Market size and opportunity for conversational AI technology.
What Problems Does Conversational AI Solve?
Conversational AI is the broad term used for the class of machine learning technologies and products associated with interpreting or emulating conversational dialogs. A big application here is intelligent agents: chatbots or voicebots that aim to generate human-like conversations so that users can interact naturally via text (typing) or by audio (speaking) to interact with the bot/service and accomplish some sort of task.
Specific applications range from customer support chatbots you’ve used on websites, intelligent virtual assistants like Siri or Alexa, or industry specific applications like personal finance chatbots, recruiting chatbots, restaurant ordering voicebots, and more.
And while chatbots are a big part of conversational AI, conversation intelligence or analytics solutions are also included in the space; for example, those technologies that transcribe and analyzing meeting conversations or sales calls.
What’s the Market Opportunity?
The ways in which businesses will adopt conversational AI fit broadly into the following categories:
- Augmenting digital interactions with voice-friendly and text-accessible interfaces to improve the experience and offer new services.
- Understanding and improving human behavior through analysis and conversational intelligence.
- Supplementing human behavior by improving quality of service (e.g. timely, available bots).
- Reduction of human labor costs by fully automating certain activities.
There are a range of estimates, but the market size for conversational AI and intelligent virtual agents appears to be growing from $4B today to more than $20B by 2027 ($18B — $45B per year). Some estimates indicate that just the chatbot market alone will grow to $9B by 2024.
5 Industries Ready to be Disrupted
Here are five big industries that are actively being reimagined by conversational AI technology today:
1. Contact Centers
One of the biggest market opportunities is to analyze, optimize, supplement, and ultimately replace customer service and call-center agents. This refers to the general voice-based contact center market ($300B globally), web-based customer service support, and also domain specific support such as:
- Insurance — helping customers fill-out or check on the status of an insurance claim.
- Banking — retrieving account information, reporting fraudulent activities, asking about credit options, promoting new products.
- General Commerce — taking orders, answering support questions, etc.
One interesting example is how online gaming companies have incorporated chatbots to automate and improve help and support for gamers. By not having to leave the game, and making it easier and natural for gamers to interact through chat, gaming companies improve the success rate and reduce the frustration for new gamers.
Opportunities in healthcare include automating communication around administrative tasks, patient reminders and nudges, bots to handle customer inquiries and perform diagnostics, and even mental health chatbots to help “talk” to patients to combat loneliness, depression, and identify and escalate risk factors to healthcare providers.
3. HR & Recruiting
It seems ironic that in order to recruit and manage humans better we would start using bots …. but here we are. In human resources there are a number of applications including conducting surveys, asking for and delivering feedback, interacting on matters of performance management, timely nudges and reminders, analyzing social media and messaging application conversations, and more.
Recruiting has also substantially benefited from automating screening questions, interviews, following-up with applicants in a timely fashion, timely nudges and prompts, and otherwise automating the interactions and activities of human recruiters.
4. Sales & Marketing
Sales and marketing is an area that has increasingly been infused by technologies (e.g. salesforce, hubspot) to streamline, systematize, and otherwise “processize” sales and marketing.
I’m sure you’ve interacted with chatbots on websites and in social media that attempt to answer your questions and work to get you to sign-up for more information or to encourage you to make an immediate purchase. These bots have the advantages of being 24x7, responding immediately, and providing additional “top of the funnel” activities to draw in prospects. The ongoing back-and-forth, marketing nudges, and clever followups in email or text message also increasingly benefit from automation and conversational AI.
There is also a growing opportunity to analyze human-human conversations in a sales setting to provide sales intelligence — whether that’s transactional sales that take place in a contact center or more complex sales that take place between an enterprise software salesperson and a prospect — both can benefit from the AI analysis, analytics, and subsequent intelligence and recommendations.
One area that I have a particular knowledge of is restaurant chatbots and voicebots. Opportunities across the industry range from guest-facing to operations management. On the guest side, a number of companies are working to automate drive-through and phone orders, notably McDonalds purchase of an AI company to automate drive-thru ordering and current emerging start-ups Valyant and ConverseNow.
On the enterprise side, there are an increasing number of applications to make the job of managers easier. Qu, for example, has built an analytics app that operators can speak to directly asking questions like “what were my online sales yesterday?”.
As conversational AI becomes more human-like and can address a broader range of applications, we can expect such technologies to become omnipresent throughout our day-to-day lives — much like we are used to being “always-on” and internet connected today.
Beyond the 5 industries identified, we will see impacts in areas such as education (teaching bots and teaching assistants like Duolingo employs), productivity tools (transcribing and analyzing zoom meetings and conference calls), and, of course, the intelligent virtual assistants like Google and Siri that may become the gateway to the internet connected world through smartphones, smart speakers, smart home appliances, smart offices and more.
Personally, I’m looking forward to a Jarvis-like experience in the not too distant future!