PRESENTED BY

Abstract
At the F8 event in April 2016, Mark
Zuckerberg discussed the potential of
chatbots to radically transform the way
we communicate with businesses. Since
then, chatbots have been all the rage in
the tech world. Recent advances in AI
technology and the rising popularity of
messaging apps has them poised to be
the next big thing in the digital world,
but many people are still scratching their
heads asking: What is a chatbot, what
does it do, and why should I care?
Chatbots will be accessible in the
messaging services we use today like
Facebook, Kik, and WhatsApp, and
will be available to receive messages
whenever a consumer needs assistance.
Theyll be developed and trained so
well that the average person wont know
if theyre talking to a chatbot or a human,
nor will it matter.
They will change the way we interact
with businesses and the way businesses
interact with us. Seem futuristic and
years down the road? Its not its
happening now, and its going to
change everything.
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Chatbot Basics
In laymans terms, a chatbot is a computer program that simulates human conversation through artificial
intelligence. For example, Siri, Cortana, and Google Now are all considered chatbots, and youve likely
interacted them.

Lets take a look at the two types of chatbots.

Chatbot Basics - RULES BASED

Rules based chatbots are the most common,
least complicated chatbots. Their responses are
pulled from a database and determined by rules
handwritten by a developer. The rules can be edited
as needed in order to continually improve the
bots functionality. When engaged with a question,
the chatbot will scan written or spoken words
for keywords it recognizes, search the database
and respond with what they believe is the correct
response. If the chatbot cant find a correlating
response, they will respond with an error message.
A conversation with a rules based chatbot is more
of question, answer exchange. For example, you
would ask a chatbot a simple question like What
will the weather be tomorrow? The chatbot will
respond with a simple, informational answer like
It will be 75 degrees and partly cloudy.
An excellent example of a rules based
chatbot is CNN Bot on Facebook:

Chatbot Basics - MACHINE LEARNING

Machine learning chatbots are much more
sophisticated than rules based, and rely on artificial
intelligence to become more conversational. Each
time the chatbot interacts with a human, they learn
to recognize specific patterns and store that data
for future reference. Over time, they will begin to
understand language, not just commands.
A conversation with a machine learning bot will feel
much more personalized, and the more you chat
with it, the more it will learn your preferences, imitate
your speech and begin to think and reason, as a
human would.
A good example of a Machine Learning
Chatbot is Mitsuku on Kik.

Chatbot Basics
As chatbot and AI technology advances, well likely
see most rules based chatbots further developed to
become machine learning or a combination of both.
Chatting with a computer that mimics your sense of
humor and anticipates your wants and needs may
seem far-fetched, but the recent hype surrounding
bots is quickly progressing the technology. The
perfect storm of cultural shifts, technological
advances, and consumerism trends has reignited
the passion for chatbots, and their ability to change
the way we live our daily lives.
At the F8 conference in April 2016, Facebook
announced that they were opening up their
messaging platform to allow businesses to deliver
automated customer support, e-commerce
guidance, content, and interactive experience
through chatbots. During the announcement,
Facebook shared that the chatbots would be able
to respond with images, links and call to action
buttons, making them capable of complex tasks
such as reservations, tracking a package, or ordering
an item from a retailer. To encourage businesses to
create chatbots, Facebook has provided the option
to either custom develop chatbots or work with a

chatbot building Facebook partner. Since Facebooks

announcement, several chatbot-building tools have
been introduced, and many of these tools are so
user-friendly that someone with no development
experience can build their own chatbot. As with any
technology, once chatbots become mainstream
and buildable by anyone, they have the potential to
become as common as a personal website, email
address or social media account. As we saw with social
media, to stay relevant, more and more businesses will
begin integrating bots into their strategy, and in the
process, continually push the limits of functionality.
Businesses that have successfully integrated chatbots
into their strategy have positioned themselves to
capitalize immediately on a whole new audience,
as messaging apps are the fastest growing apps in
the world. According to Mary Meekers 2016 Internet
Trends report, WhatsApp, Facebook Messenger, and
WeChat have each more 600,000,000 users worldwide,
with WhatsApp leading the pack with 1 billion users.
In comparison, Instagram, Twitter, and LinkedIn have
about 800,000,000 combined. Chatbots have the
potential to connect companies with over 2 billion
consumers worldwide in a personalized, convenient
conversation opening the door to millions of dollars
in potential revenue.

Chatbots - Business and Pleasure

Chatbots arent just for businesses. There are plenty of personal use-cases that may be possible in the near future.
Imagine having a virtual AI assistant that understands you, knows your likes and dislikes, and can make decisions
on your behalf. For example, lets say youre in a meeting, and your phone is on silent. Your friend texts you with a
last minute invite to the game. He has one extra ticket, and he needs to know ASAP if you can go, or hes going to
give the ticket to someone else. Frustrated by your lack of response, he gives the ticket to another person, and you
missed out. Bummer.
But if you had your own personal chatbot, you might not have missed the opportunity.
The conversation may look something like this:

Chatbots - Business and Pleasure

eCommerce seems to be leading the technological
advancement of chatbots. One company has
discovered the incredible power of pairing chatbots
and humans to create an amazing experience for
customers. Operator is an eCommerce app on
Facebook Messenger that has combined chatbots
and humans to revolutionize how people shop
online.
All the consumer has to do is tell Operator exactly
what theyre looking for, and a human + chatbot
combination do all of the leg work to find the
perfect item in a sea of options. Operator uses
advanced algorithms and real shopping experts
to deliver several product options from which the
consumer can choose.
Operator is available 24/7 and can be used
to shop for anything. In an April 2016 press
release, Operators CEO and Co-Founder,
Robin Chan, summed up Operators
premise with this quote:
Operators strength is in combining the best of
bots with its human-to-human network. We believe
the most efficient and enjoyable way to shop is
to have a conversation with another person who
understands exactly what youre looking for and
can provide personalized suggestions, said Robin
Chan, CEO and Co-Founder of Operator. Artificial
Intelligence and bots help support that process, but
cannot be the only mechanism - the most powerful
algorithm in the world is the human connection.

Chatbots Are Changing the Customer Experience

Recent trends show that mobile users are beginning
to lose their enthusiasm for apps. Downloads have
declined by more than 20% YOY, and 65% of users
download no new apps in a typical month. For this
reason, integrating into already successful chat apps
is a wiser choice both financially and strategically.
It eliminates the need to maintain an app and
compete for downloads in an already saturated
market.

Similarly, Rogers Communications, a Canadian media

and communications company, began offering
customer service via Facebook Messenger in
December 2015. They saw a 65% increase in customer
satisfaction and a 65% decrease in customer complaints.

Hyatt and Rogers Communications are great

examples of service via a messenger app improving
the customer experience.

App downloads have declined by

more than 20% YOY, and 65% of
users download no new apps in a
typical month.

In November 2015, Hyatt introduced Facebook

Messenger as a customer service channel. From
Facebook Messenger, customers can check room
availability, make reservations, and order room
service. After just one month, Hyatt saw a 20x
increase in messages.

Chatbots Are Changing the Customer Experience

Businesses who implement chatbots
will not only improve the customer
experience, but they will benefit
themselves by increasing efficiency
and gaining helpful market insights in
the process. Chatbots allow customer
service reps to monitor several
chatbot conversations at one time.
The chatbots are trained to answer
common questions without the direct
interference of a human. If a chatbot
becomes stuck, or the request
becomes too complicated, a service
rep can pick up where the chatbot
left off. All the necessary information
will be passed along, as well, to make
the transition as seamless as possible.
Smaller companies can benefit the
most from the increased efficiency,
as chatbots enable them to handle
more business with fewer employees
and improve customer service
simultaneously. Chatbots eliminate the
need for companies to compromise
customer service for the sake of
finances.

Aside from customer service,

chatbots give marketing some
unique opportunities to connect with
consumers. Chatbots gather great
insight into customer behavior by
logging conversations, and the data
collected can be used to improve
marketing campaigns and content
development.
For example, if the same question is
being logged several times a day, it
should be added to a FAQ page on
the company website. Additionally,
chatbots can be programmed to ask
questions to obtain leads and data
that can be used to increase sales
conversions. As a result; marketing
messages will be highly targeted
and the customer journey more
personalized.
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The Future Looks Good

In 2-5 years, its likely that the majority of daily mobile
tasks will be chatbot assisted. In a March 2016 blog
post by Ted Livingston, Founder and CEO of Kik,
stated that chatbots would soon allow us to interact
instantly with the world around us. In explanation,
he writes:
instead of spending millions to develop an
app, the stadium had spent thousands to develop
a simple, text-based bot. Id sit down and see
a sticker: Want a beer? Chat with us! with
a chat code beside it. Id unlock my
phone, open my chat app, and scan
the code. Instantly, Id be chatting with
the stadium bot, and itd ask me how
many beers I wanted: 1, 2, 3, or 4.
Itd ask me what type: Bud, Coors,
or Corona. And then itd ask me
how I wanted to pay: Credit card
on file or new card.

The interaction Ted described illustrates the cost

efficiency, simplicity, and profound impact on the
customer experience chatbots will have in the
future. They will anticipate our needs, monitor our
conversations, and we will find them helpful, not
intrusive. We will feel like were talking to someone
who knows us, not a corporation, and trust chatbot
recommendations as much as we would a good
friend. Chatbots will accomplish the incredible,
seemingly contradictory feat of reducing human
interaction and budgets while simultaneously
providing an improved customer
experience. The relationship between
consumers and companies is about
to get more intimate. If you think you
love your favorite brand now, wait
until you meet
its chatbot.

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Sources:

Schneider, Michael. May 7, 2016. Bots, Messenger and the future of customer service. Accessed June 29, 2016.
https://techcrunch.com/2016/05/07/bots-messenger-and-the-future-of-customer-service/
2. Meeker, Mary. June 1, 2016. Internet Trends Report- 2016. Accessed July 1, 2016.
http://www.kpcb.com/internet-trends
3. Schlicht, Matt. April 20, 2016. The Complete Beginners Guide to Chatbots. Accessed June 29, 2016.
https://chatbotsmagazine.com/the-complete-beginner-s-guide-to-chatbots-8280b7b906ca#.ntaw4utoq
4. Melendez, Steve. April 27, 2016. What Its Like to Use a Chatbot to Apply for Jobs. Accessed July 7, 2016
http://www.fastcompany.com/3059265/the-future-of-work/what-its-like-to-use-a-chatbot-to-apply-for-jobs
5. Business Wire. April 12, 2016. Conversational Commerce: Operator Introduces Human + Bot Experience on Facebook
Messenger. Accessed July 1, 2016.
http://www.businesswire.com/news/home/20160412005422/en/Conversational-Commerce-Operator-Introduces-Human-Bot-Experience
6. Saric, Marko. June 21, 2016. 8 Reasons Why Well Launch A Chatbot Rather Than A Mobile App. Accessed June 20, 2016.
http://www.business2community.com/mobile-apps/8-reasons-well-launch-chatbot-rather-mobile-app-01572355#V4f6seY5Zc2VjX3b.97
7. Bailey, Craig. June 11, 2016. Why Facebook Messenger matters for B2B marketers. Accessed June 25, 2016.
https://www.craigbailey.net/facebook-messenger-matters/
8. Livingston, Ted. March 1, 2016. The Future of Chat Isnt AI - Instant interaction is key. Accessed June 25, 2016.
https://medium.com/@tedlivingston/the-future-of-chat-isn-t-ai-b07f65bc252#.v64a48wpp

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