CRACKING THE CODE OF THE WORLD OF CHATBOTS

Ever since the covid-era has started, we have seen the business world moving upside down. We have seen rapid changes in this dynamic business world owing to the innumerable challenges COVID 19 has posed especially to various small businesses. Initially, the integration of technology and business was considered remote destiny, but now it has become a reality. Despite the lack of proper resources and training various organizations are forced to adopt these changes to survive in the aggressive market place. Many people have recently lost their jobs because the contraction in revenue streams has made it difficult for organizations to pay salaries to their employees. Skills like artificial intelligence and machine learning have become the so called ‘in demand’ skills. While it is becoming difficult for organizations to pay the salaries to their employees, many organizations are considering adopting smarter solutions like chatbots to make it easy to manage customers. Chatbots are artificial intelligence-based bots which are mainly deployed by companies on their websites to handle the frequently asked queries by the consumers.

Why have chatbots not got much attention?

Before we start talking about the role of chatbots in managing customers and some future prospects it is essential to understand fundamental issues which have limited the use of chatbots. Adoption of modern concepts require some technical knowledge, a little understanding about the consumer psychology and correct methodology of implementation which most small business owners lack today. There is a communication gap when it comes to interacting with a programmed robot because the robot works on pre-loaded algorithms which makes it impossible for the robot to understand the root cause of the problem. The first step of problem solving is to deeply understanding a problem and chatbots are unable to perform this very-first step. Many times, the consumer is not satisfied by the pre-loaded responses provided by the chatbots because explaining their problem to a chatbot might seem pointless to the consumer. While it is very important for any customer manager to connect with the consumers and deal with the situation accordingly, chatbots lack emotions which makes it virtually impossible for them to connect with consumers and satisfy them. An aversion to adopt new technology coupled with the high cost of installing such technology results in the ignorance of the long-term benefits of adoption of such technology. As mentioned previously it is also important to understand the consumer perspective in order to make any decisions in favour them.

Source: 2018 Chatbots Report

As we can see in the above image which is taken from ‘2018 Chatbots Report’ included in the ‘Chatbots magazine’ that majority of the people (48%) would prefer talking to a real-life assistant. Potential reasons for this outcome are psychological barriers associated with interacting with a machine and the fear of getting wrong information being provided by the chatbot (30%) resulting in confusion. Moreover, the concept of ‘psychological egoism’ emphasizes on the fact that we focus on aspects which help in fulfilling our self-interest and sometimes, chatbots maybe incapable of doing the same. On having a closer look, we notice that a combination of psychological and technical barriers contribute is stopping these chatbots from getting the attention they deserve.

Analysis of Chatbot performance

In the previous sections we have understood that the objective of deploying chatbots is to manage customer queries in a smarter manner and we looked at some key reasons which lead to aversion in adoption of chatbots. Now it’s miles critical for us to analyze the performance of the chatbots before we discuss about strategies for future deployment. Just like we have methods and key performance indicators to analyze stocks, we also have some figures which help us deeply analyze chatbot performance. Some of these figures include self-service rate, bounce rate, average chat time and goal completion rate. The self-service rate shows the number of users who did not want to have a conversation with a customer manager at the end of the conversation, the bounce rate shows the number of people who closed the chatbot immediately after opening it, the average chat time is the average duration of a user’s interaction with the chatbot and goal completion rate is used to ensure that the purpose of deploying the chatbot is met. Now let us try to analyze the performance of a given chatbot based on various line charts.

Graph showing the hypothetical KPI’s of a given chatbot over a period of 4 weeks

The above graph shows the hypothetical KPI’s of a given chatbot over a period of 4 weeks. On observing the above graph, we notice that the self-service rate (SSR) slightly increased initially which may mean that the chatbot was successful in satisfying consumer queries initially but now, the SSR is constant. The Bounce Rate (BR) is increasing exponentially which may mean that the consumers did not find the pre-loaded set of queries useful or the interface was not very attractive. Inclusion of more FAQs and redesigning UI may bring a dip in BR. The average chat time is decreasing which clearly indicates a lack of customer satisfaction. So, we can conclude by saying that the flow of conversation this chatbot needs to be optimized.

Future Prospects and Strategy

Technology is advancing at a fast pace and the pandemic has sent out a strong message that even the small businesses can resist change only to some extent. While various tech companies are trying to make implementation of technology easier, it is projected that the use of technology will not stop even in the post covid era. All businesses, irrespective of their size are willing to cut their operational and adopting technology like chatbots helps them achieve this objective. The market size for chatbots is predicted to be 1.8 billion by 2024 (Intellectyx, 2019) and the market size is expected to grow at a compound average growth rate 24.9% from 2021 to 2028 (Grand View Research report, April 2021). Some reports also suggests that 80% of the businesses will use these bots in some or the other form (Outgrow,2018). These figures suggest that the chatbot market has immense potential even in the post covid era but in order to execute this technology, strategic planning is a must. The conversation flow of chatbots must be optimized keeping the consumer psychology in mind which would massively boost the sales conversion rate. Some attributes related to progress tracking must be included in chatbots which may play a massive role in bringing down bounce rates and increasing the average time per conversation. Many times, creating follow up tracks for a conversation and including ‘One-time Notifications’ may also help. Explaining crucial strategies without giving relevant examples may seem futile. Facebook recently organized a live event and messenger chatbots played a pivotal role in increasing the reach by rolling out repeated notifications. Most of the car insurance companies in the United States had to arrange for refunds owing to the pandemic, so, many firms designed chatbots to calculate the refund amount for the customers. In order to reap full benefits of chatbots it is also important to include an element of innovation while execution. Many of you may wonder what are elements of innovation? The job of chatbots must not be limited to customer management or multiplying sales rather they should be deployed in other third-party websites to get attention and gain traffic. Many event organizers today are trying to combine the utilities of chatbots and mobile wallets to gather audience for their events and many of them have been successful in doing that. Various artists and musicians are using these bots as a medium to grab attention of millions of fans across the globe. The demand for messaging applications has seen a spike which is why tech giants like Facebook are investing in this technology. While these are some strategies and stories about the world of chatbots, the following are the 8 most important tips everyone must keep in

mind.

Conclusion

The chatbot market has immense potential which is still not discovered. Chatbots can definitely not replace humans because technology definitely has its own limitations. But, if we stop resisting change and try to find more strategies for implementation, chatbots will definitely disrupt the marketspace. Chatbots will act as an irreplaceable asset for millions of businesses running across the globe in the near future. This massive shift can only be facilitated by minor changes by smaller businesses and the willingness to change.

Bachelor's of Management Studies major at Shiv Nadar University