You most likely wouldn’t have believed it a few years ago if you were told AI-chat based services will become an essential part of our daily lives. After all, a 2019 study revealed that only 48% of respondents said they would have chosen to use chat assistance powered by AI more than once to get their questions answered.
Things have changed just five years later in 2024. Artificial intelligence for conversation has become ubiquitous, from assisting customers select the perfect attire to streamlining company processes. Let’s investigate the facts demonstrating the advancement, importance, uses, and likely pitfalls of conversational artificial intelligence (AI) in 2024.
Conversational AI Market Size and Opportunity
The idea around AI-based services a few years ago was that it was fit only to solve basic queries and nothing more. However, advancements in NLP and ML means that Artificial Intelligence not only understands but can also respond appropriately to human queries and feedback.
The growth and the global demand for conversational AI has been nothing short of phenomenal. The worldwide market for Conversational based Artificial Intelligence presently stands USD $10.5 Billion and is not looking to slow down any time soon. By 2032, it is expected to surpass USD$ 86 Billion, growing at a CAGR of 23.97%.
Chat services dominate the segment, having 49.1% of the total market share.
Region-Wise Market Share
- North America dominates the market with a share of 28.8%.
- The United States market has a current value of USD$ 2091 million, which is expected to cross USD$ 11,000 Million by the year 2030.
- The European region has a market share at 24.3%.
- Germany is the leader among European nations in deploying this technology, and is expected to cross the $200 million mark by 2027.
- The France market is estimated to grow at a CAGR of 15.8%.
- The United Kingdom market is predicted to grow at a CAGR of 14.1%
- The Asia-Pacific region share stands at 25%. It is estimated to grow at a CAGR of 18.7% from 2023-2027.
- China has established itself as the dominant player in the region. The market is poised to reach a value of $495.3 million by 2027.
- The Indian market is growing at a 17.8% CAGR for the 2021-2027 period.
TL; DR
Powered by technological advancements in ML and NLP, the Conversational AI market is growing at an unprecedented pace. North America has emerged as the dominant player in this market with countries like France, United Kingdom, Japan and India not far behind.
Consumer Preferences and Behavior with Conversational AI
The expectations of modern day consumers range from end-to-end convenience, quick resolution to queries and personalized experiences.
There has been a significant shift in consumer attitude regarding the use of Chat-based platforms in recent years. No longer considered just a ‘novel’ concept, there is a growing acceptance among the general public with 56.5% of individuals claiming it as ‘somewhat’ or ‘very useful.’ Although naysayers do exist, they constitute a very small population of 9% who said that they would never use a chatbot. At least 50% of respondents within the 18-34 age demographic claimed to have interacted with a chatbot once a month.
Customer service is one area where the importance of conversational intelligence platforms have grown by leaps and bounds. In the pursuit to deliver an exceptional CX, companies often struggle with high churn rates, customer dissatisfaction, and increased operational costs.
With customer service at personalized levels and proactive support, companies can boost consumer loyalty and allegiance. Here are a few metrics highlighting the benefits of adopting Conversational AI tools for customer care.
Let’s explore some more statistics on the ever-growing importance of AI Conversational Intelligence solutions in customer service.
- 70% of consumers expect AI solutions to comprehend and react to their emotions.
- 64% of consumers agree that Conversational AI are able to respond adequately to their emotions.
- More than 80% of CEOs have already decided to leverage Conversational AI products in managing their clients.
- 40% of respondents have admitted to improved customer experience after the adoption of these tools.
The increased adoption of Conversational extends far beyond customer service scenarios. This trend is driven by factors like convenience and personalization that enables companies to seamlessly meet the heightened demands of consumers.
- 27% of customers are open to purchasing basic items via a chatbot
- 13% of people have bought high-priced goods at least once using AI
- 68% of individuals appreciate the fast-paced response from chatbots
- 64% of businesses believe chatbots are able to provide greater personalized experience than human counterparts
TL; DR
Customers are becoming lenient towards the use of Conversational bots with the 18-34 age group claimed to have used at least once a month. Both businesses and customers can claim multiple benefits via the use of chatbots like greater convenience, personalization, quick response, etc.
Industry Specific Use Cases of Conversational AI
From streamlining their internal processes to improve customer engagement, more and more businesses are adopting conversational AI solutions. But, the question remains, how do businesses leverage the capabilities of conversational capabilities of AI tools and realize maximum benefits.
Let’s look at the use cases and impact of Conversational AI tools across various industries.
Employee Experience Chatbots
Gone are the days when the sole priority of businesses was serving the needs of the customers. Today, employees need to be provided with the same level of importance when it comes to catering to their needs and expectations. The employee productivity can significantly increase when they are happy and satisfied at their workplace. That being said, the inclusion of HR chatbots is gaining traction, which not only streamlines processes but also enhances the employee experience.
Although AI adoption in HR is still in its nascent stage, the trend is quickly gaining momentum with 13% of HR teams already utilizing AI chatbots for employee support.
Recruitment is another field where chatbots are already playing a pivotal role. These AI bots can sift through applicants data, automate interview scheduling, assess qualifications, etc. in fact, career websites are able to generate 95% more leads by continuously engaging jobseekers via chatbots.
Here are some more statistics highlighting the growing relevance of Conversational AI in HR processes:
- 66% of the entire chatbot interaction with prospects take place outside of business hours
- 39% of hiring managers claim automation via AI has significantly reduced the time-to-hire
- 40% or more prospects complete an application on website with the help of chatbots
- 62% of employees like to use chatbots to support their personal HR requirements
- 13% of HR teams already leverage virtual assistants to deliver employee-related services
Improving Customer Experience with Conversational AI
Chatbots have become ubiquitous for businesses in ensuring they deliver exceptional CX at all times. For instance, online shopping platforms have virtual assistants that guide users in buying their preferred products, attend to their queries as well as provide a 24×7 support.
Instant resolution of queries is critical in increasing customer satisfaction, and chatbots excel in this area by fast-tracking the process.
- 88% of customers have interacted with a chatbot.
- 70% of respondents have cited the experience as positive.
- More than 50% of individuals expect businesses to cater to their needs 24×7.
- 45% prefer messaging over email when reaching out for business services.
- 69% of customers were satisfied with their last chatbot interaction.
- 74% prefer to interact with AI bots instead of human agents for simple queries.
- 68% of US consumers have used the services of an automated chatbot.
CSS leaders are optimistic about the use of Conversational AI to respond to customer queries going forward. Proper implementation and use of these conversational bots can yield significant gains for businesses. Today, bots are even able to understand free text inputs, deflecting the basic queries seamlessly and freeing up the team to handle more complex tasks. Research indicates that teams can save up to 30% or more annually by implementing AI-based bot services.
Several businesses have already started to notice the importance of AI bots in enhancing the customer experience. Capgemini research indicates 36% of marketers are already using Conversational AI bots to increase engagement with their customers.
Moreover, companies are able to create touch points across channels via chatbots, paving the way for a unified customer experience. These omnichannel bots can be deployed across their website, their social media handles like Instagram, Facebook, X and even WhatsApp.
Another critical feature of Conversational AI in customer experience is the aspect of self-service. When customers are able to resolve their issues without even reaching out to a human agent, companies can save a massive amount of time and resources. According to Gartner, almost 70% of consumers are already using AI-self service channels for query resolution. It has also been found that businesses can reduce up to 40% of today’s live volume via self-service channels.
Conversational AI for Financial Services
Compared to other sectors, the finance industry is one such vertical where consumers often miss the mark of what consumers really want. There exists a mismatch of perception that tends to impact the priorities and performance set out by financial bodies. As per a poll conducted by Redpoint Global, 61% of consumers state personalization as a standard while doing business with a company, with 37% choosing to opt out if that is not provided. The poll also highlights the striking margin of expectations between finance marketers and customers. 51% of marketers believe they are delivering an exceptional CX while only 26% of consumers agree with that assessment.
Today, financial institutions are one of the prime adopters of conversational AI tools with chatbots and virtual assistants revolutionizing various aspects like customer service, financial reporting and accounting.
Let’s look at Statista’s report on how the finance industry is using AI-powered Conversational Intelligence across business segments.
Financial organizations that have already implemented Conversational AI would be able to reap its many benefits. Some of them include reduced operational costs, faster document processing, improved CX, prevention of fraud and advanced data analysis. Leading finance firms in the world like PayPal, JP Morgan Chase, Deloitte, Bank of America, Wells Frago, etc, have already included chatbots to better engage their customers. These applications also open the door for major cost savings AI applications enabling financial institutions to save USD$ 447 million.
According to Business Insider, 80% of banks are keenly aware of the benefits of adopting AI solutions.
88% of banking executives state that conversational AI will become the major customer service channel.
Conversational AI for the Retail Industry
The retail industry is one of the leading adopters of conversational AI with a goal to create personalized buying experiences, increase efficiency and boost sales. Let’s take a look at some of the numbers.
- 17% US shoppers use Chatbots to find information before purchasing a product
- Chatbots can help global retail businesses save USD $439 million annually
- Retail sales powered by AI bots to reach USD$ 112 Billion
- 40% US consumers have already engaged with chatbots to engage with the retail industry
By implementing conversational AI, retail businesses, specifically e-commerce can streamline the buying journey for customers. Apart from ML and NLP capabilities, e-commerce sites also use speech recognition to engage users in context-aware conversations. Chatbots for online purchasing is in fact the new normal with research numbers clearly highlighting the positive shift in user perception.
- 42% of GenZ are comfortable using a chatbot for purchase.
- 57% customers cite the pandemic as the primary driver for greater acceptance of AI bots.
- Retail industry constitutes 23.3% of the global conversational AI market.
- 54% buyers believe AI keeps their information safe and secure during online purchases.
Conversational AI in Travel and Hospitality
The travel industry is one sector where consumers have a lot of questions before they make a decision. Traveling to the perfect, keeping the costs under check, ensuring safe and convenient stay, etc are some of the critical concerns for a consumer. They are highly dependent on travel companies to be able to experience their dream without any hurdles or roadblocks.
Having a human agent cater to the buyer needs 24×7 can be a costly affair. This is where AI bots become extremely important in this regard.
- In 2022, chatbot usage in the hospitality industry increased by 53%.
- 73% travelers are more likely to stay at hotels providing self service tech.
- 74% are interested in hotels that use AI to provide tailored experiences and intelligent stay suggestions.
- 68% airline businesses and 42% of airports will adopt AI driven bots into their existing models.
- Two-thirds of survey respondents found chatbots useful (40%) or very useful (26%) during travel planning.
- 37% travelers prefer to use AI bots for planning or comparing booking options.
- 87% would interact with travel bots if it saved them time and money.
The use cases of Conversational AI in travel and hospitality are manifold. From making reservations, handling itineraries, providing prompt notifications and 24×7 customer support, Chatbots have truly become the go-to solution for traveler’s convenience.
TL; DR
AI bots are being increasingly used across industries with the retail sector being the leading adopter. Conversational AI can help unlock unprecedented cost reduction for businesses with financial institutions and retail businesses saving USD $447 million and USD$ 439 million respectively.
Benefits and Efficiency Gains for Conversational AI in Businesses
The role of conversational AI is not only limited to a bot that is available 24×7. When implemented properly, this intelligent AI feature can lead to a hoard of benefits for enterprises. We are all aware of the fact that the modern day customer lays great emphasis on personalized experiences. 96% of them expect a response within 5 minutes after initiating a conversation. Businesses are also not alien to this scenario. Therefore, they are increasingly implementing this AI conversational tools across channels that makes interactions for customers convenient, efficient and satisfactory.
Some of the benefits for businesses in adopting conversational AI are listed below:
Round the clock support
Reduced operational costs
Reduced operational costs
Improved customer self service
Quicker complaint resolution
Let’s take a look at numbers and statistics to understand the tangible benefits of adopting AI Conversational Intelligence for businesses.
- 90% of businesses have improved complaint resolution pace using AI.
- Chatbots to help businesses save up to 2.5 billion hours.
- Enterprises can reduce customer service costs by 30%.
- Chatbots enable businesses to increase sales by 67%.
- 57% businesses believe chatbots provide significant ROI with little effort.
- Chatbots have enabled 80% of business respondents to handle complaints with ease.
- Conversational AI bots can help reduce business costs up to 40%.
- 35% of CXOs claim AI bots helped them close deals faster.
- HR chatbots can handle 12000+ interactions every month.
- 63% leaders believe AI bits can deliver hyper-personalized customer experiences
Conversational AI has become a must-have for businesses to stay ahead of customer expectations and the demand curve. After all, many are familiar with the lucrative product recommendations that a shopping app provides based on our purchase history. Who knows what else is in store for the future?
There are however still concerns pertaining around the use of conversational AI for both businesses and customers alike. We explore that in the next section.
TL; DR
Conversational AI unlocks multiple benefits for businesses across verticals, from reduced operational costs, enhanced CX and faster deal-closures.
Trust and Transparency in Conversational AI
Conversational AI bots are transforming the way businesses operate and achieve their goals. However, there are some ethical points we must consider. Chatbots continuously analyze user interactions and operate with the data provided. This brings our attention to the ever evolving question of data collection, storing and privacy. Businesses must establish privacy policies in place that lay emphasis on greater transparency on how user data is collected and used to provide services. More importantly, data transparency also involves providing user a control over their data and the option to opt for specific data-sharing practices.
Here are some statistics around the customer stance regarding trust and transparency in using AI bots.
- 85% of users are worried about receiving false information from AI bots.
- 45% online buyers are open to sharing in return for a more personalized shopping experience.
- 35% buyers believe AI solutions use their information responsibly.
- 86% shoppers demand stricter policies for Conversational AI bots.
- 63% are worried responses from AI tools have potential bias.
- 52% of consumers are in doubt regarding the protection of their private data.
- Only 7% respondents trust AI bots for claim making
- 43% of customers still prefer human interaction for services
TL; DR
Despite benefits, there are still looming concerns around the ethical use of conversational AI tools over data privacy and transparency. Users have expressed worries about potential bias, data privacy issues and the demand for more stringent policies.
Before We Wrap Up….
One one hand, transparency issues will continue to persist, while on the other, technological advancements are going to increasingly penetrate AI bots further into our everyday lives. Let’s face the truth- AI Conversational bots have become a part of our everyday lives, whether we like it or not. The onus is now on businesses and solution developers to ensure customers are not dicey in using these tools due to mistrust and privacy concerns.
Stricter regulations, a more transparent view into how these technologies work, and efficient training will help both businesses and customers reap maximum benefits of this intelligent feature.
