What New Business Models Will Chatbots Enable?

A recent question posted on Quora asked community members if they thought chatbots will enable new business models in the future.

Ross Simmonds, who describes himself as a Digital Adman & Entrepreneur chimed in with a detailed answer, summarising seven alternative models.

Here’s how Ross’ answered panned out;

You have probably already encountered most of the types of business models that chatbots will leverage in the next few years. That said, I believe that there is room for a few new ideas in this new form of interaction between human and bot.

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Here are seven business models that I expect entrepreneurs will leverage as the chatbot industry continues to mature:

1) Bots As A Services

Bots (software) that are helping people be more productive, manage HR tasks or tackle communications challenges will replicate business models being used by existing graphical user interfaces.

I’m willing to bet that for B2B bots, the SaaS model is going to be the business model that floats to the top. For some bots, you will be able to access more features with an upgrade from one tier to the next. According to Forrester, SaaS and cloud-based business application services revenue is estimated to reach $32.8B in 2016. It’s a no-brainer that this trend translates over to the B2B Bot industry.

Most Slack apps available today are offering a free version of their product with reference to their paid tier as TBD like this pricing chart from Growbot:

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This indicates an early comfort for Software-as-a-Service (SaaS) .

SaaS is business model that b2b customers are familiar with and will require little education on how the transaction will work. Some of the bots will have complex pricing models like Intercom while others will have pricing as simple as Buffer.

2) Bots + Sponsored & Native Content

Native content and advertising is a trend that has been soaring over the last few years thanks to the likes of BuzzFeed, VICE and more. Native or Sponsored content is a model in which brands pay to have their content distributed by media companies directly into their channels in a way that is often viewed as content created by the media outlet rather than a brand.

Here’s an example of native content from Durex:

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Now imagine you’re using a Cooking Bot. While the bot will tell you that swapping Cumin for Coriander is okay in a certain recipe through its native function – it will also send you an article that talks about 5 Sriracha Infused Recipes That Will Leave Your Guests In Awe. Sponsored by Sriracha of course…

Native advertising has been found to consistently perform better than traditional banner ads. Brands will embrace this approach because this approach consistently delivers and bot makers will embrace it because the experience will be aligned with any content centric bot.

3) Bot Leveraged Affiliate Marketing (Old)

Affiliate Marketing has been a monetization strategy for entrepreneurs and new businesses for years. In the early days, the model was quite simple, find a product that people were searching for frequently, create a website and landing page that would bring in traffic, run some ads and then profit.

Forrester Research conducted a study that concluded that affiliate marketing spending in the USA would grow to $4.5 billion in 2016. For chat bot creators, you could envision a Fitness Bot that offers tips and tricks on how to stay healthy along with affiliate links driving users to buy fitness products that have affiliate links associated with them.

Shopping bot, Kip has already leveraged this monetization strategy. People can ask the bot for different things like “Chocolate” and it will return a list of products:

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And for every product bought by their users, the Kip bot team are able to ring the cash register and take a small percentage.

Here’s one user explaining that they bought the Amazon Echo ($89.99):

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4) Bots For Data/Research Sales & Services

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Wondering what millennials are thinking about the Presidential Election?

There are bots that you can pay to do the research for you. I’m not sure if any bots are doing this today, but it would make a lot of sense for bots to offer this type of service.

Bots like DisOrDatBot are already asking people simple this or that questions as you can see in the experience above. Now, imagine you’re an event planner and are trying to determine which music act you should try to book for your city. Rather than using, you can run a research campaign with the DisOrDatBot and ask users in your city whether they prefer Radiohead or Nickelback.

5) Bot Lead Generation Business

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Lead generation businesses run wild online.

Create a landing page. Acquire targeted leads. Sell leads to targeted suppliers. Profit.

While I haven’t seen it yet, I expect we will see Chat bots that act as lead generation businesses with an initial focus on content. The chat Bots that deliver insights and in formation to users who are looking for advise about home ownership, insurance, weddings or finances and then pass along this user information to various businesses.

For example, imagine you’re talking to the Life Bot and start engaging in a conversation about home buying. As the discussion continues, the bot gathers information like the amount of cash you have for a down payment, where you want to live, whether you’re employed and whether it’s your first home. After building this relationship, the bot asks you “Would you mind if I pass this along to someone to get in touch?” You agree and the bot then it passes your information along to a Real Estate company in your area. The Real Estate company follows up with you the next day and the bot company gets paid for the lead.

6) Pure Retail Sales

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Retail is one of the most straightforward experiences you will find amongst chat bots. It’s the idea of a store selling directly to the consumer (B2C). You can imagine stores like Wal-Mart, Harrys, Target and Amazon creating bots where people can ask them if they sell something like “Tooth Paste” or “A shaver” and the bot responding back with those products. The user will make the purchase directly through the conversation with the bot and it will act similar to a transaction from a typical website.

7) Cost Per Conversation/Task

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People want advice and are willing to pay for good advice.

As bots become more sophisticated, I expect people to be willing to pay to have conversations with the bots that can help them with various challenges in life. For example, you could talk to the Oprah Bot if you needed life advice, the Mechanic Botfor information on your car or the Marriage Bot if you want anonymous marriage counseling.

Marriage counsellor can charge anywhere from $75 to $200 or more per hour depending on where you live, the experience of the therapist, and the type of setting can all play a factor in how much counseling costs. Bots could help marriages at scale at a lower price point and be more accurate in their advice by leveraging the data they recieve from their frequent interactions.

During an interview with Harry Stebbings of 20 Minute VC, Sam Lessin, Founder @ Fin and Partner @ Slow Ventures explains that the future of business models for bots is still to be determined and I couldn’t agree more. It’s going to be an interesting next couple years and I’m excited to see what founders (myself included) come up with for the business model for bots.

If you’re interested in learning more about bots and my thoughts on how they will redefine B2B – Subscribe to my newsletter.

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