What Are Chatbots and Are Consumers Ready to Talk to Them?

min read
What Are Chatbots and Are Consumers Ready to Talk to Them?

When that friendly face pops up in the corner of the screen and asks “Hi! Can I help you with something?”, you never know if you are going to be chatting with a person or a chatbot. But until recently, you usually found out pretty quickly. The rule-based “bots” that predated commercially-available AI were easy to flummox, repeated responses frequently, and were generally about as helpful as a t-shirt in a blizzard.

The next generation of voice- and text-based chatbots are much smarter and more human. But are consumers ready to talk to bots? More importantly, are they always a viable substitute for help with a heartbeat? In this blog we'll dive into what chatbots are, how they work, and how today's consumers are reacting to them.

What Are Chatbots?

Chatbots are computer programs created to replicate an interaction with an actual human support person through a messaging service. Depending on the different platforms your business is using, they can be integrated into your website, social media, or messaging apps. They're a great tool to help manage the same repetitive customer questions your business might receive, while leaving more complicated inquiries for an actual person. 

How Do Chatbots Work?

Chatbots are powered by artificial intelligence and natural language processing technology which allows them to understand human languages, and then respond with learned messaging fed by data. Some chatbots use machine learning that will allow them to improve their responses and interactions. With time, chatbots will be able to personalise their responses and further improve their accuracy. 

5 Quick Stats About Chatbots

We recently conducted a survey across seven industries (Auto, Financial Services, Healthcare, Home Services, Insurance, Telecommunications, and Travel), and here’s what consumers are saying when it comes to calls and Chatbots: 

  • 20% of consumers preferred interacting with a Chatbot in 2022, which is up by 7% when compared to 2021. 
  • 26% never want to interact with a chatbot in any scenario. 
  • Younger customers are more likely to appreciate chatbots, as Gen Z/Millennials made up 32% of those who prefer them. 
  • Gen Xers made up 21% of those that preferred chatbots. 
  • Only 5% of Baby Boomers preferred interacting with a chatbot

Recent Advances in Chatbots

Improved Natural Language Processing (NLP): NLP has made it more and more difficult for users to tell if they’re interacting with a chatbot or an actual human. Some occasional glitches and grammatical errors still occur, but nonetheless, NLP has become more and more capable of understanding and responding to human languages. 

Increased Use of Machine Learning (ML): ML has allowed chatbots to improve their ability to respond to human inquiries. It can be used to train chatbots to recognise patterns in human language and eventually generate more natural and engaging conversations. 

Multilingual Features: If you were losing customers due to language barriers and not being able to support them, then chatbots might be the way to go. They can now be taught to support multiple languages, which would allow your business to potentially widen its customer base! 

Enhanced Integrations: Chatbots can now be integrated with multiple platforms including social media, messaging apps, your business’s website, and beyond. This gives your users a seamless experience across multiple channels. 

How People are Responding to Chatbots

As we mentioned before, there’s a positive trend happening when it comes to chatbots. In our recent study across seven industries, we found that 20% of the customers now prefer to interact with chatbots. That’s up from 13% in 2021. If it’s been a while since you’ve interacted with one, give it another try. You might be pleasantly surprised with what it’s capable of. Different companies, industries, and services are going to have varying levels of customer service when it comes to their individual chatbots because the data they collect varies vastly. Just know that every time you speak to a chatbot, you’re contributing to it becoming better for you and other customers as well! 

But the world isn’t ready to go all-bot, all the time. According to a recent report, 43 percent of consumers would still rather talk to a real person, but 34 percent say that they expect to use a chatbot to get connected to the right person. Compared to other business communication channels, chatbots came in second when it comes to getting instant responses, only losing out to online chat. Which, of course, can also be handled by a bot.

When Chatbots Work Well

As more consumers handle a majority of their tasks and transactions online, they are also becoming more impatient. People want to find the information that they are looking for instantly and they don’t want to dig around a website to find it (thanks, Google!) The most common complaints are not being able to find answers to simple questions like business hours, locations, and inventory, and that it takes too long to find services. If the information is more than a couple clicks away, you can plan on customers leaving to see if your competitors can provide the answer faster. This is where chatbots can excel in serving customers — giving people a simple path to instant answers to simple questions.

When compared to phone calls, consumers believe that chatbots can provide quicker answers to simple questions, are more likely to provide 24-hour service, and that they are a bit more convenient. But the margin of victory for the bots are fairly slim, so it does not appear that they are ready to replace phone calls or emails for communicating with businesses right now. And there are some areas where chatbots fall significantly short of meeting consumer expectations.

When Chatbots Fail

One area where chatbots aren’t ready for primetime is high-ticket items and considered purchase categories like home mortgages. When consumers are considering purchasing items that are either costly or could have far-reaching impacts on their lives, they trust people more than a bot. About 30 percent of people think that a bot is likely to make a mistake and accordingly, only 9 percent of consumers find chatbots useful in their attempt to purchase an expensive item. When it comes to getting detailed, expert answers, a phone call is also preferred to chatbots by over 20 points. But this sentiment may again change soon, as the phone beat bots by just 1 percent among millennials in the same survey — well within the margin of error. Another survey we cited in our post on AI in the Insurance industry also showed that preferences for using chatbots to get information from insurance companies are no different from the preferences of engaging with retail companies. It appears there is some trepidation in trusting the decisions of bots when the stakes are high, but people are nearly all-in when it when it comes to increased convenience.

When bots fail, that's when it's time to bring in the humans. According to our research, 76% of people said that if their voice assistant could easily connect them to a human who could answer their question, they would rather do that. The same sentiment likely applies to chatbots, so making it easy for customers to connect with a human when your chatbot lets them down should be seriously considered.

Chatbots Are Part of the Customer Experience Strategy

Chatbots aren’t ready to jump in and replace call centres, but they are an excellent way to supplement human assistance. Customers want to get answers to their questions instantly, 24 hours a day and a conversational chatbot can make that a really pleasant experience. Chatbots can communicate more like people, and they can not only take the burden of fielding basic inquiries off of call centre staff, they can help direct customers to just the right person or department when the time comes to call. On mobile or with virtual assistants, this can also be turned into a seamless, no-click, single-device experience for customers.

The age of the chatbot is indeed here, and it should be a part of your future customer service strategy.

Additional Reading

Want to learn more about balancing customer service automation with a human touch? Check out these resources:

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