Chatbot Statistics: 2020 & Beyond

In this article I’ll cover the most relevant chatbot statistics about the chatbot market, usage, engagement and business value, as well as some forecasts and predictions for the future.

Conversational AI Market

According to a recent update to the International Data Corporation (IDC) Worldwide Semiannual Cognitive Artificial Intelligence Systems Spending Guide, spending on cognitive and AI systems will reach $77.6 billion in 2022, more than three times the $24.0 billion forecast for 2018. The compound annual growth rate (CAGR) for the 2017-2022 forecast period will be 37.3%.

Software will be both the largest and fastest growing technology category throughout the forecast, representing around 40% of all cognitive/AI spending with a five-year CAGR of 43.1%. Two areas of focus for these investments are conversational AI applications (e.g., personal assistants and chatbots) and deep learning and machine learning applications (employed in a wide range of use cases).

North America is expected to hold the largest market size in the global conversational AI software market, while Asia Pacific (APAC) is expected to grow at the highest CAGR during the forecast period. North America is expected to be the leading region in terms of adopting and developing conversational AI. Growing investments in AI and ML technologies, presence of maximum number of conversational AI vendors, and increasing government spending on AI-based technologies are expected to contribute to the market growth during the forecast period. (Markets and Markets)-

Conversational AI Market, By Region (USD Billion)

Source: MarketsandMarkets Analysis

According to Markets and Markets, the global conversational AI market size is expected to grow from USD 4.2 billion in 2019 to USD 15.7 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 30.2%.

Intelligent Virtual Assistants (IVA) and chatbots are the 2 segment types in the conversational AI market report.

Chatbot Statistics: Market Segment

The Chatbots segment will hold a larger market size during the forecast period. Research and Markets states that the Chatbots Market was worth USD 1.2 billion in 2018 and is projected to reach USD 7.5 billion by 2024 registering a CAGR of 34.75% over the period.

The chatbots segment is estimated to hold a larger market size, owing to the increasing demand for AI-powered chatbots to analyze customer insights in real time. The AI-based chatbots can be used by the enterprises to understand user behavior, purchasing habits, and preference over time and accordingly can answer queries.

The major factors fueling the market growth include the increasing demand for AI powered customer support services and omni-channel deployment, and reduced chatbot development costs.

Chatbot Adoption Growth Expected Across All Industries

A new study from Juniper Research has found that the operational cost savings from using chatbots in banking will reach $7.3 billion globally by 2023, up from an estimated $209 million in 2019.

The insurance sector will also benefit from AI including chatbots with cost savings of almost $1.3 billion by 2023, across motor, life, property and health insurance, up from $300 million in 2019.

PSFK says that 74% of consumers prefer chatbots when they’re looking for instant answers. With companies that use chatbots in retail seen as efficient (47%), innovative (40%) and helpful (36%).

But it’s not just customer facing chatbots enterprises need to consider.

By 2022, 70% of white-collar workers will interact with conversational platforms daily. Gartner says that IT leaders need to create a conversational platform strategy that ensures an effective solution for employees, key partners and customers.

However, choosing the right development platform to create a chatbot is key.

According to an April 2019 survey from Forrester Consulting, 89 percent of customer service decision makers in North America believe chatbots and virtual agents are useful technologies for personalizing customer interactions. But problems arise when the capabilities that chatbot vendors promise to deliver just aren’t there or require too much involvement from internal IT teams.

Ian Jacobs of Forrester says that one of the things he learnt while researching 14 vendors is that a typical request for proposal (RFP) doesn’t work for conversational AI. In his opinion, it’s almost impossible to differentiate between the products on paper. Ian recommends carrying out proof of concepts to evaluate conversational AI chatbot development tools.

Data shows that chatbot usage and engagement is on the rise.

Here’s a look at some statistics covering the past few years:

Chatbot Usage and Engagement Market Statistics

Here we’ve organized some chatbot market statistics into yearly segments:

2018

·       A Statista study demonstrates that over 64% of business respondents believe that chatbots allow them to provide a more personalized service experience for customers (Statista).

·       When it comes to chatbots, 60% of millennials have used them, 70% of those report positive experiences, and of the millennials who have not used them, more than half say they are interested in using them (Forbes).

·       56% of businesses claim chatbots are driving disruption in their industry and 43% report their competitors are already implementing the technology (Accenture Digital).

·       57% of businesses agree chatbots deliver large ROI with minimal effort (Accenture Digital).

·       90% of businesses report faster complaint resolution with chatbots (MIT Technology Review).

·       Within 18 months, 53% of service organizations expect to use AI chatbots – a 136% growth rate that foreshadows a big role for the technology in the near future (Salesforce).

2019

·       In the 2019 Gartner CIO Survey, CIOs identified chatbots as the main AI-based application used in their enterprises (Gartner).

·       Twice as many consumers surveyed in 2019 would knowingly engage with chatbots because they are “very helpful,” compared to 2018 respondents; 83% of consumers said they’d make messaging their primary means of contacting customer support if they could be guaranteed an immediate response (Helpshift).

·       77% of customers say chatbots will transform their expectations of companies in the next five years. Given the choice between filling out a website form or getting answers from a chatbot, only 14% of customers would choose the form, according to this survey (Salesforce).

Gartner Hype Cycle for Artificial Intelligence, 2019

The Gartner Hype Cycle places chatbots on the peak of inflated expectations. This is where early publicity produces several success stories — often accompanied by scores of failures. Some companies act, however, many do not.

As time goes on, many chatbot providers will leave the market, and projects will be abandoned. Gartner predicts that 40% of chatbot/virtual assistant applications launched in 2018 will have been abandoned by 2020.

With Facebook’s launch of their messaging platform, they became the leading platform for chatbots. In 2018 there were more than 300,000 active chatbots on Facebook’s Messenger platform, however, many of these solutions were nothing more than glorified FAQ solutions.

Source: Top Trends on the Gartner Hype Cycle for Artificial Intelligence, 2019

Market Guide for Conversational Platforms

In the report Gartner notes that “Chatbots and virtual assistants have reached peak interest in the enterprise as the most common uses for AI. But to improve customer experience and reduce costs, application leaders need to choose the right conversational platform as the enabling technology for developing chatbots and VAs.”

Discussing the market Gartner notes, “Chatbots and virtual assistants are, respectively, at the peak or just post-peak on the “Hype Cycle for Artificial Intelligence, 2019,” having gathered tremendous interest from Gartner clients over the last couple of years. According to Gartner’s 2019 CIO Agenda, 31% of enterprise CIOs have already deployed conversational platforms (see “The 2019 CIO Agenda: Securing a New Foundation for Digital Business”). This represents a 48% year-over-year growth in interest and points to conversational platforms taking center stage in enterprises’ adoption of AI.”

The Gartner report recognizes 16 Representative Vendors including:

·       Avaamo

·       Amazon Web Services

·       Artificial Solutions

·       Eudata

·       Google

·       IBM

·       IPsoft

·       kore.ai

·       Microsoft

·       onereach.ai

·       Openstream

·       Oracle

·       Rasa

·       Rulai

·       SmartBotHub

·       SoundHound

The larger market for conversational platforms, chatbots and VA offerings may include as many as 1,000 to 1,500 vendors worldwide. This Market Guide contains vendors that:

·       Offer an extensible platform for a variety of use cases.

·       Have above-average capabilities.

·       Have received client interest via Gartner either through mentions or inquiry.

·       Show differentiating functionality that is defining for a trend in the market.

Chatbot Forecasts & Predictions

Here are some future forecasts and projections for the chatbot market:

2020

·       By 2020, the average person will have more conversations with bots than with their spouse (Gartner).

·       40% of chatbot/virtual assistant applications launched in 2018 will have been abandoned by 2020 (Gartner).

·       By 2020, 80% of businesses plan to utilize chatbots (Oracle).

·       25 Percent of Customer Service Operations Will Use Virtual Customer Assistants by 2020 (Gartner).

2021

·       By 2021, more than 50% of enterprises will spend more per annum on bots and chatbot creation than traditional mobile app development (Gartner).

·       By 2021, nearly one in six customer service interactions globally will be handled by AI (Gartner).

·       According to Opus Research, chatbots will see an estimated investment of $4.5 billion by the year 2021 (Opus Research).

2022

·       By 2022, 70% of white-collar workers will interact with conversational platforms daily (Gartner).

·       $3.9 trillion projected AI-derived business value growth by 2022 (Gartner).

·       $8 billion projected business cost savings from chatbots by 2022 (Juniper Research).

·       75% to 90% projected percentage of queries to be handled by bots by 2022 (CNBC).

·       $0.70 projected chatbot cost savings per customer interaction (CNBC).

·       According to Lauren Foye, by 2022, banks can automate up to 90% of their customer interaction using chatbots (Juniper Research).

2023

·       5 billion hours projected time savings for businesses and consumers from chatbots by 2023 (Juniper Research).

·       $112 billion projected value of chatbot eCommerce transactions by 2023 (Juniper Research).

·       The Chatbots Market was worth USD 946.55 million in 2017 and is projected to reach USD 5,638.64 million by 2023 registering a CAGR of 34.64% over the period 2018-2023 (Business Wire). [Source: Research and Markets]

·       The global Chatbots market is valued at 840 million USD in 2017 and is expected to reach 5310 million USD by the end of 2023, growing at a CAGR of 36.1% between 2017 and 2023 (Reuters). [Source: Orbis Research]

·       The operational cost savings from using chatbots in banking will reach $7.3 billion globally by 2023, up from an estimated $209 million in 2019 (Juniper Research).

·       AI, including chatbots, will have a highly disruptive impact on insurance claims management, leading to cost savings of almost $1.3 billion by 2023, across motor, life, property and health insurance, up from $300 million in 2019 (Juniper Research).

2024

·       According to Markets and Markets, the global conversational AI market size is expected to grow from USD 4.2 billion in 2019 to USD 15.7 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 30.2% is forecast during the same during the forecast period (Markets and Markets).

·       The Chatbots Market was worth USD 1274.428 million in 2018 and is projected to reach USD 7591.82 million by 2024 registering a CAGR of 34.75% over the period (2019 – 2024) (Research And Markets). [Source: Research and Markets]

·       By 2024, AI will become the new user interface by redefining user experiences where over 50% of user touches will be augmented by computer vision, speech, natural language and AR/VR (IDC).

2025

·       Annual global AI software revenue is forecast to grow from $9.5 billion in 2018 to $118.6 billion by 2025 (Tractica).

·       By 2025, customer service organizations that embed AI in their multichannel customer engagement platform will elevate operational efficiency by 25% (Gartner).

2026

·       According to the current analysis of Reports and Data, the global Chatbot market was valued at USD 1.17 Billion in 2018 and is expected to reach USD 10.08 Billion by year 2026, at a CAGR of 30.9% (Globe News Wire). [Source: Reports and Data]

It’s clear that chatbots are here to stay. As the market matures, only the intelligent and capable conversational AI chatbot platforms will remain. In the next chapter we’ll look at the future of the chatbot market more closely.