "By automating the lead qualification process through a chatbot, TreeRing sales people can focus on closing sales. This results in a 15X ROI through a 10% increase in pipeline value."
Quotes
  • "(p.3) Chatbots serving industries like retail, eCommerce, banking and healthcare could bring cost savings of USD 8 billion annually by 2022, up from USD 20 million in 2017."
  • "(p.3) The return on investment (ROI) for an enterprise chatbot is expected to be rapidly realized by reducing dependence on the HR call center. "
  • "(p.3) Other longer-term benefits include reduced attrition, accelerated employee development and higher employee net promoter score (NPS) resulting in stronger employment brand reputation in the marketplace."
  • "(p.3) In a 2017 global HR survey conducted by the IBM Institute for Business Value in collaboration with the IBM Smarter Workforce Institute, 55 percent of CHROs expected cognitive computing and artificial intelligence (AI) to be a disruptive force in HR."
  • "(p.4) . Of the 8,600 employees in the 2017 global HR survey, 62 percent would choose to reuse a cognitive enabled tool like a chatbot to support personal HR decision-making."
Quotes
  • "Juniper forecast that the success rate of bot interactions in the healthcare sector (those completed without relocation to a human operator) will move from 12% currently, to over 75% in 2022. In the banking sector, Juniper expects this to reach over 90% in 2022."
  • "Juniper found that many bots are suited to enquiries such as healthcare diagnosis, where users can select predefined answers allowing bots to assess health issues and provide a recommended course of action. "
  • "However, as AI capabilities advance, bots will be able to aid in more sophisticated healthcare diagnostics, such as monitoring and analysis of mental health."
  • "Juniper believes that A2P messaging providers will adopt chatbots as a means to offer information to consumers and forecasts the number of A2P SMS sent from chatbot interactions to exceed 100 billion by 2022."
Quotes
  • "Chatbots find applications in a wide range of industries, such as healthcare, retail, BFSI, media & entertainment, travel & tourism, e-commerce, and others"
  • "U.S. Chatbot Market by Vertical, 2014 - 2025 (USD Million)"
Quotes
  • "When asked which emerging technologies they are already using and which they intended to implement, 80% of respondents said they already used or planned to use chatbots by 2020."
  • "...with 40% planning to implement some form of automated technology by 2020."
Quotes
  • "The people management challenges in 2030"
  • "The role of HR HR as we know it vanishes, replaced by automation, outsourcing and self-organising teams."
  • "Regulations and laws, the governments that impose them, broad trends in consumer, citizen and worker sentiment will all influence the transition toward an automated workplace. The outcome of this battle will determine the future of work in 2030."
Quotes
  • "Over 1 million knowledge-work jobs will be replaced in 2020 by software robotics, RPA, virtual agents and chatbots, and machine-learning-based decision management. "
  • " It also estimates that 331,500 net jobs will be added to the US workforce next year, human-touch jobs that require intuition, empathy, and physical and mental agility."
  • "This is the result of automating the “low-hanging fruit,” the repetitive tasks and incidents, leaving the more complex and time-consuming problems for humans to fix."