Outbound conversational AI – competitive threats for small providers

Conversational AI is at a relatively early stage, with several suppliers competing in a fragmented market. Telecom providers have been an early adopter of these technologies and are estimated to account for ~24% of conversational AI spend. This totals £0.8bn in 2019 and is expected to grow by about 30% per year to around £2.4bn by 2023. Solution providers are mainly trying to differentiate their solutions according to end-user niche, technology, channel focus, and method of engagement.

One such differentiation is the use of automated outbound messaging which proactively seeks to initiate conversations with customers throughout various points in the customer journey (e.g. on-boarding, installation appointments, repairs, contract expiry, etc.) to improve the customer service experience, generate up-sell opportunities, and pre-empt inbound enquiries. While the inbound/reactive engagement space has a high level of competition, the outbound space is characterized by very few competitors. This, however, creates a competitive threat, as it might invite other players to approach this still less competitive segment. This can include:

• Inbound focused players that can leverage existing customer base to cross-sell outbound solutions;
• Larger IT players (e.g. CRM providers) moving into the space;
• Alternative solutions that can e.g. be developed in-house by combining existing AI solutions. 

However, competition in this market is primarily based on the ability to provide a greater customizable experience and ease of integration into existing customer solutions. Therefore, it is critical for a small outbound conversational AI player to get a “locked” customer base by building a solution which can be easily customized by clients themselves and is compatible with the most popular business software.