In 1994, ELIZA was the first “Chatterbox” to be developed by Joseph Weizenbaum at Massachusetts Institute of Technology (MIT). Since then the Chatbot Industry has been evolving and improving alongside the technology development. Today, one in five businesses are using intelligent assistant or chatbots. Why did these companies adopt the Chatbot solutions?
Market Diffusion of Technology
Marketers commonly dissect the timeline of a product using a product adoption curve or market diffusion process. For developed countries, the market for Chatbots is within the early majority stage, quickly approaching critical mass. This spurs the growth of Chatbot developers. For developing countries, Chatbot technologies are still considered advanced technology, which results in diffusion hovering between the early adopters and early majorities. Let’s understand the adoption process from the start.
Innovators & Early Adopters – Tech enthusiasts and Visionaries
The development of AI technology helped Chatbots to resurface and gain attention from individuals, entrepreneurs, and enterprises alike. The impact of AI and ML on Chatbot is straightforward to the tech enthusiasts. Businesses with visionary leaders who saw the technology’s potential were also quick to hop on the bandwagon. The top three industries with the highest consumer acceptance rate of chatbots are online retail, healthcare and telecommunications.
Early Majority - the Pragmatists
Is Chatbot just a hype or does it add value to the firm? Pragmatic business managers are willing to explore solutions within the premise of creating business value, in other words, solution which yields positive ROI. The ability of chatbot providers to build its products with sound business cases for enterprises at a justifiable rate is key to converting the pragmatic decision makers. Currently development of Chatbots serves a wide spectrum of businesses with tried-tested-and-proven use cases (example: online retail, healthcare, logistics, and financial sectors). Many of the use cases are built around the efficiency, availability and the accuracy of work done by Chatbots -- this gives Chatbots more edge in developed countries than in developing countries due to the differences in labour costs.
Late Majority - the Conservatives
Will there still be interest in virtual assistants once the hype fizzles out? Many businesses take on a more passive stance when it comes to technology adoption as they worry about the large sunk costs that may be incurred when the bubble pops. Companies with risk adverse cultures are likely to wait for technology to gain critical mass, or for competitors to adopt the strategy before subscribing to them. For highly differentiated industries, this could be a viable stance but for more competitive industries, the inactivity may allow competitors to gain market share.
Laggards - the Skeptics
Companies are constantly overwhelmed with solutions which promises to improve their businesses. It is easy for decision-makers to fall prey to confirmation bias in the information overload environment. These managers will seek out only the downsides of new solutions in the bid to justify to oneself for rejecting it. If the solution is successful, the laggard managers who are reactive would have lost market shares to their competitors as AI solutions are not implemented overnight. Besides bureaucracies prevalent in large companies, project planning phases, development, user acceptance tests, are also contributory factors to long project lead time.
Channel management is important for successful outreach of businesses especially in the information overload era. There are inherent opportunity costs for businesses which are slow to market.
Within your business environment, how ready is your business and your industry in the adoption process? Which stage do you think your business is ready to take actions in?