Do you want to start a business building & selling chatbots services? If YES, here is a detailed guide to running a chatbot firm with no money or experience.
Chatbots within the past ten years have emerged as a huge marketing trend. The marketing agencies with the biggest successes and the highest client retention right now are the marketing agencies that are using chatbots to their maximum potential.
Artificial intelligence, also known as AI, is the technology behind the widespread of chatbots. By implementing AI and natural language processing (NLP), chatbots can now communicate with humans using common language instead of specific command lines. Also, chatbots are able to perform complex tasks, such as placing orders, editing shipping details, updating billing information, and changing account information.
But you have to understand that starting a business that builds and sell chatbot services requires a lot of planning, knowledge about your business environment, your prospective target audience, and an understanding of which features will be the most valuable to users.
Remember, bots are still in their early development stages, so there’s still a long way to go, functionality-wise. These bots also need to be designed to suit your client’s specific needs that may range from a simple customer care assistant to an internal-facing chatbot that coordinates the entire team.
Owing to the popularization of AI-powered virtual assistants, setting up your own bot-building agency is easier and more lucrative than ever. Read on and follow the tips analysed below to create high-quality, custom chatbots for your customers that produce results and help reduce their responsibilities, allowing them to focus more on growing their organization’s overall performance.
How to Start a Business Building & Selling Chatbot Services – A Complete Guide
- Industry Overview
According to reports, the Chatbots Market was estimated at USD 1274.428 million in 2018 and is expected to reach USD 7591.82 million by 2024 registering a CAGR of 34.75% over the period (2019 – 2024). This growing demand for voice-activated smart devices is gaining high traction because of their high convenience and fully automated processes.
Also, smart speakers, in particular, is becoming ubiquitous. A chatbot is simply an artificial intelligence powered application, which converses with a human being to solve a problem or to answer a certain query.
It helps to reduce the operational time and enhances efficiency, which is likely to enhance the market growth. According to Facebook, as of early 2018, about 1.4 billion people used messenger applications and are very willing to converse with a chatbot, which is expected to have a positive impact on the market growth over the forecast period.
Meanwhile, the adoption of the chatbot is at an early stage, the adoption rate is increasing. But the relative lack of awareness and convenience has been one of the key issues identified over the last few years restraining the growth of the market, with some of the major vendors looking to address them by introducing interactive features in the product.
Also, in the banking and financial industry, the attempt to mitigate the need for live call centres and slit excess costs which are very significantly visible can be achieved with the introduction of the chatbot. In the Asia-Pacific region, there are many start-ups investing in chatbot technology and machine learning technology.
Additionally, small and mid-sized enterprises are sharply integrating the usage of chatbots in their customer service process offering seamless performance, handling a large number of consumers, and enhancing customer-engagement techniques.
With the rapidly expanding information and communications technology infrastructure in leading economies such as China and india in this region, the market is expected to grow further. Also, with the vast population and growing adoption of smartphone users in the region, it is forming a highly promising consumer pool for the chatbot market, especially for applications such as personal assistant.
Table of Content
- Selling Chatbot Services – Market Feasibility and Research
- List of Niche ideas in the Chatbot Service business
- Level of Competition in the Chatbot Service Industry
- List of Well Known Businesses Building and Selling Chatbot Services
- Starting a Chatbot Service Business from Scratch or Buying a Franchise
- Selling Chatbot Services – Legal Aspect
- Catchy Business Name ideas for a Chatbot Company
- Intellectual Property Protection
- Is Professional Certification Needed to Run a Chatbot Company?
- Legal Documents Needed for a Chatbot Service Business
- Financing a Chatbot Service Business
- Choosing a Suitable Location for your Chatbot Service Company
- Selling Chatbot Services – Technical and Manpower Requirements
- The Service Process Involved in a Chatbot Business
- Selling Chatbot Services – The Marketing Plan
- Strategies for Winning Competitors in the Chatbot Services Business
- Increasing Client Retention in the Chatbot Service Business
- Boosting Brand Awareness and Creating a Corporate identity in the Chatbot Business
Selling Chatbot Services – Market Feasibility and Research
- Demographics and Psychographics
This business is suitable for anyone who loves programming or general problem-solving. It helps if you have experience working on software development teams that produce popular applications or other artificial intelligence features before you try to go off on your own to start a chatbot building business. Programmers are known to work very long hours without immediate reward, because solving the programming problem is the catalyst that pushes them forward.
In this type of work, it is rare to have regular working hours, so you should be prepared to adopt a schedule that can adjust according to changing workloads. Since this Business model includes creating and selling chatbots, you will want to find companies who will give you a steady workflow to keep your programmers busy and also pay you a fair price for the work.
Your customers in this line of business will be as many people as you can possibly find in your target market. If the chatbots attract a lot of interest from the general public, it will sell easily. On the other hand, if it solves some critical problem for a niche market, it will sell to a smaller group of people or companies, but at a higher price.
List of Niche ideas in the Chatbot Service business
Successful entrepreneurs in this line of business will always suggest you choose a niche as quickly as possible. Choosing a niche streamlines your brand and gets the word out about your services. For instance, if you start creating chatbots for a real estate agent, they can easily recommend you to other real estate agents.
To succeed in this business as a new comer, you should place heavy attention on your references and reviews at the very beginning. You may also need to start at extremely low rates to offset your lack of industry experience. Most companies prefer to hire a chatbot creators with an established reputation, so it can be difficult to get started.
Level of Competition in the Chatbot Service Industry
Reports have it that the chatbot market is highly competitive due to the presence of many small and large players. The market is moderately concentrated with the key players adopting strategies like product innovation to stay ahead of the competition.
The need to improve customer relationship management (CRM) in the BFSI sector and increase awareness about the advantages offered by chatbots over other customer support options are the major factors that fuel the growth of chatbots.
However, factors such as increased initial instalment cost and lack of product differentiation hamper the market growth to a certain extent. The global chatbot market is segmented into platform, type, end user, and region. Based on platform, it is divided into web-based and mobile-based. Based on type, it is classified into software and services. By end user, it is categorized into banks, insurance companies, and others.
List of Well Known Businesses Building and Selling Chatbot Services
- Artificial Solutions
- Nuance Communications, Inc.
- eGain Corporation
- Creative Virtual Ltd.
- Next IT Corp.
- 24/7 Customer Inc.
- Codebaby (Idavatars), Inc.
- Inbenta Technologies Inc.
- IBM Corporation
- Dialogflow (Google)
- Amazon Web Services, Inc. (Amazon Lex)
- Creative Virtual Ltd
- LiveChat, Inc.
The need to improve customer relationship management (CRM), benefits chatbots over other customer support options, and growth in integration of chatbots with social media drives the growth of the market. But, growth in initial installment cost is expected to limit the market growth. Meanwhile, the adoption of chatbots has grown in banking and financial sectors especially to maintain customer relationship.
The digitization-driven shift in customer engagement also influences the banking and financial sectors to redefine their touch points with customers and focus on understanding the customer’s intent and their latent needs. That is why a good number of banks integrate chatbots as they have the potential to simplify the entire banking experience for customers.
The various advantages provided by chatbots include 24/7 availability, increased response capacity, increased return on investment (ROI) for customer support, streamlined processes for repetitive inquiries, and others. Aside cost reduction, use of chatbots offer business advantages such as improvement in net promoter score (NPS) and customer satisfaction by reducing response times, enhancing customer convenience, and increasing first time resolution.
Experts believe that social networking platforms help brands to boost brand engagement and interaction between the brands and their customers. The integration of chatbot with these social media platforms assist the user to find a solution to new features, security, and other issues related to the site, which drives the growth of the chatbot market.
Starting a Chatbot Service Business from Scratch or Buying a Franchise
Chatbot is a computer program designed to simulate conversation with human users especially over the Internet. Setting up your own bot-creating business and providing AI-powered virtual assistants to companies is a challenging task.
To start and run a successful chatbot creating business, you have to focus on providing a consistent and high quality service to your customers as well as delivering a good return on investment. Buying into a franchise in this industry will give you with a better platform to achieve these goals unlike starting from the scratch. Buying into a franchise offers you the following benefits
- A better business platform
- Easy access
- Integrated applications
- Flexible and scalable
Possible Threats and Challenges of Starting a Business That Builds and Sells Chatbots
The rising need for better AI-powered chatbots has undoubtedly made this business one of the highly innovative modern technologies. This is a growing niche as businesses are looking for ways to cut their staff to just the bare essentials. In fact, some put total industry estimates at close to $8 billion by the early 2020s.
However, because the job can be done remotely, clients are often looking for chatbots to attend to the needs of their clients, which will in turn let them focus more on business growth. To achieve success in this business, your chatbots need to provide services that can’t easily be found elsewhere. Possible threats to starting a chatbot creating business include;
- Purchasing necessary equipment
- Renting an office space
- Creating a marketing plan
- writing a business plan
- Proper industry knowledge
- Deciding on the type of services you want to sell
- Searching for a partner
Selling Chatbot Services – Legal Aspect
- Best legal entity for a Chatbot Service Business
There are a good number of legal entities to choose from (Sole Proprietor, LLC, Incorporation, etc.), so you’ll have to do a good research and see which model is right for the services. But when planning extensively for this stage, it is advisable you consider all possible options, your plans for the business, and how best any structure would suit you.
The legal entity you decide will rely on the size of your Chatbot business, but for the sake of this article the LLC is the best entity for your Chatbot business The benefits of forming an LLC business structure is well known to the world, but the reason why it is the best structure for this business is because it provides security, flexibility and credibility.
Catchy Business Name ideas for a Chatbot Company
- Favour connection Inc.
- Antique corp
- Space Inc.
- Access Internets
- XYZ electronics
- Shred business Corporation
- Airfire Communications
- Tribune Internets
- Darkage Internets
- Fundit network solutions
- Deltasone LLC
Note that starting and running a chatbot building business can put you at risk. You will definitely have access to other companies’ sensitive data. Although you’re operating on a web-based system, the laws of copyright, libel, slander and trademark still exist.
Just like all those providing professional services, building and selling Chatbots comes with an expectation of a certain level of professionalism. So, when things go wrong the chatbot creator may well be held to account for any financial losses and this is where insurance is expected to mitigate the effects of such actions. You need to have;
- General Liability Insurance.
- E&O Insurance.
- Cyber Liability Insurance (Data Breach Insurance).
- Business Owner’s Policy.
- Workers’ Compensation Insurance.
- Employer’s Liability Insurance.
- Fidelity Bond Insurance.
- Employment Practices Liability Insurance.
Intellectual Property Protection
Handling and sharing data with a third-party is always risky, but Chatbot creating establishes concerns for IP. Protecting your intellectual properties can be stressful but in the modern world where ideas and patents are been stolen on daily basis you need to consider protecting your hard earned intellectual property rights.
- Select the right service
- Read and understand your fine prints
- Expect to pay more
- Consider IP creation
- Secure it yourself
- Prevent a lockout
- Revisit control on daily basis
- Pick a right provider
Is Professional Certification Needed to Run a Chatbot Company?
Professional certification are educational qualifications that measure your knowledge and skills against industry- and vendor-specific benchmarks to prove to customers that you have the right mix of Internet skills, knowledge, and expertise. Professional certification in the Chatbot creating business may include;
- CompTIA Network+
- WCNA: Wireshark Certified Network Analyst.
- CCIE: Cisco Certified Internetwork Expert.
- CCNP: Cisco Certified Network Professional.
- JNCIE-ENT: Juniper Networks Certified Enterprise Routing and Switching Expert.
Legal Documents Needed for a Chatbot Service Business
When starting this business, you will need to register for a variety of state and federal taxes before you can open for business. In order to register for taxes, you will need to apply for an EIN. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down. Some state permits and licenses may be needed to operate a chatbot building business. Here are some legal documents needed for a chatbot business.
- Business license
- VAT registration
- Employment agreement
- Federal tax identification number
Financing a Chatbot Service Business
Starting and running your Chatbot requires enough funding to be able to push through the challenges of establishing yourself in the market. Notably, there are many financing options out there for any focused entrepreneur. There are bank finance, private investments, and even funding from wealthy individuals who want to help small business owners to become successful.
But of course, you can’t just borrow money as easy like that. You have to prove to these people that the business you’re making has a potential to give them significant return. Ways to gain funds in this business may include…
- Personal savings
- Service charge
- angel investor
- Venture Capital
- Loans and grants
- Alternative funding source like Crowdfunding
Choosing a Suitable Location for your Chatbot Service Company
You have to understand that choosing an excellent location for your business is very important to the success of your Chatbot business. The location should be convenient for your customers and employees – without being too expensive.
Indeed, there are many factors to consider when deciding on a suitable location for your business. But have it in mind that any location you choose is likely to have its own advantages and disadvantages. An office in a rural setting might be relaxing, but could be awkward for staff or suppliers making deliveries.
Being right in the middle of the city could be very convenient, but might also be expensive. Location has a major impact on cost. If you need premises in a prime location the extra costs may be justified. Factors to consider may include…
- Planning restrictions
- Local council charges and business rates for services such as waste collection
- Local amenities
- The level of passing trade
- The number of competitors
- Transport links and parking
Selling Chatbot Services – Technical and Manpower Requirements
To properly provide your customers with the service they need, note that you need to have the right tools and equipment. But these days, it’s not enough that you just get what’s available out there – you’ll need to get the latest technology as people are always looking for new and faster service.
As an owner of a chatbot building company, you will need to be able to interface with clients (if doing work-for-hire) and manage the interface with the public if your bots are sold on an advertiser-supported model or on a subscription basis. Also, your other main job will be to manage your bot development team. Your bot development team may be on the edge of eccentricity and on the border between genius and insanity.
This is normal for this business. Your daily job will be to create an amazing creative environment where other geeks will want to stay in and spend many days or maybe many weeks creating software code and bots without much need for doing anything else. Another part of your job will be to ensure that the team is heading in the best direction.
Really intelligent people have a tendency to wander off into tangential thoughts that are not part of the project they are supposed to be working on. As the business owner, your job is to guide them towards producing positive and useful outcomes.
Meanwhile, having a degree in computer programming is helpful although not necessary. Knowing programming code, even if self-taught, is extremely valuable. Have it in mind that you will succeed if you love what you do. If you develop bots as a hobby simply because you enjoy doing it, you will definitely succeed in this business.
You will have to enjoy working long hours, sometimes through the night, and not necessarily getting paid for your time when you first get started. Your goals, when you start, are to learn as much as possible.
One way to get the vibe needed to succeed in this business is to volunteer on an open source program to help improve it. Everyone working on an open source program works for “free.” However, they get paid by what they learn from the others that are more advanced than they are.
There are very few “brick-and-mortar” schools that offer this level of expertise and real-time learning. Bot creators who are the best in the world are renegades. The really superb ones want to teach skills to others. However, you better be quick and learn fast because they have no time for slow-learners.
Although, building a team is all about budget. If you can pay to add staff and have enough work for them to do, then, by all means, hire more staff to help you. Use freelancers as much as possible in the beginning and find the best ones by giving them small tests of things to do to advance your projects.
The Service Process Involved in a Chatbot Business
To successfully run this business you have to ensure that your bots are designed to suit your client’s specific needs that may range from a simple customer care assistant to an internal-facing chatbot that coordinates the entire team. When creating a custom chatbot, you should always remember to:
- Choose the Best Platform
There are so many options to choose from and each one offers different features and benefits. Don’t forget that some bot builders will require different levels of technical knowledge. If you have experience coding, chances are you can start creating bots from scratch without the help of any third-party tools.
On the other hand, if you don’t have much coding knowledge, choosing a platform like ChattyPeople can help you save time while allowing you to deliver high-quality results.
- Know the Bot’s Audience
It’s advisable that you touch base with each client to discuss their target audience. Remember, different chatbots can be designed to provide information, solve common issues, or work as a sales channel. Remember to keep their main purpose in mind and identify the right audience to create a bot that appeals to them. Also, remember that bots are relatively new tools, so make your bot proactive and easy to use in order to help users feel more comfortable.
- Leverage Natural Language Processing and Artificial Intelligence
AI and NLP are the two main reasons for the widespread emergence and usage of bots. Note that you can make a chatbot that doesn’t employ either of these two elements, but they might be a nightmare for users, as they would have to operate it using exact command lines.
Making use of natural language processing and artificial intelligence means that users can communicate with a bot using everyday language. In addition to being easier to use, chatbots that employ these two key features can display a bit of personality to help captivate and engage users on a deeper and more personal level.
- Give it Functional Features
Consumers are more demanding than ever, and they expect your chatbot to work as well as any of your other products. Instead of overloading your virtual assistants with ‘exciting’ new features that don’t work properly, you should begin with just a few capabilities that work to perfection and build your way from there.
Don’t forget that chatbots can use AI to learn from every conversation, so you can create a simple version at first and implement more features slowly to create an efficient, problem-solving machine.
- Marketing Your Chatbots
It’s very crucial you consider your bot’s marketability throughout the entire creation process. Aside coming up with an attractive name that’s simple to remember and spell, you should also make sure it’s indexed and available on Facebook and other third-party chatbot databases. This will guarantee that your bot is easy to find and that users can track it down with a simple search engine or social media query.
- Optimize, Enhance, and Reduce Turnaround
Just like most modern marketing tools, chatbots are not static schemes but rather dynamic solutions that can be optimized for better performance. Once your bot has been running for some time, you can look at its performance metrics and make changes accordingly.
Have it in mind that this should enhance the user experience, identify and solve confusion triggers, and ultimately reduce your turnaround time for future chatbots you create. You may need to employ additional analytics tools to get a feel of the bigger picture and work towards building a seamless experience for users who interact with your bots.
Selling Chatbot Services – The Marketing Plan
- marketing strategies for a Chatbot service business
The best chatbots, by being very useful, promote themselves. Attending trade shows is one good way to meet potential customers if you want to do work-for-hire. There are many freelance systems online that you can use to find customers looking for software and bot developers with specific skills.
Giving public speeches and becoming known as an industry leader is a great way to increase the popularity of yourself and the applications made by your company. Marketing this business might seem easy but it still needs careful consideration and Cooperate planning.
- Word of Mouth Program
Send your current clients a bi-monthly or monthly newsletter featuring referral and bonus program details. Also try to offer one month of free service to customers who refer someone new to your business. For instance, to gain the free month, the customer must refer someone who signs a six-month or one-year contract.
Try to create the program with a tiered structure wherein if a customer refers 10 or more new subscribers in an allotted time frame, he receives six months of free service.
- Join the Chamber of Commerce
You should also consider joining your local chamber of commerce and get to associate with other business owners in your area. Also try to attend social and networking events sponsored by the chamber and offer service discounts to fellow members. We believe that individuals like to meet those with whom they might do business in person.
- Partner with Internet Clubs
You should also partner up with technology clubs at local community colleges and universities. Offer to help them with projects and teach them about emerging technologies. Give tours to elementary schools and high schools with information technology departments. Show the students how you keep clients’ data secure, how to speed up connections, the difference between bots, etc.
- Organise Free Courses or Seminars
You can organise free classes or seminars at your business for those interested in learning more about technology. Make sure some of the classes are channelled towards residential customers while others could address the specific needs of business customers. Start by teaching them about firewalls, and spyware detection and removal through seminars or mini-classes. Participants will notice your expertise in the field, which builds trust and respect.
Strategies for Winning Competitors in the Chatbot Services Business
According to statistics, your prospective clients will be looking for someone irreplaceable, so it’s very important that you take your duties extremely seriously. Lower paying clients may not always stay that way as they start to rely on your skills more and more.
Your services cannot only make organizations more organized, they can increase compliance, accuracy, and even profits. To properly school your competitors, you have to create a suitable roadmap that will guide and help you to achieve your objectives. When doing so keep these crucial two key points in mind regardless of which combination of options, and influencing factors are considered, as follows:
- Understand the initiative quickly
The most difficult and daunting point to consider, not least because of the uncertainty accompanied with predictions about the technology industry and consumer behaviour, is that it would be prudent for you to be more proactive in offering even more customer-pleasing, and regulator-friendly, propositions/business models, on their own terms, instead of being forced into it.
- Alienate or irritate the customer
It would be less painful to include customers in decision making, (e.g. via opt-in schemes for ad-supported models), than to end up losing market share and/or possible vilification for invasion of privacy.
Increasing Client Retention in the Chatbot Service Business
Have it in mind that your reputation in this industry says it all. There are two types of reputations. The first one is with clients that hire you to create bots for them. The second type is a public reputation for the bots you sell directly. Both reputations are enhanced when your bots serve an important need and the users tell all their friends about it on social media and in other ways. You should;
- Choose the right tools
- Make it simple
- Protect their ideas and interest
- Provide fast and reliable services
- Wow your customers
- Follow them up
- Provide some personalization
Boosting Brand Awareness and Creating a Corporate identity in the Chatbot Business
Although it all depends on your skills to make bots that attract attention and gain paying customers, you can start with a single successful bot and build a business worth many billions. Software development is always about being new, innovative, and showing your paying customers ways to do things they never imagined before.
But there is a caution you will need to understand regarding earning a “fair price” for the work. Software development of bots and other applications is a global business.
In countries where the standards are lower and the cost of living is substantially less than the more developed countries, there are programmers that work very cheaply. If you are not in one of these countries, you can still use programmers from those areas of the world with lower labour costs. Other strategies to implement may include…
- Making it easy for customers to buy from you.
- Stay active on social media.
- Be transparent.
- Stay in touch.
- Deliver outstanding customer service.
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