Chatbots and the Future of Conversational Marketing

Chatbots are currently considered the future of digital marketing. Using artificial intelligence (AI), they streamline communication between a business and its consumers in a...

Jamie Gonzales
Jamie Gonzales July 19, 2019

Chatbots are currently considered the future of digital marketing. Using artificial intelligence (AI), they streamline communication between a business and its consumers in a reactive, personalized manner. When implemented correctly, chatbot marketing can benefit your business by letting you save resources and enhance the customer experience.

How are chatbots winning the race of advertising? Read on to find out.

The History of Chatbots

In 1950, Alan Turing devised a test which aimed to measure AI. It involved having to identify which of two subjects was a computer after a series of text-only exchanges. If a machine is able to respond in a way that makes itself indistinguishable from a human being, then it said to exhibit truly intelligent behavior. With the desire to answer whether or not machines can think like humans, the Turing Test sparked the revolution of AI which led to the following developments:

ELIZA (1966)

ELIZA was built at the MIT AI Laboratory and is the mother of all chatbots. Its ability to simulate human conversation relied on matching user prompts to pre-programmed responses. Despite being able to fool a couple of interrogators, it ultimately failed the Turing Test as it cannot contextualize events.

PARRY (1972)

PARRY was made by Kenneth Colby to imitate an individual afflicted with paranoid schizophrenia. The AI employed a conversational strategy with a more serious tone than that of ELIZA, getting more than half of participating psychiatrists to think they were talking to a real person.

Jabberwacky (1988)

Deviating from the formality of its predecessors, the Jabberwacky was largely meant to entertain, focusing on delivering a chat experience that’s natural, interesting, and humorous. Nonetheless, it showed great sophistication in its attempt to break out of text-based conversations and shift to a completely voice-operated system.

Dr. Sbaitso (1992) 

Dr. Sbaitso is an AI speech synthesis program that came with MS DOS-based computers. It was coded to interact with users as if it were a psychologist, usually responding with lines like “why do you feel that way?” The program, however, was far from lifelike, having utilized highly digitized voices.

A.L.I.C.E. (1995)

Short for Artificial Linguistic Internet Computer Entity, A.L.I.C.E. processes large amounts of natural language data from human inputs. The chatterbot then applies heuristical pattern matching rules to engage in conversations. At the time, it was one of the most accomplished humanoid robots, but was still unable to pass the Turing Test.

SmarterChild (2001)

SmarterChild was a chatterbot widely distributed on various messaging platforms like AOL Instant Messenger, Windows Live Messenger, and some SMS networks. Considered as the precursor of Apple’s Siri, SmarterChild boasted personalized replies and a distinct personality.

IBM’s Watson (2006)

IBM’s Watson was created specifically to compete in the popular TV show Jeopardy!. In its early runs, Watson can answer only 15% of the questions correctly, but by 2010, it easily beat human contestants on a regular basis. Watson actually went on to win the show in 2011 against two former champions, and is now able to impart valuable insights through natural language processing based on large amounts of data.

Siri (2010)

Apple launched Siri as an intelligent personal assistant for iOS users. It featured a natural language user interface (UI) to answer questions and deliver web service requests, laying down the groundwork for future service AIs. Today, Siri is able to send text messages, mark calendar events, play songs, and more.

Google Now (2012)

Like Siri, Google Now is a female-voiced portable assistant that answers questions, performs web commands, and makes recommendations. Since its initial release, the program graduated from only providing basic information to being a highly sophisticated predictive search software. Before being aware of it yourself, Google Now presents you with things you might want to check out in an easy-to-read format.

Alexa (2015)

Alexa was produced by Amazon to inhabit the Amazon Echo Device. The AI is completely voice-operated and uses natural language processing algorithms to take in data and act on the user’s behalf.

Cortana (2015)

Using the Bing search engine, Cortana is an intelligent personal assistant created by Microsoft. It can take commands in a number of languages, answer questions, and set appointments.

Bots for Messenger (2016)

Facebook Messenger bots allowed developers to create their own AI within the messaging platform for advertisement, entertainment, and other purposes. Just a year after its announcement, Facebook Messenger was filled with over 34,000 bots.

Tay (2016)

Tay was a chatbot created by Microsoft which launched on Twitter in 2016. It took the persona of a teenage girl, and based its replies on the tweets it received. Unfortunately, due to a number of trolls, Tay had to be shut down as it developed to become offensive and paranoid.

Chatbots and Conversational Marketing

So where does marketing come in amid all these technological breakthroughs?

The answer: conversational marketing.

This feedback-oriented approach makes use of one-on-one conversations to drive conversions and sales. It effectivity banks on creating an authentic buyer experience by initiating real-time discussions and providing personalized responses.

As opposed to traditional lead generation forms, conversational marketing doesn’t leave people hanging for an answer. Nor does it force potential customers to go through needless processes just to establish communication. Instead, it makes use of AI to instantly gather data, answer queries, and address concerns. The insights collected through these conversations are also incorporated into future marketing efforts, allowing brands to forge a more genuine relationship with consumers.

The Birth of Chatbot Marketing

chatbot flow conversation design in marketing

Thanks to modern technology, consumer behavior shifted and the marketing scene evolved out of its impersonal strategies. Traditional marketing collapsed as the masses gained power to deny interruptive ads and choose the experiences they want to have. For instance, messaging apps are overtaking email in popularity, causing email open rates to plummet to 21.8%.

Other channels are not exempt from this change in consumption. Only 43% of the population entertain cold calls—assuming they pick up on an unknown number at all—and the average landing page conversion rate is now at only 2.35%.

Today, business owners are challenged to not just create products and services that people want, but to also promote them in a way that their target market would be eager to consume. Put simply, marketing that’s instant, straightforward, and relevant.

All these in the face of the growing preference for mobile usage and fast developing AI innovations paved the way for chatbot marketing. A few years later, chatbots are now being used across industries, converting leads to sales in shorter amounts of time.

Steady Evolution

Chatbot marketing has undoubtedly gained traction since its launch. From a profitability rating of $113 million in 2015, it skyrocketed to be worth $864.9 million in 2017, and is projected to be valued at $1.25 billion by 2025. These numbers are reflective of public reception, as well as business owners’ belief that chatbots are here to stay for the long haul.

From humble informational bots to competent utility bots, chatbots have gone from providing simple responses to solving problems and anticipating requests. Operating with efficiency, 47% of shoppers are found to trust chatbots when making direct purchases.

While a number of companies have yet to adopt chatbot marketing, some businesses have already reaped its benefits. Organizations that made use of the chatbot Drift increased their landing page conversion rates by 36% and active conversations to 267%. Meanwhile, Chatbot Winnie brags a 72% user click-through rate (CTR) since it was incorporated in Facebook messenger.

Indeed, chatbots offer advantages to help businesses thrive in a dynamic market, but it doesn’t mean they’re perfect. Current AIs are still more or less bound to their pre-programmed responses, adding a caveat to their quick replies. In fact, although 57% of consumers love chatbots for their instantaneity, 75% of users would opt not to entrust customer service issues to chatterbots.

Fifty nine percent (59%) of unsatisfied customers would often cite chatbots’ incapacity to understand nuances in communication as a cause for ditching the AI. Misunderstanding requests (59%), executing the wrong commands (30%), and giving inaccurate information (14%) are other complaints that prompt consumers to seek speaking to a live person. Nonetheless, 40% of end users don’t mind chatbots so long as they execute their function.

Current Trends in Chatbot Marketing

As of 2019, chatterbots hold the majority market share in terms of revenue. Because of advanced AIs, they are able to overshadow traditional conversational services and handle complex exchanges and commands. Sophisticated AI chatterbots successfully provide a custom experience to clients, and could even go so far as to guide them through complex banking procedures.

In a nutshell, current chatbot marketing efforts circle around the following elements:

In-Depth Engagement

Whereas traditional marketing tools are content with clicks and views as a form of consumer engagement, chatbot marketing goes beyond these through active conversations. Compelling chatterbots encourage consumers to ask more questions and take their time exploring your products.

A good example would be Officer Judy Hopps on Facebook Messenger. Prior to Zootopia’s release, Disney cleverly created a chatterbot impersonating the character from the movie. The AI served as an interactive trailer that can replay as much as they pleased. The campaign delivered on its purpose to hype the film, and was recorded to get consumers to spend more than 10 minutes talking to the chatbot, often having them restart the chatbox to play out a different scenario.

In-depth engagement can also be qualified with regards to the accumulation of direct user insights. Context-aware chatbots are now programmed well enough to maintain natural conversations and remember entries from previous speech bubbles. Such conversational settings are great for getting information that is otherwise inaccessible when using typical survey forms or questionnaires. Kept at a steady pace, chatbot conversations can involve personal questions that are valuable in creating buyer personas.

Victoria’s Secret does a good job in this respect with its PINK Kik bot. After asking standard questions, the chatbot proceeds to make product suggestions and adjusts to consumer feedback.

Having a “Live” Brand 

It’s important to build a brand that resonates with your target audience. A modern-day chatbot brings your brand to life, giving consumers a “live” entity to interact with.

By sparking meaningful conversations, you pull buyers toward your business rather than disperse fragments of a story across multiple platforms. Advanced natural language programming elevates the realness of the experience, allowing AIs to respond more naturally and understand different languages.

The National Geographic Channel took advantage of this trend to promote their new TV show, Genius. If you go to their Facebook page, you can chat with a bot pretending to be one of the featured geniuses of the show. The entertaining chatbots can answer professional and personal questions while assuming the character of a famous scientist or artist.

Better Functionality 

Instead of switching between apps when multitasking, today’s chatbots offer great functionality backed with an expansive set of commands. Some AI may even develop far enough to render most apps obsolete. Today’s Siri and Alexa already aid many scenarios where hands-free operation is convenient.

The Future of Chatbot Marketing

The future of chatbot marketing appears to be a bright one, convincing market analysts that 85% of customer interactions will be handled solely by AI in 2020. The way things are headed, it wouldn’t be surprising to reach a point where someone develops a chatbot that’s intelligent enough to pass the Turing Test. Although some experts would insist we are far from creating such AI, the developments leading up to that momentous occasion would mean better and better user experience.

In time, conversation design will be applied to other fields, and we might find chatbots everywhere in our daily lives. One of the projected directions of today’s chatbots is the development of a seamless interface that does not interfere with other apps or normal browsing. The moment our programs become sophisticated enough to operate with such finesse, we are bound to a future where chatbots are ingrained in our society forever.

Finally, some experts pronounce, quite enthusiastically, that Conversation as a Service (CaaS) would rise from current chatbot marketing strategies. With messaging apps treated like second homescreens, it is believed that investments will pour hard into developing bots that can do almost everything.

Seeing how natural language processing and AI-based machine learning are becoming more and more surreal, the fate of chatbot marketing is an exciting idea of the not-so distant future. Who knows? In the next decade, we may be living in a world reminiscent of your favorite cinematic universe.

Interested to learn more about how to take your business to the next level? Speak to a chief marketing officer at Growth Rocket and stay relevant in an ever-changing market.

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