Enterprises are seeing significant benefits from conversational platforms, such as higher engagement rates and the ability to personalize interactions at scale with GenAI. Here’s how it can be used to secure a lasting competitive edge in the marketplace
India is undergoing a rapid digital transformation, with over 650 million Indians now active on social media platforms like Facebook, Instagram, and YouTube, and messaging services like WhatsApp. Despite this massive online presence, only 30% of users—around 200 million—currently shop online. A similar trend is observed among small merchants, where just 15% of the 30 million formalized small businesses registered on the Udyam portal are selling online. With many future online shoppers and sellers already within the digital ecosystem, India presents a significant untapped opportunity for businesses looking to expand their reach.
The Challenge of App Adoption
Most apps and services currently target 200 million digitally savvy users. However, beyond top categories like social media, messaging, entertainment, Unified Payments Interface (UPI), and horizontal marketplaces, app adoption is limited. Even in high-frequency categories such as grocery, banking, and mobility, monthly active users rarely exceed 35 million. App fatigue is also setting in, with 65% of savvy digital users expressing frustration with app downloads and 40% abandoning purchases when pushed to install new apps. The next 450 million non-savvy digital users remain hesitant to adopt apps due to a preference for assisted shopping, limited phone storage, and difficulties navigating app interfaces. As a result, the app-led model may plateau beyond the top 50 million to 100 million customers, prompting businesses to seek new ways to acquire and engage customers.
The Rise of Conversational Journeys
One promising avenue is the implementation of chat-based assisted journeys, or conversational journeys, on platforms with high user engagement like social media and messaging services. Consumers are already informally interacting with businesses—both small and large—through these platforms, messaging carpenters, doctors, bank representatives, and direct-to-consumer brands. More than 50% of surveyed users expressed a strong preference for transacting via conversational journeys, particularly for high-frequency use cases such as accessing bank statements, obtaining travel details, paying utility bills, and booking liquefied petroleum gas cylinders.
However, scaling these humanlike conversational journeys has proven challenging. While larger enterprises have automated simple tasks like service requests and order tracking with AI chatbots, more complex or urgent interactions still require human intervention. For small businesses, limited resources and expertise mean they often rely on manual approaches until they achieve scale, making investment in automation a cautious decision. This highlights the need for a democratized, affordable, and intelligent AI solution to seamlessly implement end-to-end conversational journeys.
The Role of Generative AI
Generative AI-powered assistants, with their ability to engage in contextualized, humanlike conversations, offer a solution to these challenges. These AI assistants can support multimodal interactions, understand vernacular languages, and reason through complex queries, making them ideal for driving conversational journeys at scale. The investments by leading tech companies to democratize access to generative AI platforms and build an ecosystem of offerings are further accelerating this transformation in consumer engagement.
The Conversational Future
Businesses in India currently engage customers across multiple channels, including SMS, email, contact centres, websites, and apps. However, the effectiveness and ROI of traditional channels like SMS and email are increasingly being questioned due to rising spam and low engagement rates. As a result, businesses are experimenting with conversational platforms across various customer touchpoints.
Large enterprises, in particular, are seeing significant benefits from conversational platforms, such as higher engagement rates and the ability to personalize interactions at scale. More than 60% of enterprises plan to increase spending on these platforms over the next three to four years, with a focus on building end-to-end journeys. Generative AI is at the forefront of these plans, with approximately 95% of surveyed enterprises in India familiar with generative AI and over 80% planning to invest in AI-based solutions within the next one to two years.
For small and medium businesses (SMBs), conversational platforms can address critical pain points across the customer journey, including limited reach for customer acquisition and challenges in establishing digital storefronts and managing payments. Early signs of success are already evident, with 15 million SMBs using WhatsApp for Business to create a digital presence and drive traffic through click-to-chat ads.
The Shift to Conversational Commerce
With the growing adoption of conversational platforms and the transformative potential of generative AI, businesses are increasingly focusing on driving transactions through conversational journeys, a trend known as conversational commerce. Large online platforms are leading this shift by developing proprietary chatbots and building AI-assisted journeys on conversational platforms. However, offline players, including organized and unorganized SMBs, will play a significant role in this transformation by using existing conversational platforms to leapfrog into digital commerce, potentially bypassing traditional marketplace models.
Service journeys, such as utility bill payments and ridesharing, are inherently less complex than product transactions like grocery shopping, making them a natural starting point for conversational commerce. These services are likely to accelerate user adoption and drive transaction volumes on conversational platforms.
The Winning Playbook
To capitalize on this opportunity, businesses must follow six key imperatives:
- Conversations vs. Communication: Reimagine end-to-end customer journeys by integrating seamless conversational threads across every touchpoint.
- Personalization at Scale: Leverage the power of generative AI to deliver highly personalized experiences at every customer interaction.
- New Markers of Trust: Establish digital credibility through hyper-personalization, encouraging customers to engage and transact via chat-based interfaces.
- Generative AI at the Core: Embed generative AI into the organization’s DNA to create a competitive advantage and stay ahead of the curve.
- Scale Experimentation: Adopt an agile “test and learn” approach, experimenting across diverse journeys to identify and scale the most effective use cases.
- Return on Conversations: Develop a clear measurement framework based on business objectives to assess the returns on end-to-end conversational journeys.
The Future of Customer Engagement
As generative AI continues to disrupt the tech landscape, it is poised to revolutionize consumer engagement models. With over 650 million Indians already active on social media and messaging platforms, many of whom prefer conversation-centric interactions, businesses must adapt to a future where conversational journeys are the norm. Those who embrace generative AI to create hyper-personalized, seamless conversations will secure a lasting competitive edge in the marketplace. The time to act is now.
Based on a recent report by Bain & Company in partnership with Meta
