Businesses are always looking forward to providing better customer experiences. Encounters with customers through various channels may help a company learn about customers’ needs and expectations, leading to innovation. However, the advancement in Artificial Intelligence (AI) and overall Information Communication Technologies (ICT) have changed how these encounters occur with conversational agents. One such conversational agent that businesses have adapted over the years is chatbots. These AI chatbots allow businesses to provide automated information to customers and interact with them in the most human-like manner for a better customer experience. However, it is essential to ponder whether these AI chatbots give businesses room to come with novel concepts such as new ways of marketing products or providing the most personalized content, or just handling automated data saving cost and time only?
This research investigates the implication on business innovation when AI-based chatbots are used for customer encounters via a qualitative approach. An analytical model was created with the variables, AI chatbots-based service encounters, co-creation, and innovation derived from various literature. As the research topic is relatively new, a systematic review of blog articles is done to investigate the issue further, followed by semi-structured interviews with businesses.
The research concludes with the notion that service encounters taking place through AI-powered chatbots have a very minimal impact on business innovation. The advancement in AI might fuel the success of these chatbots to be a part of innovation in the near future, but not in the present. It is noted that AI chatbots are limited to communicating as human agents while not actually understanding, interpreting, and delivering solutions as human agents. This is primarily in the case when these bots receive complex queries. However, AI chatbots have been seen as a successful marketing tool and aid the innovation process in the marketing field to some extent. The study further presents factors to be considered when researching the field of AI chatbots-based service encounters and their implication on business innovation.