What is a Chatbot? An Introduction to Chatbots

A Chatbot is a Powerful Tool for Customer Service

If you subscribe to a service from a link on this page, Reeves and Sons Limited may earn a commission. See our ethics statement.

Primarily, chatbots are intended to provide companies with a way of enhancing their customer service efforts. These simple tools can automatically respond to common consumer questions, complete actions on the behalf of customers, and even route clients to the right service or sales agent.

Today, we’re going to take a closer look at the chatbot landscape, and how it’s evolved over the years, to help you understand why chatbots might be beneficial to you.

What is a Chatbot?

A chatbot is essentially a software solution or computer program which simulates human conversation through voice or text interactions. Chatbots are capable of understanding inputs in the form of written text (and sometimes speech), and can trigger a range of responses to queries.

Chatbot use is growing in both the B2C (Business to Consumer) and B2B (Business to Business) space to handle a range of tasks, from responding to queries, to completing purchases. Some bots can even be designed to proactively reach out to customers, reducing the risk of abandoned carts, or offering personalized recommendations on which products to purchase.

Chatbots can aid with everything from human resources, to routing customers on a mobile app, and completing various tasks. However, they haven’t always been as advanced as they are today.

Chatbots started life as relatively simplistic tools. In the 1970s, companies were already experimenting with bots capable of simulating human conversation. However, these tools have evolved drastically since then. Thanks to the rise of machine learning, natural language processing, and other AI technologies, chatbots have become more intelligent.

Bots can now more effectively respond to human text, and analyze huge amounts of data in seconds, in order to provide clients with streamlined shopping experiences. Many bots can integrate not only with ecommerce builders and messaging tools, but also CRM solutions and databases, to provide more accurate and personalized services to clients.

How do Chatbots Work?

The exact functionality of chatbots and how they work will depend on the kind of bot you choose to design. Chatbots have varying levels of complexity, depending on whether they’re stateless, or stateful. With a stateless chatbot, each conversation is approached as though the system is interacting with an entirely new user. However, stateful bots can review previous interactions and frame their responses based on extensive amounts of context.

Chatbots work using a combination of automation, algorithms, and artificial intelligence. In the past, creating a chatbot for a business website would have required extensive coding. However, modern chatbot builders allow companies to access comprehensive conversational user interfaces, with visual builders which don’t require technical knowledge.

Depending on the nature of the chatbot, the solution is likely to include some natural language processing technology. This ensures the bot is capable of understanding human conversation, whether it’s written, or spoken out loud in some cases.

Businesses implementing chatbots also need to determine whether they want the discussions managed by the bot to be structured or unstructured. Chatbots designed for structured conversations are highly scripted. This helps to simplify programming, but it limits what users can reasonably ask. In B2B environments, chatbots are usually scripted to respond to common questions and perform simple tasks, like providing insights into an order status.

In order to provide chatbots with the right information to deliver exceptional service, most companies will integrate their systems with existing tools, like knowledge bases and CRM (customer relationship management) tools. This allows for a more personalized experience.

The Different Types of Chatbots

As chatbots have evolved, new variations of the technology have begun to emerge in the market. While most of these solutions still fall under the same “chatbot” umbrella, they’re designed to address specific needs and business goals. Some of the most common types of chatbots include:

  • Scripted bots: The most basic chatbots are designed to algorithmically respond to messages using pre-built scripts. They follow set guidelines, and can only respond to a specific number of requests. These bots are unable to process questions and words that haven’t been added to their databases, which means their functionality is somewhat limited. For instance, a scripted bot may offer customers a list of questions they can choose to have answered, rather than simply responding to whatever a person types.
  • Keyword recognition bots: Keyword recognition bots are similar to scripted chatbots in that they can only respond to certain queries. However, they do offer a little more flexibility. Rather than giving customers a list of questions to choose from, they attempt to perceive what a customer needs by recognizing certain keywords. However, these bots can still struggle with responding to terms they haven’t been programmed to understand.
  • Hybrid bots: Hybrid chatbots combine menu-based, and keyword-based bot technologies into one ecosystem. In some cases, users can either choose to have a question answered directly, by clicking on a suggested query, or they can enter certain keywords if the menu is not suitable. These bots are a little more commonplace among companies who can’t manage building and maintaining a more intelligent bot.
  • Contextual chatbots: Contextual chatbots are perhaps the most popular form of chatbot on the market today, though they may require a little more technical knowledge. They use a combination of AI and machine learning to understand which questions are being typed. They can also learn from each interaction and expand their own databases over time, without human intervention. They can also be enhanced via AI training.
  • Voice-enabled chatbots: Using natural language processing technology, voice-enabled chatbots can respond to more than just written messages. They’ll be able to listen to spoken dialogue, and pinpoint keywords and phrases to help them deliver the correct response. Developers create these bots using voice recognition and text-to-speech APIs. These bots can also send notifications to human employees when a conversation needs to be accelerated and addressed by a specific individual.

How Do Businesses Use Chatbots?

As mentioned above, chatbots can be designed to support a range of functions within the business landscape. As these tools become more advanced and intelligent, they’re becoming more capable of handling a wide range of requests. Some of the most common ways to use chatbots include:

  • Proactive messaging: To help increase sales, qualify leads, and drive customer engagement, companies can build chatbots which automatically reach out to customers on their website. These bots can be designed to send specific messages based on the page a customer is viewing. They can also be triggered after a customer spends a certain amount of time on a page. The idea is to increase the chances of sales and reduce cart abandonment.
  • Customer service: One of the most common ways to use a chatbot is to enhance the customer service experience. Chatbots can be designed to respond to frequently asked questions, drawing information from the company’s database. They can also perform simple tasks on the behalf of customers, such as placing orders, finding out information about stock levels, or tracking order status. In many cases, a chatbot can also be designed to route a customer to the right customer support agent when they need extra help.
  • Virtual assistants: Chatbots can also be used as virtual assistants to support employees in the modern workforce. These tools can help agents to find information within a relatively short amount of time, so they can save moments on searching through databases. They can also be used for various automation tasks, like sending data to a specific database or entering information into a report.

How are Chatbots Influencing Customer Experience?

Chatbots have become an incredibly useful tool for many businesses in recent years, particularly as consumer expectations evolve. Many clients now expect companies to be available to answer their questions at all times. Chatbots can improve customer experience and employee experience at the same time. They reduce customer wait times and offer immediate answers to questions on a 24/7 basis. They can also help with routing conversations to the correct employee.

Chatbots can reduce wait times in a contact center, and help businesses to minimize the strain on their workers, by filtering out common questions. They’re also capable of performing a range of common tasks which save business leaders time and money.

Some of the main benefits of chatbots include:

  • Scalable service: Chatbots can handle and respond to multiple queries at the same time, unlike human agents. They can offer 24/7 support without having to take time off, which can reduce wait times and improve business productivity.
  • Cost effectiveness: Chatbots are generally regraded as a simpler and cheaper solution than hiring additional employees. They can also reduce the costly issues commonly caused by human errors. Companies can also use chatbots to reduce customer acquisition costs.
  • Save time: Thanks to automation algorithms, chatbots can streamline some of the tasks commonly performed by human agents. This gives employees more time to focus on value-added tasks, and serving customers with complex queries.
  • Proactive interactions: Companies can design chatbots to reach out to customers proactively, reducing the risk of customers abandoning their carts, or moving away from the website. They can even send personalized recommendations to each customer, and monitor how clients respond to different suggestions.
  • Collecting data: With chatbots, companies can collect more valuable feedback and insights from every interaction with a customer. Bots can record and track purchasing patterns and customer behavior, to help companies make better decisions on how to generate growth.
  • Globalization: Chatbots can be designed to interact with customers in a range of different languages, which means companies can span into new markets without hiring additional employees. They’re also available at all times, so there are fewer issues with time zones.
  • Lead generation: Chatbots can improve lead generation, qualification, and nurturing processes. They can ask questions throughout the buyer journey which helps with segmenting customers and directing them to the correct resource based on their needs. They can also prevent companies from wasting time on unqualified leads, and provide agents with the information they need to convert customers rapidly.

What are the Challenges of Using Chatbots?

While chatbots and chatbot apps are certainly capable of offering businesses a lot of unique advantages, they can still have some challenges to overcome. For instance, implementing new technology like AI, machine learning, NLU, and NLP tools can sometimes mean accessing additional technical expertise, particularly if you want to build a bot for specific use cases.

Other potential challenges of chatbot technology include:

  • Security: When interacting with chatbots via messaging apps, customers can reveal a lot of personal data. This data can help a business to optimize its CX strategies, but there’s also a risk it could become victim to a breach if its not protected correctly. This is why many chatbot providers offer tools to help secure messages.
  • Accessibility: While many chatbots are designed to work with a range of apps and systems, from Amazon Alexa to social media, there’s no guarantee every system will work with every tool. This is why business leaders need to ensure the chatbot they choose is capable of integrating with the platforms their clients already use if they want to improve customer satisfaction. Fortunately, most tools do offer integrations for options like WhatsApp, Facebook Messenger, and Instagram direct messenger.
  • Compliance: In certain industries, such as healthcare and the financial landscape, companies are required to adhere to very specific guidelines. When building AI powered chatbots, these companies will need to ensure they’re not just prioritizing user experience, but also following the rules and regulations of their industry.
  • Empathy: Chatbots are excellent for enabling self-service in the customer service landscape, but they can’t offer the same level of emotional support as live agents. For a call center or business team to offer the appropriate response to each request, they must ensure that a chat conversation can also be passed onto a human agent when necessary.
  • Technical issues: Even as chatbots continue to grow more impressive, with solutions like natural language understanding and machine learning, there’s still a risk that technical issues may occur. Digital assistants may act unpredictable, FAQs may not load properly, and popups may fail to function according to expectations. Companies need to ensure their chatbot platform comes with access to the right support to aid their potential customers.

The Future Of Chatbots

Despite the challenges associated with chatbots, they’re still considered to be exceptional tools for supporting sales teams, service agents, and business leaders. Both rule-based chatbots and AI-enhanced systems can help to enhance customer experiences, and accelerate workflows. However, they need to be implemented correctly to drive the right results.

Going forward, as AI and machine learning continue to evolve, there’s a good chance that conversational AI systems will be able to offer an even more human-like experience during customer interactions. However, most experts agree that chatbots are unlikely to replace human professionals entirely. Instead, tools like Apple’s Siri and web-based chatbots are likely to become a supplement for the human worker, helping them to achieve their business goals. 

Rebekah Carter

Rebekah Carter is an experienced content creator, news reporter, and blogger specializing in marketing, business development, and technology. Her expertise covers everything from artificial intelligence to email marketing software and extended reality devices. When she’s not writing, Rebekah spends most of her time reading, exploring the great outdoors, and gaming.

shopify popup new
shopify light modal wide - this exclussive deal expires