There’s been a lot of excitement around chatbots for business and bots in general for a number of years now. That said, market projections may vary significantly depending on the analyst or magazine. So today, I want to take a minute to share a perspective on the market opportunity at hand with its booming growth.
I’ve been in this space since 2014, developing and implementing business bot solutions for companies across Europe: pretty active up until 2019 all included and then focused on conversational experience during 2020 up until now. For the remainder of 2021, I’m charging back to bots.
The pace at which this market revolves has never stopped to amaze me. And I love that. Let’s look at some of it:
- What’s the market looking like for the next 3~5 years?
- Which industries are/will be impacted by the Botsunami era?
- How has the market evolved and what’s next for bots?
Let’s uncover these topics together and kick off this Bots Fitness exercise!
Bots numbers in that back of a napkin
Bots are hot, so much that the range at which its market is perceived and valued today and tomorrow differs quite a bit, depending on which analyst or specialized magazine is behind the scene. For 2020~2021 chatbot market size is ranging between [~500M$, ~2.5B$].
With regards to the pace at which it is growing, the research and perspectives I’ve gathered point to similar directions between 25%~35% growth YoY for the next 3~5 years. Given these inputs, and to simplify numbers on the back of a napkin, I’ve decided to focus on, or embrace, the lower end of these forecasts. In such a scenario 📈🤖
The Chatbot Market outlook’s worth is set to a 500M$ size in 2021 and growing at a 25% pace YoY, that is, +125M$ growth per year!
Industries impacted by the Botsunami
While it is true that Bots have found a sweetspot in the customer service realm, and personally this is where I’ve seen most projects popping up and consolidating since the ‘early days’, this is no longer the case. Both B2C and B2B bots are here to stay and myriads of examples are flourishing by the day in a wide spectrum of business sectors.
From marketing to the public sector and passing by IT service desk: chatbot technologies are accelerating business transformation across the globe. Have you ever ordered your pizza dinner over WhatsApp in a conversational fashion with 0 human intervention? If your answer is no, please consider visiting the Dominican Republic and make sure you reach out to Pizzarelli 🤓
📦 🏫 🍔 👨⚕ ️🩹 🚚 ⚡ 🏘️ 🩺 👪 🛎️ 🏦 ✈️
Emancipating industries navigating chabot waves include Banking, Ecommerce, Edtech, Foodtech, Healthcare, Insurrance, Logistics, Energry & Utilities, Real Estate, Travel and Hospitality, Medtech and HR. The list goes on.
A Point Of View on How the Market has Changed
The early days — In 2014 it took a village to kick off a chatbot, or should I say, a virtual assistant project. Mainly rule based, one needed to anticipate, or hard code, all potential “linguistic” scenarios: including re-wording or re-phrasing or even anticipating potential typos end customers would eventually deliver. Many variations of the same messages needed to be created manually which made the process tedious, even if the end result was innovative and exciting. This so called ‘emmergent grammar’ was a mix of exact matching, regex and extrapolation to find and call the closest variation possible
Also, NLP powered IVRs (or bots) were costly and creating the Grammar or Corpuses to feed these ‘things’ took forever and resulted in heavy implementations. Another interesting point at least from my perspective, is that I did not think in terms of providing a Conversational Experience but was rather focus on more technical aspects of the endeavor: integration points with channels, information systems, and a lot of maintenance happening behind the scenes. Transparent to end-users certainly, but not to the companies hiring (us as) service providers.
The hottest topic in town — 2017 open the door to a different ball game. The advent of AI exploded. Accesing these AI technologies was made available to technical folks that did not need to be versed in any way in data science or natural language processing but could nonetheless call an API that did all the heavy lifting on their behalf. Another important shift in the market was the audience’s maturity in consuming these experiences. Messaging is roaring at this point. People using messaging apps in a regular basis with friends and family thus making it easy for chatbot technologies to overcome these original barriers to entry.
The final piece, which is an extremely important element in that period’s recipe for success, was the ecosystem. A booming, but disconnected, landscape, IMO. Many solutions out there, were delivering one piece of the puzzle, but without any tedious integration, it was difficult to deliver a smooth end-to-end experience. I remember categorizing 2 types of Bot Builder players and noticing how the space was polarized between solutions very easy to use providing declarative builder and delivering rather scripted bots vs. more programmatic approaches that leveraged NLP. A major league and a minor league, polarized between easy-to-use builders vs. developer-oriented environments.
The new normal — In 2020/2021 bot technologies have had the opportunity to demonstrate how they (can) re-define a new/normal approach for companies to interact with their customers in the most natural way, via what we (humans) are best at doing, having conversations. The solutions landscape is thriving in offering more integrated and turnkey experiences and there are really cool things out there that I am personally very excited about. This is why I have decided not to cover it today and rather do a ‘fly-by’ on the current bot builder market in the next Bot Fitness exercise! Please stay tuned.
So what’s next for bots then? Well, please read the next article! But in a nutshell: in this day and age, it’s all about Multi-language, AI, Templates, and Modularity!
In a nutshell and next steps
Back of napkin numbers summary to remember: the chatbots market is [at least at] a 500M$ TAM in 2021 growing at 25% YoY, which is a huge +125M$ growth per year.
All industries will be impacted and saved in some way or form by bots. Most amazing examples are in retail and financial services but also in IT service desk, or even in the public sector!
Many different types of players navigate the space and provide solutions for different types of user profiles. And today, there’s a set of capabilities that bot builder solutions must have to succeed, which includes the following — Multi-language, AI, Templates, Modularity. We will cover this and more in the next Bots Fitness exercise. Thank you!