What are Chatbots? How do Chatbots work? Top 10 applications

If you’ve ever landed on a website, you’re probably familiar with that icon at the bottom corner of your screen. Sometimes it flashes, sometimes it dings. However, if you were to return to the website, you can always rely on it to greet you with a “How can I help you today?” This greeting is the catalyst of many customer-brand relationships, thanks to the website chatbot.

Chatbots are one of the most powerful tools a business can use. When used well, it creates connections and helps customers out.

We hope you enjoy this guide to chatbots!

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What are chatbots?

A chatbot is a type of software that can help customers by automating conversations and interact with them through messaging platforms.

Here’s an example.

Say you’re on WhatsApp, making plans with a friend, and you remembered that you needed to purchase something from IKEA. While you could open your browser to look up its opening hours, wouldn’t it be easier if you could find out without switching tabs? 

That’s why IKEA decided to deploy a WhatsApp chatbot. 

Bots can communicate through different platforms, including Facebook Messenger, Twitter, Slack, chat windows on your website, mobile applications, or even messaging apps, such as WhatsApp, Telegram, and many others. 

We know that you have any queries like - Where do chatbots come from? Does chatbot software use AI? Do chatbots use NLP? Are chatbots the future? Hold up! We will answer them all in due time. Keep reading ahead to uncover all these mysteries.

Now that we’ve covered the basics, let’s further break down the mechanisms and workings of chatbots to guide you toward building the best chatbot for your business!

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What is the purpose of the chatbot?

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Chatbots allow you to pinpoint their queries and deliver relevant answers rather than scrolls and click-to-find the information customers and decision-makers are looking for. Gartner predicts that chatbots will handle over 85% of questions in 2021.

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Of course, bots eliminate the need for traditional call channels, inconsistent customer service, and wait and drop times. You can integrate these chatbots on your company websites or any other social media platform to be present wherever your customers and employees are. 

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56% of people prefer to message than speaking to customer service.
- Microsoft report on future of chatbots

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But first, where did they originate from?

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History of chatbots

Throughout modern history, we’ve been obsessed with interacting with robots and AI. And towards the latter half of the 20th Century, this dream started becoming a reality. Starting with ELIZA in the 1960s to Alexa and beyond. 

The year was 1950. During World War II, Alan Turing was one of the most prominent breakers of the German code. Turing challenged scientists to create a program that would be indistinguishable from a human in a Natural Language conversation.

A panel of human judges would converse anonymously, in text form, with a computer program and a human operating a computer. They would try to determine which of the participants is a human and which is the program. This one challenge has been the reason behind the development of thousands of bots.

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E.L.I.Z.A.

Fast-forward to 1966, and we see Joseph Weizenbaum at the MIT Artificial Intelligence Laboratory and his creation- ELIZA. ELIZA chatbot assumed the persona of a psychotherapist.

She managed this by passing the words entered by users through a program and pairing them with scripted responses. She didn’t manage to pass the Turing Test. But she did manage to do something unexpected. ELIZA got users to trust her enough to confide some of their deep thoughts in her.

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PARRY

6 years later, psychiatrist Kenneth Colby released PARRY. It played the role of a patient dealing with paranoid schizophrenia.

In a variation of the Turing Test, PARRY shocked its testers. Only about 48% of psychiatrists were able to differentiate between PARRY and an actual paranoid person.

In January 1973, Vint Cerf created a ‘computadora e computadora’ situation. With ELIZA at MIT and PARRY at Stanford University, he used ARPANET to make ELIZA give PARRY a psychotherapy session.

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Jabberwacky

Created in 1988, Jabberwacky attempted to stimulate natural human conversations entertainingly. Created by British programmer Rollo Carpenter, it used an AI technique called ‘contextual pattern matching.’

Rollo wanted Jabberwacky to be more of an entertainer and a companion than an assistant. He aimed to develop AI technology that could beat the Turing Test.

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A.L.I.C.E.

A.L.I.C.E. (Artificial Linguistic Internet Computer Entity) uses heuristic pattern matching to converse. Through Artificial Intelligence Markup Language (AIML), A.L.I.C.E. managed to have more human-sounding conversations. Developed in 1995, it served as Spike Jones’ muse for his critically acclaimed film ‘Her.’ It wasn’t able to pass the Turing Test.

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The new chatbots evolved from pattern recognition technologies to machine learning and other AI algorithms.

Due to this, they were able to learn from their interactions with humans. History took a whole new turn, with conversational chatbots beginning to display a new kind of intelligence.

Smarterchild

Smarterchild resided in the AOL IM and MSN Messenger lists of millions of people. It could do anything from holding a conversation to giving you stock quotes and sports scores. This helpful bot was the predecessor to all of the widely available virtual assistants that we know and love because of these capabilities.

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WATSON

5 years later, IBM came up with a chatbot that would compete on the TV show ‘Jeopardy!’. WATSON even ended up beating a couple of the show’s former champions. It demonstrated the power and potential that conversational agents hold.

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Virtual Assistants

The last decade gave us virtual assistants like Siri and Google Now. The world got chatbots that could perform tasks on behalf of their human users. From placing calls to setting reminders, even looking up the web, personal assistant chatbots can do it all. Amazon released Alexa in 2015.

Integrated into their Echo devices, Alexa holds voice interaction capabilities to perform tasks prompted by voice commands. However, Alexa’s voice capabilities are far from perfect.

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Messaging Platforms

2016 and 2017 were the years in which bots gained prominence on several messaging platforms. Facebook, WhatsApp, Twitter, Slack, Telegram, Kik, Teams, and several other messaging platforms allowed bots to interact with users over these platforms.

Therefore, it has become essential for businesses to meet their customers where they prefer to spend their time online. this sentence "As your chatbot gets a user's attention, it's easier to convert them and take them through the client onboarding process later.

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How do chatbots work?

It acts as an intermediary that imitates human conversations by initiating chats instantaneously and responding tirelessly to the user queries at any point in time.

All the working chatbots today are mainly based on this model:

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Knowledge Base/CMS

The knowledge base provides a real-time, personalized customer experience to engage and retain customers.

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NLP Layer

The Natural language Processing (NLP) layer consists of two systems; Natural Language Understanding (NLU), and Natural Language Generation (NLG). The NLU system analyzes the different aspects of the language. While the NLG system maps the given input in natural language into a useful representation.

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Data Store

To train your chatbot effectively, it needs data and AI. Chatbots using artificial intelligence learn from the queries and text that is provided. Training a chatbot is an ongoing process, so the data needs to be kept in a store for the chatbot to continue automated learning.

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Why businesses need to consider Chatbots

They’re available 24/7, affordable, fully customizable, and can facilitate any business. Here are a few reasons why businesses need to consider them.

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The benefits of chatbots

Here are the 4 benefits:

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They use machine learning to know people better. They are therefore able to offer a personalized experience to customers based on the information that they gather.

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They respond to customers’ demands faster than human agents can. Due to the way they’re programmed, their precision provides customers with the information they need. It accelerates communication which leads to an increase in the number of purchases made, your service delivery is faster, and this enhances the customer experience.  

Since they are machines, they don’t need breaks as humans do. They are alert 24/7 and are always working. Another advantage that the bots have is handling multiple requests and chats simultaneously without making a mistake.

P.S. Here’s our list of the 10 best chatbot features!

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Although it is impossible to replace humans with chatbots in customer service, some reports already show that they reduce the amount you spend on customer service by as much as 29%. It is also easier to develop than it is to create an app.

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Customer support Chatbots can work round the clock to provide quick and relevant responses to the customer’s queries. They tend to be able to solve a user’s problem much faster than an agent can. In a survey carried out in November 2017, 64% of 1000 US adults preferred getting help from a chatbot at any time of the day. 43% of them claimed that they resolved the complaints faster. 

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In an ideal world, customers demand immediate service, self-service options, and personalized care. They also prefer using a chat interface over a phone call or email.

Types of Chatbots

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They can be classified either based on the deployment platform or capability.

Based on the deployment platform, we have 3 types:

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When it comes to capability, we have: ‍

There are a couple of different ways that chatbots can be programmed.

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Rules-based chatbots

Rules-based chatbots (or linguistic-based) are an excellent tool for automating customer service for specific situations. The conversation is driven by the use of particular keywords or through suggested responses.

They use a basic form of Natural Language Processing. They create conversation flows using an if/then logic. It’s very much a black-and-white approach to conversing, so interactions are very structured. At best, these types of chatbots work as an interactive FAQ section.

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However, Rules-based Chatbots have their drawbacks 

They are best used for transactional interactions. It acts based on a set of defined rules. It’s a simple approach, to begin with, but it fails in handling more complex questions.

Variations of questions have to be inputted to understand what we’re trying to say. For example, a chatbot is trained to understand and answer the question, “Where’s my pizza?” But if a user were to ask a variation of this like, “When is my pizza arriving?” the bot will not understand the user’s intent unless it’s trained to do so.

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Menu-based chatbots

They are a variant of the rules-based chatbots, where instead of the customer typing information out, it’s presented as buttons. It’s a great tool to use when interactions are transactional. These bots can only automate situations that they have learned and are likely to arise.

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What are AI-powered chatbots?‍

An AI chatbot is trained to function more or less on its own, by using a process known as Natural Language Processing, combined with Artificial Intelligence (AI) and the annotation of human data.

AI chatbots get smarter over time.

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Advantages of AI-powered chatbot

Advanced chatbot capabilities

The capabilities of chatbots are endless. Unlike an agent, they have infinite patience (and memory). While an agent can feel frustrated interacting with a difficult customer, a chatbot can calmly resolve the issue to keep your agents at ease. 

Their memory capabilities are far more advanced than any human. Any detail fed to the chatbot can be used to deliver personalized interactions to your customers.

Here’s a list of some more advanced capabilities of a chatbot.

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How can industries benefit from chatbots?

Industries that need staff for performing repetitive processes are the best ones to utilize the benefits of a chatbot. Chatbots can benefit industries like marketing, sales, eCommerce, customer support, human resources, etc. In all practical ways, this allows a reduction in overhead expenses and increased efficiency.

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Applications of Chatbots

Here are some chatbot applications across a range of domains:

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Sales & Marketing

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Many organizations use chatbot technologies as a catalyst for brand communication, lead generation, and nurture warm leads.

Here are the key areas that chatbots can automate:

Engage and qualify leads

Use your chatbots to show website visitors a simple prompt – like “Let us know if you have any questions” – or even a welcome video to open up the door for conversation. Bots can then ask further questions to collect basic qualification details like email and company size.

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Send high-intent leads directly to sales

Visitors who spend minutes on your pricing page or click the “Get more info” button likely show interest in your product. Use your chatbot to qualify instantly and schedule a call with your sales team.

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Nurture and upsell users

If you offer free trials, bots can help users who haven’t completed their setup and check in with people whose trials are about to end. For customers, let them know about new features and connect them to the Sales reps if they’re interested in upgrading.

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Entertainment

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The news and media publishing companies have been using chatbots to share their content based on customer needs.

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Healthcare

We need to integrate healthcare chatbots with e-health records to start with the basic patient data. With time, they can use the data to provide patient information. Determining basic symptoms and matching them with known ailments is also something that the bots will become good at, with time.

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Availability round-the-clock

Healthcare Chatbots are available 24/7 and are dedicated to assisting patients through their recovery. This chatbot can help you in tasks such as reminding you about your medicines, provide medical information, give you tips, and monitor your overall well-being.
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Builds a rapport with the patients and provides assistance

Imagine one of your patients has fallen ill but can’t describe what they’re feeling. What would they do? They’d start by looking up their symptoms online, and you know how that turns out. They would most likely land on a page that scares them further and stresses them out even more. 

Now, imagine another situation where this patient had an assistant that walks through their symptoms in real-time. This assistant could also help with appointment booking, finding a doctor, and more. That’s precisely why your patients need a health bot!

When a patient visits your website, your chatbot needs to give them a warm greeting and help them through the symptoms, predict potential diagnosis, and provide them the option of booking an appointment with you directly.
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Schedule appointments

Chatbots can help patients book appointments directly from your website chatbot. Not just that, they can also assign a relevant doctor to your patient, send the doctor an email with patient information and create a slot in both the patient as well as the doctor's calendar.

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Automobile Industry

The industry is very customer-centric and is based on queries ranging from basic to important.

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eCommerce

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Customers expect lightning-fast responses and want the purchase process to be quick and seamless. Moreover, the surge in mobile eCommerce has raised the bar as organizations need to accommodate higher volumes of traffic. Chatbots allow businesses to attract clients one-on-one that too in a personalized manner.

Provides personalized suggestions

AI chatbots remember the past interactions of the users and use them further to customize future conversations. Moreover, bots can keep the focus on customers while promoting the products or services.

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Records real-time interactions

AI chatbots enable e-commerce businesses to get hands-on real-time user interaction. They can analyze information to improve the services as per the user input. The instant access to critical data reduces the operation cost and maximizes a business’s efficiency and functioning.

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Eases customer executives

As chatbots can handle 80% of the repeated queries of the customer, they can help customer care executives keep the locus of support to solve complex queries. By addressing complex queries with priority, you can win more customers while reducing the operation cost.
 Allows customers to browse and compare products with ease

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Insurance

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Insurance companies have been able to uplift their services, communication, efficiency, and customer support by incorporating insurance chatbots into their workflows.

Process claims faster

As part of efforts to make claims smoother for policyholders, chatbots can help out in processing claims. The chatbot will then pass on that information to an agent for further processing.

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Help in finding the right insurance policy

Chatbots assist clients in choosing the right insurance policy by collecting large amounts of data.

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Manage claims and renewals 

Healthcare or employee-initiated policyholders are always eager with their claims. With the help of chatbots, they can check their coverages, file for a claim, track status, and assist in the renewal process also. 

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Build an AI chatbot to engage your always-on customers

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Future of chatbots

Despite always being connected to the internet, GenZ is considered the loneliest generation yet. Keeping this in mind, it is highly likely that we will soon be seeing chatbots that have Emotional Intelligence. These bots could judge the user's emotion and respond in a way that is sensitive to user's state of mind, performing sentiment analysis in the process.

AI is the future. We’re going to be seeing bots that sound more human as time passes. Someday, we may even get bots that are indistinguishable from humans, even though that’s a long time from now, but that’s where we’re headed!

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Organizations will be integrating chatbots into their business processes to a much greater extent. A trend that we expect to be seeing is the growth of on-premise chatbots. These are bots that exist on the physical premises of the organization rather than on the Cloud. These are usually located within the organizations’ servers and data centers. With the benefits of increased security and control, many organizations are expected to opt for on-premise chatbots.

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Chatbot maturity cycle

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Level 1 - Rules-based interactions

At this level, the chatbot is essentially a traditional notification assistant; it can answer a question with a pre-built response. It can send you notifications about certain events or reminders about things in which you’ve explicitly expressed interest. For instance, a level 1 travel bot can provide a link to book travel.

Level 2 - Configured machine learning

At level 2, the chatbot can answer FAQs but is also capable of handling some follow-ups. It has the knowledge to respond to some unexpected user utterances and is accessible across different channels- offering a multi-channel experience. For instance, a travel bot will be able to walk you through a few popular destinations and make the necessary travel arrangements.

Level 3 - Self-learning AI

At level 3, the chatbot begins to understand the context. It remembers your preferences and can offer personalized and contextual recommendations. For instance, the chatbot would proactively reach out to book your ride after you’ve landed.

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How to create a chatbot?

If you are wondering, is it easy to create a chatbot?

The answer is YES!

You can use Engati to create a chatbot as per your needs and specifications. Create bots in under 10 minutes with no coding or programming requirements. Integrations are also possible with your e-commerce website, apps, Slack, Telegram, WhatsApp, Facebook Messenger, and more.

You can either build a bot from scratch or choose from 200+ bot templates that highlight multiple use-cases or even ask our experts to create a chatbot for you!

Incorporating Machine Learning and Natural Language Process programs into the platform, which are the key aspects, leaves you with only creating the conversational flow and the tasks you want the chatbot to perform.

Thus, designing these bots is as simple as dragging and dropping from a set of pre-defined functionalities, coupled with good scope to modify and customize them for your specific business objectives.

Hence, businesses are opting for chatbot platforms to build bots faster and with ease and because it contains many benefits.‍ Despite how easy it is to create a chatbot using our platform, consider implementing our 7-step conversational design process.

It’s hard to define the end goal of your conversational flows without a target audience in mind. So ask yourself, who is going to use your chatbot? What kind of questions would they have for your chatbot? What tasks do they want to accomplish through the chatbot? 

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The next step to writing your conversational flow is to determine your chatbot’s purpose.

What does it do for your customers? Does it assist them with their purchases, or is it the equivalent of a greeter?

How much effort will it take? Will it regularly send reminders to users or pop up now and then to celebrate when they meet a goal? Determine its goals before moving to the next step.

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Step into your audience’s shoes and think about how you would converse with them. Write it down like it’s a script and implement your voice into your chatbot. 

Your persona will help you determine the tone, writing style, maturity, and politeness you’ll use in your writing.

In messaging, replies are short. Poorly written chatbots send walls of text with an overload of information, but real conversations don’t work this way. Chatbot replies should generally be brief and cut to the chase. 

Write your script in fragments to stay organized and make brainstorming easier. An easy way to do this is by creating a conversation diagram.

The elements you may use in a chatbot conversation are:

You can also include visual elements such as carousels, GIFs, emojis, pictures, or videos.

Remember to keep your customer’s journey in mind when you map out your conversation elements and diagram. What kind of experience do you want to create? Will interactions be quick and professional or conversational and casual?

You can create diagrams and flowcharts for multiple conversation types. Using simple boxes and arrows, map out a greeting or two, potential user responses, chatbot answers, among others. If you have live chat, you can look through your transcripts to find frequently asked questions for your chatbot to answer.

Once you have your material on deck, you can start labeling your diagram boxes or nodes. Give them simple names like “New user greeting,” “Returning user greeting,” etc.

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Now that you have a structure to work with, you can start writing conversation scenarios. Depending on your bot’s purpose, you may have to create iterations for each situation.

The trick is to keep messages short — hence the nodes. First, step into your customer’s shoes and picture what they’d like to hear and what tasks they’d like to accomplish. Then step into your shoes and solve for how you’d like to help them.

Remember to keep the pacing in mind. Even though you can’t draw pauses, consider them when writing your elements. A conversation with a therapy bot may move slower than a shopping assistant bot.

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Great. We've got all the pieces of the puzzle. Now, all we have left is to assemble them. Easy peasy!

Not quite.

Designing the actual conversation flows is a time-consuming process. After completing your first draft, start creating variations. Your customers don’t want to have deja-vu every time they talk to your chatbot. Make it more human with iterations.

Then observe. Note what you’ve missed, and find the dead-ends. If your customers get lost during a conversation, how do you get them back on track towards their goal?

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Designing conversation flows can get intense quite quickly. 

As you write and rewrite your script, we recommend reading it out loud to yourself. Hearing your writing makes it easier to spot errors or awkward moments.

You can also use a platform, like Engati, that lets you create and test your chatbot. Interact with your bot in real-time to get an idea of its flow. It’s like seeing a play performed on stage versus just reading the script. The pacing and delivery make the words come alive.

How to build a chatbot with Engati?

Now that you’ve designed your conversational flows, you’re ready to implement your plan. The best way to get started is by building your chatbot on Engati. You can register for free and get started in a couple of mins.

Once you’ve registered, you have to follow these simple steps-

You can also watch this complete step-by-step tutorial on getting started with Engati!

Build a chatbot with the rich capabilities that we offer!

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We offer some of the best features out there for you to build and customize your chatbot. Here’s a short preview for you:

Engati chatbot deployment channels

We also support deployment for channels such as:

All you have to do is select your channels from the channel deployment menu, and you’re set! 

And if you’ve already deployed your chatbot and would like to deploy it on additional channels, simply select Channels from the Configure menu and select your channel of choice.

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Engati Integrations for your chatbot

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Salesforce

Salesforce integration offers capabilities for recording leads, service tickets, and inquiry functions.

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Zendesk

You can now integrate your Zendesk account and enable your customers to:

Google Calendar Integration

Bypass the time-consuming back-and-forth with your clients for appointment bookings. Engati integrates with Google Calendar for enabling your customers and prospects to book meetings straight into your calendar through your chatbot.

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Google Sheets Integration

Enable Google Sheets Integration on your bot to store user-generated data in a Google sheet. It helps you focus on lead generation, customer service, and support, etc.

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SMS Integration

Send SMS node enables your bot builders to send instant notifications to your customers’ mobile phones. This functionality will also allow bot creators to send SMS to multiple numbers at once, depending on their service provider.

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JSON API 

The capabilities of any chatbot can be significantly enhanced by having it integrated with other systems and applications. The typical use cases include – 

Zapier Integration

Automate tasks and increase your team’s productivity within minutes. With Zapier, you can integrate 1,000+ applications to your bot to simplify customer journeys.

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Social Media Integration

Integrate your chatbot across multiple social media channels to build a solid brand personality, generate quality leads, capture user data, retain customers, and improve customer engagement.

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Let's build your first AI Chatbot today!

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Are chatbots here to stay?

Chatbots are weaving their way into our personal lives. They’re already embedded into our phones, laptops, watches, among other devices and as devices get smarter, chatbots will too. But this circles back to our first question- why? Why are chatbots finding a way into our lives? 

The answer is simple. It’s to make our lives easier. There is less effort involved in interacting with a conversational user interface.

We wish you luck on your journey of diving into the world of AI and chatbots. If you’d like to ride the automation wave and explore further, register with Engati here.

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FAQs‍

How much time does it take to build a chatbot?

The average time required to build a chatbot system could range from a few mins to maximum few hours. You can get started with pre-designed templates and customize them as per your requirements!

Are chatbots successful?

The success of chatbots is the impact it’s creating on customer experience. Chatbots help the business to provide overwhelming customer service which pushes more and more companies to try them.

How effective are Chatbots?

As per IBM's research, chatbots can successfully answer up to 80% of routine questions without human intervention. In addition, the capacity to manage multiple customers at once makes the chatbot a better choice when compared to a human. Chatbots can increase operational efficiency in your sales, marketing, and customer support teams.

Do Chatbots increase sales?

When used smartly, chatbots will improve your revenue significantly. They not only help in lead generation & sales but also play an important role in customer support and nurturing. They provide omnichannel support to your customers throughout the entire journey.

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Register & build your chatbot now!