Will Chatbots Signal the End of the Intelligent Virtual Assistant?

Is the Intelligent Virtual Assistant (IVA) market over before it has even begun? Does the emergence of chatbots mean that the IVA is destined to go the way of Vista, Betamax, the LaserDisc and Nest (only kidding) as another brave tech failure?

IVAs attempt to humanize web self-service by delivering knowledge and information to customers via a human like interface. IVAs can be embedded within a web page or mobile app. The attraction for businesses is obvious. Unlike a customer service representative IVAs can serve thousands of customers at once, they are available 24/7, across all channels and the experience is consistent. Many organizations, particularly in the retail sector are today using IVAs as an opportunity for differentiation and a visual extension of their basic web self-service technologies.

The problem for the IVA market is that chatbots have the potential to offer the same feature set with fewer of the negative overheads. Similar to IVAs chatbots

Will Chatbots replace IVAs?

enable users to interact via text or using speech recognition. Speech recognition has the potential to transform the self-service user experience, making it a more natural experience and most importantly hands free. Speech recognition can deliver service to users anywhere and in any situation or context. IVA vendors have recently augmented their solutions with speech recognition capabilities to offer voice driven information search and retrieval such as video on demand. Already retailers have begun to explore the potential of voice driven self-service with for example Domino’s Pizza introducing Dom their virtual voice ordering assistant.

The problem for IVAs is that they expect the web page and mobile app to remain the dominant customer engagement interfaces. As I have discussed in previous posts users are not downloading business apps.  In addition artificial intelligence and speech recognition threaten the future dominance of text based web search and the text based company web page.

Chatbots will be able to provide all of the features of an IVA without having to download an app or go to a web page and invoke the IVA client. Most importantly they’ll be built within apps that customers (e.g. Kik, WeChat, Messenger) are actually using providing convenience and simplicity that is the cornerstone of successful customer service.

Chatbots: A New Customer Service Channel

In bricks and mortar retail we have the concept of footfall, which is the number of people entering a shop or shopping area over a given time frame. Businesses pay higher rents for higher footfall locations. In order for organizations to engage with customers they have to locate themselves where customers are likely to hang out. This was the main reason why businesses across all industries rushed to build business apps. If customers are using apps we must build an app. As I discussed in my previous post, for a variety of reasons mobile business apps have failed big time. Customers aren’t downloading business apps. If mobile apps are part of your customer engagement mix they aren’t getting any footfall.

In addition customer service via mobile apps is for the most part pitiful. Most of today’s business apps are deigned to sell not serve. Many business apps throw the user out of the native app into a browser if you want to reach customer service. As for self-service, case management and notifications via a mobile app, forget about it. No wonder few people download business apps.

The emergence of chatbots however provides an opportunity for organizations to engage with customers that overcome many of the limitations of the business app. A chatbot is a type of conversational agent, a computer program designed to simulate an intelligent conversation with one or more human users via auditory or textual methods. Chatbots are integrated within the apps that customers actually want to use. They are integrated within messaging apps such as WeChat, Kik and Messenger which act as the operating systems for the chatbots. Chatbots thus solve the business app problem, enabling customers to engage with a business without downloading an app or going to a website.

Perhaps most importantly, chatbots also reflect the emergence of artificial intelligence or speech recognition as a customer service user interface.  Artificial intelligence is slowly creeping into our everyday lives. Today, four of the largest global IT organizations – Apple (Siri), Google (Google Now), Amazon (Alexa) and Microsoft (Cortana) — offer speech recognition software. Customers will be able to interact with the chatbot using either text or voice recognition software. Long term, voice recognition software will become the dominant UI for customer engagement and well as for interaction with the Internet of Things (IoT).

Chatbots represent a new customer engagement channel that will soon co-exist with today’s other multichannel options of voice, chat, email, social and self-service. Chatbots will initially act as a self-service interface with simple escalation options. Eventually chatbots could replace 1-800 numbers and Facebook (for Messenger) is currently providing developers with API tools to build chatbots and Live Chat web plug-ins for business clients.

In April 2016 Facebook announced, at its annual F8 Developer conference, that its Messenger app was to become a platform that allows businesses to communicate with users via chatbots.  Customer service is firmly in Facebook’s sights with Facebook CEO Mark Zuckerberg stating “We think you should be able to text message a business like you would send to a friend and get a quick response,” The chatbot strategy has also been endorsed by Microsoft CEO Satya Nadella who stated, “bots are the new apps.”

Mobile customer service is terrible. Customers aren’t downloading business apps. Chatbots provide a new opportunity to address both of these issues.

Are You Sure You Want to Build that Business App?

Most smartphone users download 0 apps per month. That’s right zero, zip, zilch, nada. Sixty five percent of US smart phone users download no apps per month. Yet the time we spend using apps continues to rise. The problem for many businesses is the vast majority of time spent in apps is on social media, messaging and entertainment applications, not engaging with companies. My local supermarket has an app, so has my insurance company, my optician and some of my favorite clothes retailers. I would never think of downloading them though.

Have Business Apps Failed?

The logic behind building business apps was understandable. Business want to engage with their customers, customers are using apps, therefore we need to build an app. We need to hang out where our customers are hanging out. There were however a number of problems with this logic:

It’s Personal – Smartphone and Mobile devices are for the most part personal devices. A private space away from the work environment, for communicating with close friends and families, for participating in hobbies, music, TV and movies. For the things we are passionate about. For the most part people aren’t passionate about businesses. Do we want businesses invading this personal private space?

Storage Issues – I seem to get a message from Apple every day telling me I’ve exceeded my storage limit.  Do you want to waste storage on business apps? If you need to free up storage the business apps are the first to go.

Most Business Apps are Useless – Let’s face it most business apps are useless. They are deigned to sell not serve. After all this time most business apps can’t do customer service right, throwing the user out of the native app into a browser if you want to reach customer service.

Security – what information are you sharing with businesses? – We are more paranoid than ever about sharing personal information. Do we want to share location and contact details with companies? How much personal information do we want to share with businesses?

Inconvenient – This might be a first world problem but apps are just a little bit inconvenient. It’s time consuming to have to download an app and to create another user ID and password that will be forgotten in minutes. Interstitials encouraging users to download a mobile app are also frustrating for web users and can result in huge abandonment rates.

Ultimately customers aren’t using business apps. So if you are thinking of building a business app you are probably 2 or 3 years too late. You are merely copying rather than trying to leapfrog the competition. So what’s the solution? To get a potential answer lets go back to the start of this post and to the logic behind business apps, businesses want to engage with customers and customers are mobile, so let’s build an app. But if they aren’t downloading apps how do you engage with mobile customers? The solution is that we engage with customers inside the apps they are actually using, for example messaging apps. And a potential solution has emerged in the form of chatbots.

In my next posts I’ll take a look at chatbots and their role as a next generation customer service portal and their wider impact on mobile devices.