Gen-AI chatbot adoption for SMBs in North America

Insights
Written By

By Harjot Dhatt

Radius Global 

The latest advancements in generative artificial intelligence (GAI)—a technology that can create content (e.g., text, image, video, code) based on patterns from large training datasets (Jebara, 2004)—have attracted significant attention among practitioners and researchers alike. GAI gained popularity following the release of the conversational chatbot ChatGPT in November 2022. Today, individuals across various hierarchical levels and functional areas within most organizations have the opportunity to utilize and explore the capabilities of GAI, regardless of their technical expertise or background. The global generative AI in chatbots market is expected to be worth around USD 1,714.3 million by 2033, up from USD 151.0 million in 2023, growing at a CAGR of 27.5% during the forecast period from 2024 to 2033.

Generative AI in chatbots represents a transformative advancement in the field of artificial intelligence, significantly enhancing the capabilities of chatbots across various industries. This technology enables chatbots to generate human-like responses by leveraging deep natural language processing capabilities, thereby improving interaction quality and customer experience.

Generative AI is revolutionizing the landscape for small and medium-sized businesses (SMBs) by offering cutting-edge tools that were once exclusive to large corporations, effectively democratizing scalability and fostering innovation. With their inherent adaptability, SMBs can rapidly integrate generative AI to bridge knowledge and technology gaps, leveling the playing field with bigger competitors. Representing about 90% of all businesses and accounting for over half of global employment, SMBs are essential drivers of economic growth across various sectors—particularly in emerging economies.

Gen AI in SMBs

The generative AI market for small and medium-sized businesses (SMBs) is experiencing rapid growth, driven by the need to automate tasks, enhance customer experiences, and personalize content. According to Growth Market Reports, the global market for AI in SMBs reached USD 8.7 billion in 2024 and is projected to grow to USD 86.5 billion by 2033, at a CAGR of 28.6%.

In 2024, the U.S. Chamber of Commerce reported that 40% of small businesses in the United States were already leveraging AI tools. By 2025, the landscape has evolved significantly:

  • Global Adoption Surge: 77% of small businesses worldwide have integrated AI into at least one function, demonstrating broad-based adoption.

  • U.S. Market Growth: Approximately 38% of SMBs in the U.S. are actively utilizing AI across areas such as recruitment, customer support, and marketing automation.

  • Automation Powerhouse: A 2025 report by Intuit and ICIC reveals that 89% of small businesses are using AI to automate repetitive tasks and improve efficiency.

  • India’s Leadership: India leads in SMB AI adoption, with 59% of businesses already implementing AI-driven solutions.

  • Customer Service Transformation: Among SMBs using AI for customer service, 95% report improved response quality, and over 92% note faster turnaround times.

  • Chatbot Integration: By the end of 2025, 80% of small businesses plan to integrate AI chatbots into their customer support strategies.

SMBs across industries are turning to chatbot solutions to enhance customer support, streamline sales processes, and improve overall user experiences. Generative AI-powered chatbots provide distinct advantages, including 24/7 availability, scalability, and the ability to handle multiple conversations simultaneously.

Generative AI Chatbots in North American SMBs

The integration of generative artificial intelligence (Gen-AI) chatbots into small and medium-sized businesses (SMBs) in North America is rapidly transforming operational landscapes. North America currently leads the market, holding a 41% share and contributing USD 3.4 billion in revenue in 2024—driven by technological advancements, high digital adoption, and a robust startup ecosystem.

The region has long been at the forefront of AI research and development, fostering fertile ground for Gen-AI innovations. Major tech giants like Google, Microsoft, and OpenAI have heavily invested in Gen-AI platforms, virtual assistants, and natural language processing (NLP) tools. These technologies are now being applied across business functions including marketing, customer service, content creation, and software development (Wang et al., 2024).

Market Growth and Trends

  • Generative AI in Chatbots:
    The global Gen-AI chatbot market is projected to reach USD 1,714.3 million by 2033, up from USD 151.0 million in 2023, growing at a CAGR of 27.5%.

  • Conversational AI Market:
    Expected to grow from USD 10.1 billion in 2023 to USD 79.4 billion by 2033, at a CAGR of 22.9%, driven by AI-powered chat solutions for customer engagement and operational optimization.

  • Holiday Surge in Adoption:
    AI-based chatbot usage saw a 42% increase during the 2024 holiday season compared to the previous year, as businesses shifted toward instant messaging platforms.

  • Use Cases Expanding:
    North American businesses across healthcare, finance, retail, and customer service are leveraging Gen-AI chatbots to automate tasks, improve experiences, and gain data-driven insights. SMBs are particularly keen on AI to optimize operations, reduce costs, and stay competitive.

Detailed Market Analysis

  • In 2022, cloud-based deployment held over a 60% market share due to scalability and ease of integration.

  • Customer service applications led with a 29% share, driven by automation and faster response times.

  • Retail and e-commerce dominated the market, thanks to digitalization and demand for personalized experiences.

  • North America held a 38% share in the Gen-AI chatbot market.

  • Over 60% of companies are using Gen-AI tools, reducing workload by 60–70%.

  • eCommerce chatbot performance:

    • 85% open rate

    • 40% click-through rate (CTR)

    • Compared to email: 23% open rate, 3% CTR

  • 73% of customers prefer chatbot self-service, saving over 10 minutes per interaction.

Recent Developments in Gen-AI (2025)

  • In May 2025, LinkedIn launched a generative AI tool that lets users uncover tailored job listings just by describing their ideal role in their own words. The technological initiative in applications is allowing individuals to explore and develop their expertise. 

  • In May 2025, IBM Think 2025 highlighted Watson X.data’s role in generative AI. The data platform will address roadblocks in scaling generative and agent-based AI, contributing to the growth of the generative AI market. 

  • In May 2025, Kama.ai launched trustworthy AI hybrid agents. The merging of deterministic and generative AI delivers trusted, brand-safe virtual agents. It is guided by human values, with a new enterprise retrieval augmented generation (RAG) process. 

  • In February 2025, Google Cloud and Accenture launched the Generative AI Center of Excellence in Saudi Arabia, providing businesses with industry expertise, technical knowledge, and product resources to build and scale applications using Google Cloud’s generative AI portfolio and accelerate time-to-value. 

  • In April 2025, the Cannes Film Market launched Village Innovation, a new venue dedicated to technology and innovation (including Gen AI) in the film industry. The venue will bring together the bulk of activities from Cannes Next, the market’s flagship program dedicated to innovation in the film industry, as well as activities stemming from the all-new ImmersiveMarket, which revolves around XR and immersive professionals. 

  • In May 2025, TalentSprint, a global leader in DeepTech education, announced an executive-friendly, four-month Generative AI Foundations and Applications program. Created for both emerging and current working professionals, the program provides cutting-edge AI skills and hands-on experience in the rapidly evolving world of Generative AI.   

  • SXiQ, an Australia-based digital transformation services company with expertise in cloud applications, platforms, and cybersecurity, was acquired by IBM in November 2021.  

  • ALTAIR ENGINEERING INC announced the release of Thea Render V3.0 in March 2021. The Thea Render is a 3D renderer that uses state-of-the-art and unbiased graphic refining unit engines. 

  • Altair announced in February 2021 that it had adopted GE Aviation's Flow Simulator.  

  • In May 2020, Archistar, an Australian property intelligence platform that combines architectural design with artificial intelligence to inform property decision-making, closed a USD 6 million Series A funding round led by AirTree to accelerate international growth and expand its product and engineering team. 

Historical Notes:

  • IBM acquired SXiQ (2021)

  • Altair released Thea Render V3.0 and adopted GE Aviation’s Flow Simulator (2021)

  • Archistar raised USD 6 million for global expansion (2020)

Benefits for SMBs

  • 24/7 Customer Support: Automates up to 70% of inquiries (Quidget), reducing wait times and improving efficiency.

  • Cost Reduction: Cuts expenses on staffing for support and lead gen.

  • Enhanced Personalization: AI tailors responses based on data, boosting loyalty (e.g., a floral company’s personalized quiz chatbot increased engagement and prize claims).

  • Competitive Advantage: Enterprise-level tools now affordable for SMBs.

  • Internal Efficiency: Automates HR and IT inquiries, freeing up staff for strategic work.

Leading chatbot providers for SMBs in North America 

Several chatbot providers cater specifically to SMBs in North America, offering a range of features and pricing options. Some examples include: 

  • Quidget: Known for its affordable pricing (starting at $16/month) and user-friendly, no-code setup. 

  • ProProfs Chat: Offers a free plan for single users and paid options starting at $19.99 per operator/month, combining live chat with AI chatbot features. 

  • Tidio: Combines live chat and AI chatbot features, designed for small businesses and startups. 

  • Botsify: Provides omnichannel support with AI-powered chatbots for various platforms. 

  • ManyChat: Focuses on marketing automation and social media messaging. 

  • ChatGPT: Popular for content ideation and available with free and paid versions (starting at $20/month for plus). 

  • Microsoft Copilot: Best for Microsoft Office users, available with paid plans starting at $30 per user/month and a free version. 

  • Google Gemini: Best for Google Workspace users, with the Google AI Pro plan starting at $19.99 per month.  

Challenges and Considerations for SMBs

  • Data Privacy and Security: SMBs need to address concerns regarding data privacy and security when implementing AI chatbots, especially when dealing with sensitive customer information. 

  • Integration with Existing Systems: Integrating chatbots with legacy systems can pose technical challenges for SMBs. 

  • Developing AI Expertise: A lack of in-house AI expertise can hinder the effective customization and optimization of chatbot solutions. 

  • Ethical Considerations: Ensuring that chatbots avoid biased or inappropriate content requires careful consideration and the implementation of robust filtering mechanisms. 

  • Maintaining a Human Touch: While AI chatbots offer numerous advantages, it's important for SMBs to maintain a balance between automation and human interaction, especially for complex or sensitive customer inquiries.  

Future outlook 

The market for Gen-AI chatbots in North America is expected to continue its upward trajectory, with increasing sophistication and broader applications across various industries, according to a LinkedIn analysis. The emergence of industry-specific chatbots and the continued development of natural language understanding and voice recognition capabilities will further drive adoption and create new opportunities for SMBs. The shift towards low-code/no-code platforms will also empower more businesses to leverage Gen-AI chatbots to enhance customer engagement, streamline operations, and drive growth.  

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