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Chatbots are also known as chatterbot or IM bot are computer programs that channels conversations through textual or auditory means. These programs are developed in such a way as to copy human behavioral pattern and behave as a conversational partners. Some of these bots are used in dialog systems such as customer service or information acquisition, some are equipped with refined natural language processing systems (a form of artificial intelligence) which scan for keywords and reply with corresponding keywords from their database. Many chatbot developers aim to pass the Turing test – thus having the ability to understand and respond in natural language (either generated or scripted).

This article covers companies that provide automated chat-based enterprise or consumer applications, development platforms, development services (using proprietary platforms). The major enterprise use cases are employee productivity enhancement, and always-on customer support. The major consumer use cases are virtual companions/assistants, concierges, and specific bots for shopping, travel booking and restaurant discovery and booking. The analysis excludes companies which provide chat-based assistance by using human agents, bots that work on fixed commands and do not use NLP.

Problem and Implication

In a recent survey done by Oracle, 80% of their senior marketing and sales professional anticipate the use of chatbots for customer interaction by 2020. This points to the fact that chatbots are the next big platform for connecting people to businesses, but this sector is not bereft of problems. Some of the problems faced by code developers and investors are:

  • Context Integration: This is the first challenge in building a chatbot. The integration of sensible response – physical and linguistics – is a problem that many developers face. In the integrating linguistic context such as location, time, date, and other data, embedding conversations into a vector is a challenge. Users have various integrations that need to be met and there have been complaints about the inability of some bot to meet them.

  • Coherent Responses: This problem deals with how a chatbot can produce semantically correct answers on a consistent basis. Many bots are usually powered to answer questions that are semantically similar but what happens when the questions asked isn’t in the large list of queries? This poses a problem for developers and users alike.

  • Human Intelligence: A large amount of reviews on boosting the effectiveness of chatbots focuses on improving their tendency to understand humans. Many users and developers battle this problem and more focus is been put into getting them to understand us – hence the use of machine language. The use of traditional metrics such as DAU/MAU in determining the conversational nature of chatbots does not always work and more research and investment is required to boost their performance and increase user values.

  • Bad Reviews: Like many nascent technology, there are pitfalls that beginners and seeders face when they start building and investing, the chatbots insustry has its own share of this too. Bad reviews and customer experience is one of the problems faced by companies and developers. Customer opinions usually range from miscommunication, lack of empathy, to need to speak to a human agent. This leads to misinterpretation of the benefits and solutions that chatbots can offer.

Need Payoff

Chatbots have radically changed the customer service arena providing immediate personalized customer experience which has helped saved businesses all over the world. According to Tracxn report (February 2017) over 450 companies have been founded in the sector with over 102 funded in last 5 years and a total of $227M invested in 2016. Some of the benefits of Chatbots for your businesses are:

  • Easier running of businesses: Many entrepreneurs already support the use of automation in various forms: touch screens, self- service booths among other plentiful features on the smartphone. Chatbots offer an ideal technique to enable customer comfortability and increase overall productivity of the business.

  • Customer Satisfaction and satisfactory commitment: Due to increase in business opportunities and customer feedback, there is a probability of cultivating a stable list of online followers. Chatbots are great at holding customer attention for long periods of time. Many businesses might find out that conversations with customers initiated through the use of chatbots usually receive good remarks especially if these bots understand their tastes and requests.

  • Nominal cost that leads to maximum returns: Chatbots require little maintenance and because they are automated, there is no need to be focused on labor intensive methods. They are one of the cheapest ways of customer engagement and as new methods of increasing their intelligence levels come to the market, the cheaper they would be in integrating them to your business.

  • High user/customer engagement: Most businesses are online. Many users want to scale the boundaries of day and night and limitations such as availability and unavailability have affected the patronage of users to certain businesses. A successful integration of chatbots to a business’ online presence can increase investment and engagement.


According to many CEOs, as chatbot intelligence increases, companies would begin seeing the true potential of automated conversations in customer support, retention and acquisition. The future of the chatbot is an interesting one but the word of caution to investors and developers is to focus on an area of the market that and build quality bots. It is also important to note that bots are not meant to replace humans, in the nearest future, they will act as a bridge between brands and customers.



Tracxn Report, February 2017.

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