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, as is the fuction of any good 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!
What are Chatbots?
“A chatbot is a type of software that can help businesses to automate customer conversations and interact with them through different messaging platforms.”
Chatbots are software programs designed to automate conversations with customers through messaging platforms. For example, imagine you're on WhatsApp making plans with a friend and need to know IKEA's opening hours. Instead of switching tabs to search for it, you can use the IKEA chatbot deployed on WhatsApp to quickly get the information you need.
Today, chatbots can communicate through various messaging platforms, including Facebook Messenger, Twitter, Slack, and others, and have evolved to become more sophisticated with advanced capabilities. With the help of AI and Natural Language Processing (NLP), chatbots can understand and respond to customer inquiries, provide personalised recommendations, and even complete transactions. Some chatbots can also be integrated with voice assistants like Amazon Alexa or Google Assistant, making them even more versatile in their capabilities. As a result, chatbots have become an essential tool for businesses to improve customer service, increase sales, and enhance the overall customer experience.
Yet what you see are just the basics of what chatbots really do for a business. In this blog, we will uncover all the mysteries of the wonders chatbots can do for your business - What are chatbots? Where do they come from? Does chatbot software use AI? Is conversational AI the future of business? And a lot more. So prepare to be amazed at how much technology has grown.
What is the purpose of the chatbot for businesses?
A business chatbot is like a digital assistant that can communicate with customers and help them with various tasks or answer their questions through messaging platforms like Facebook Messenger, WhatsApp, or Slack. Its purpose is to save time and provide 24/7 support, making it an excellent tool for businesses to improve customer satisfaction and engagement. Plus, with advancements in AI and natural language processing, chatbots are becoming even more capable and intelligent.
How do chatbots work?
Chatbots are computer programs that talk to people through text, voice, or other modes of communication. They work by processing what a person says or types, then figuring out what the person wants and how to respond. Chatbots use natural language processing (NLP) to understand human language and then generate a response that sounds like a human is talking.
There are two main types of chatbots: rule-based and machine learning-based. Rule-based chatbots follow a set of pre-defined rules to determine how to respond to a user's input. Machine learning-based chatbots, on the other hand, learn from data and improve their responses over time. They use complex algorithms and statistical models to understand human language and then generate a response that is appropriate for the conversation.
Overall, chatbots are becoming increasingly common and can be found in a variety of settings, from customer service, marketing, sales to personal assistant applications. They allow people to communicate with computers in a more natural way and can help automate many routine tasks. As technology continues to advance, chatbots are likely to become even more sophisticated and useful in our daily lives.
All the working chatbots today are mainly based on this model:
The knowledge base provides a real-time, personalized customer experience to engage and retain customers.
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.
To train your chatbot effectively, it needs data and AI. Chatbots use artificial intelligence to 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.
What are Natural Language Understanding and Natural Language Generation?
Natural Language Understanding (NLU) and Natural Language Generation (NLG) are two subfields of artificial intelligence and natural language processing that enable machines to interact with humans more intelligently and naturally.
Natural Language Understanding involves the processing of human language data to derive meaning and context from it, while NLG involves the use of algorithms and software to automatically generate human-like text or speech from structured data or other input sources.
For example, consider a virtual assistant like Siri or Alexa. NLU helps the virtual assistant understand user queries by parsing and analysing the grammatical structure of the sentence and deriving its meaning. Once the meaning is understood, the virtual assistant uses NLG to generate a response that is grammatically correct, fluent, and contextually appropriate.
NLG uses pre-defined templates, language rules, and machine learning algorithms to generate text that sounds like it was written by a human. NLU and NLG work together to create more natural and intuitive interactions between humans and machines, allowing for more sophisticated and personalised experiences.
Is ChatGPT a chatbot? Whats the difference?
Yes, ChatGPT is a chatbot. The main difference between ChatGPT and other chatbots is that ChatGPT is an AI language model, whereas a chatbot is a software application designed to mimic human conversation.
One key difference between ChatGPT and chatbots is that ChatGPT can generate responses based on its training data and past interactions, whereas chatbots typically follow pre-programmed scripts or decision trees.
However, both ChatGPT and chatbots require training to improve their ability to understand and respond to user inputs. Chatbots can be trained either manually or using advanced technologies like GPT-4, which can learn from vast amounts of data to generate more natural and nuanced responses.
So, while ChatGPT and chatbots may seem similar on the surface, there are important differences in their capabilities and the ways they are trained to interact with users.
What are the Benefits of Chatbots?
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.
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.
56% of people prefer to message than speaking to customer service.
- Microsoft report on future of chatbots
1. They provide customers with personalised experiences
With advanced machine learning and AI technologies, chatbots can analyze vast amounts of customer data, enabling them to deliver tailored and personalized experiences to each customer. This level of personalization can help build stronger customer relationships, increase engagement, and drive sales.
2. They're faster and accurate
Chatbots are lightning-fast and accurate in providing responses to customer inquiries, which can save customers a lot of time and frustration. With chatbots, customers no longer have to wait on hold for an agent to become available or deal with a long wait time to get a response. Plus, chatbots can handle multiple inquiries at the same time, which means that customers don't have to wait in a queue to get their questions answered.
3. They work round the clock
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. This 24/7 availability is especially helpful for customers who need assistance outside of regular business hours. Chatbots are like your own personal customer service representative that's available to you anytime, anywhere.
P.S. Here’s our list of the 10 best chatbot features!
4. They're economical
Although it is impossible to replace humans with chatbots in customer service, some reports already show that implementing chatbots can be a more cost-effective solution for businesses than hiring additional employees. With chatbots, businesses can handle a large volume of inquiries without requiring additional staffing costs. Plus, chatbots are self updating and can handle a wide range of tasks, from answering basic inquiries to more complex issues, which can save businesses a lot of money in the long run.
5. They provide a better experience for customers
Chatbots can help businesses provide a better customer experience by providing quick and accurate responses to inquiries. When customers receive a fast and accurate response, they feel heard and valued, which can lead to a more positive experience. Plus, chatbots can help customers make purchasing decisions, which can lead to increased sales. In fact, 95% of consumers believe customer support’ will benefit the most from chatbots.
6. Customers just love chatbots!
Customers love chatbots! They offer a quick and convenient way to get assistance with their inquiries, without having to navigate complicated phone menus or wait on hold. Plus, chatbots can provide a more immediate and personalized experience that feels like a conversation, making customers feel more comfortable and at ease.
7. They help with scaling
Chatbots can easily scale up or down depending on the volume of customer inquiries. If a business experiences a sudden surge in customer inquiries, chatbots can handle the increased volume without requiring additional staff. This scalability allows businesses to provide consistent customer service, regardless of the demand.
What are the different types of Chatbots?
There are many types of chatbots but we will be mentioning the six main types, classified based on the deployment platform and capability.
These chatbots are like rule-following students who can only answer questions that they've been specifically taught. While they're not the most creative, they can be effective at handling simple tasks and providing quick answers.
These chatbots are like smart students who can learn from their experiences and improve their responses over time. They're great at handling complex queries and can provide more personalised responses.
These chatbots are like personal assistants who can help you with specific tasks, like scheduling appointments or setting reminders. They can be accessed through various interfaces, making them easy to use.
Social media chatbots
These chatbots are like social butterflies who love interacting with users through messaging apps. They can be used for a variety of purposes, including customer service, lead generation, and marketing.
These chatbots are like personal assistants who can be controlled through voice commands. They're commonly found in smart speakers like Amazon Echo or Google Home and can provide users with a range of services, like weather updates, news briefings, and personalised recommendations.
These chatbots are like multi-talented individuals who combine rule-based and AI-powered technologies to provide accurate and personalised responses to user inputs. They can be particularly effective for handling complex queries and providing personalized recommendations.
Chatbots vs. AI chatbots vs. virtual agents
Chatbots, AI chatbots, and virtual agents all use chat interfaces to interact with customers, but they differ in their capabilities and sophistication.
Chatbots use predefined rules and scripts to simulate human conversation, making them limited to a set of pre-determined answers.
AI chatbots use artificial intelligence and machine learning to understand natural language and improve their responses over time, making them more effective than rule-based chatbots.
Virtual agents take this a step further, using sophisticated machine learning algorithms and natural language processing to simulate human-like conversations and provide a more seamless customer experience.
In industries like customer service, where providing a seamless, human-like experience can be the key to success, virtual agents' advanced capabilities are especially important. By recognising and responding to natural language, they can make interactions feel more personal and less frustrating, improving customer satisfaction and loyalty, ultimately contributing to the success of a business.
Industries that need staff for performing repetitive processes are the best ones to utilise 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.
What are the most common uses and application of chatbots in 2023?
Here are some chatbot applications across a range of domains:
1. Customer service
Chatbots can be used to handle customer queries and provide support 24/7, reducing the need for human customer service representatives. They can provide instant responses to frequently asked questions and help customers navigate through a company's products or services. They can also be used to handle customer complaints and provide personalized solutions to customers. Use-cases can include:
Quick and instant responses: Chatbots provide quick and instant responses to customer queries, improving customer satisfaction and loyalty.
Multilingual support: Chatbots can be programmed to support multiple languages, making them ideal for businesses with a global customer base.
Reduced workload: Chatbots help reduce the workload of human customer service representatives, allowing them to focus on more complex customer issues.
Click here to know more about Customer service chatbots.
2. Sales and marketing
Businesses can leverage chatbots to engage and reach out to their audience, gather feedback, and conduct surveys. Chatbots are versatile and can be utilized for a variety of purposes, including product or service promotion, personalized recommendations, and coupon or discount offers. Furthermore, they can facilitate the collection of customer feedback, enabling businesses to enhance and improve their offerings. Use-cases can include:
Personalised recommendations: Chatbots can analyze a customer's browsing history and purchase behavior to provide personalized product recommendations.
Increased engagement: Chatbots can increase customer engagement by providing interactive experiences, such as quizzes or games.
Improved lead generation: Chatbots can be used to capture leads and qualify them based on predefined criteria, making lead generation more efficient.
3. Lead generation
Chatbots can assist with lead generation by capturing leads and qualifying them based on predefined criteria. They can be programmed to ask qualifying questions and provide customers with personalized recommendations based on their answers. Use-cases can include:
Increased lead volume: Chatbots can capture leads 24/7, increasing the volume of leads generated by a business.
Improved lead quality: Chatbots can ask qualifying questions to ensure that the leads generated are high-quality and more likely to convert.
Cost-effective: Chatbots are more cost-effective than human representatives, reducing the cost of lead generation for businesses.
4. Personal assistance
By assisting customers in managing their finances, chatbots can check account balances, transfer funds, and open new accounts, while also providing personalized advice on savings, investments, and debt management by analyzing customer financial data. Additionally, chatbots enhance customer security by detecting and preventing fraudulent transactions and offer 24/7 support, which reduces waiting times and increases customer satisfaction. Use-casescan include:
Convenience: Chatbots can provide users with a convenient way to complete tasks without having to leave their messaging platform.
Personalised recommendations: Chatbots work by analysing a user's preferences and behavior to provide personalized recommendations.
Time-saving: Chatbots can save users time by automating tasks that would otherwise require manual input.
Chatbots can help patients book appointments, provide medical advice, and answer common health questions. They can be programmed to provide patients with medical information, remind them to take their medication, and even monitor their symptoms.Use-cases can include:
Improved accessibility: Chatbots can provide patients with instant access to medical information and advice.
24/7 support: Chatbots can be available 24/7, providing patients with support outside of regular business hours.
Reduced workload: Chatbots can reduce the workload of medical professionals, allowing them to focus on more complex medical issues.
Click here to know more about healthcare chatbots.
Chatbots can be used to help students with their studies, provide personalized learning recommendations, and even answer homework questions. They can be programmed to provide students with study resources, help them with test preparation, and even grade their assignments. Subpointers can include:
Personalised learning: Chatbots can analyze a student's learning style and behavior to provide personalized learning recommendations.
Increased engagement: Chatbots can increase student engagement by providing interactive learning experiences, such as quizzes or games.
Time-saving: Chatbots can save teachers time by automating tasks such as grading assignments, allowing them to focus on teaching and providing personalized feedback.
Click here know more about education chatbots.
Chatbots have the ability to offer users entertainment, which may include playing games, telling jokes, or providing personalized recommendations for movies or TV shows. Additionally, they can be used to connect users with others who have similar interests, serving a social purpose. Use-cases can include:
Personalised recommendations: Chatbots can analyse a user's preferences and behavior to provide personalized entertainment recommendations.
Interactive experiences: Chatbots can provide users with interactive experiences, such as playing games or telling stories.
Social connection: Chatbots connect users with others who have similar interests, promoting social connection and community.
Chatbots can help customers find products, track orders, and make purchases. Chatbots can analyze a customer's browsing history and behavior to provide personalised product recommendations, increasing the chances of a sale. They can also provide customers with real-time updates on their order status, reducing the need for them to contact customer support. Additionally, chatbots can guide customers through the checkout process, reducing cart abandonment rates and increasing sales. Use-cases can include:
Product recommendations: Chatbots can analyse a customer's browsing history and behavior to provide personalized product recommendations, increasing the chances of a sale.
Order tracking: Chatbots can provide customers with real-time updates on their order status, reducing the need for them to contact customer support.
Simplified checkout process: Chatbots can guide customers through the checkout process, reducing cart abandonment rates and increasing sales.
Click here know more about ecommerce chatbots.
9. Banking and finance
Providing assistance with banking needs is one of the ways chatbots can be of help. Customers can check account balances, transfer funds, and even open new accounts with the help of chatbots. Besides these, chatbots can provide personalized financial advice by analyzing customers' financial data, offering advice on savings, investments, and debt management. Customers are also safeguarded against fraudulent transactions by chatbots, which provide an extra layer of security. Chatbots can offer support round the clock, reducing wait times and boosting customer satisfaction.Use-cases can include:
Personalised financial advice: Chatbots have the ability to examine a customer's financial information and offer customized guidance on how to manage their savings, investments, and debt.
Fraud prevention: Chatbots can detect and prevent fraudulent transactions, providing an added layer of security for customers.
24/7 support: Chatbots can provide support around the clock, reducing wait times and improving customer satisfaction.
Click here to know more about Banking Chatbots.
Chatbots can revolutionize the real estate industry by assisting customers in finding properties, answering their queries, and making the buying and selling process seamless. They can provide personalized property recommendations based on the customer's search history and behavior, increasing the chances of a successful sale. Some use-cases of chatbots in real estate are:
Property recommendations: Chatbots can analyze a customer's search history and preferences to provide personalized property recommendations. For example, if a customer has been searching for a specific type of property or location, chatbots can suggest similar properties that match their preferences.
Answering queries: Chatbots can provide real-time answers to customers' questions regarding property details, pricing, location, and more. This reduces the need for customers to contact customer support or agents, leading to faster responses and increased customer satisfaction.
Simplified property search process: Chatbots can guide customers through the property search process by asking relevant questions such as location, budget, property type, and amenities. This reduces the time and effort required by customers to find the right property.
Real-time updates: Chatbots can provide customers with real-time updates on the status of their property transactions, including offers, contracts, and payments. This reduces the need for customers to contact agents or customer support and increases transparency in the buying and selling process.
Click here know more about Real-estate chatbots
11. Social media
Chatbots can be used to automate social media engagement, respond to messages and comments, and provide personalized recommendations. Chatbots can respond to customer inquiries and complaints, providing quick and efficient support. They can also distribute content such as articles, videos, or promotions to followers, increasing engagement and driving traffic to a website or landing page. Additionally, chatbots can analyze a user's behavior and preferences to provide personalized recommendations for content or products. Use-cases can include:
Customer service: Chatbots can respond to customer inquiries and complaints, providing quick and efficient support.
Content distribution: Chatbots can distribute content such as articles, videos, or promotions to followers, increasing engagement and driving traffic to a website or landing page.
Personalised recommendations: Chatbots can analyze a user's behavior and preferences to provide personalized recommendations for content or products.
What are the must-have features for Chatbot?
Following are the 10 must-have features that can change the mechanism of business functions and help increase customer success.
1. Easy customization
2. Emotional intelligence
3. Quick chatbot training
4. Easy omnichannel deployment
5. Integration with 3rd-party apps
6. Interactive flow builder
7. Multilingual conversations
8. Easy live chat
9. Robust API
10. Security & privacy
Here's a reference article to learn about all the chatbot features in detail.
A Guide to Chatbot Terminology
What are the use cases and examples of Chatbots?
1. Tokio Marines Nichido Fire Insurance
The multichannel solution optimizes processes by providing insurance policy quotes, tracking claims, and renewing requests online. It also serves clients by answering FAQs round the clock, effectively working as a stream for lead generation.
2. Cabinet UK
Cabinet UK wanted to encourage and engage students to take up STEM projects. They were able to create workflows in no time
and deployed it on their website for students and increased the engagement rate by 43.5%.
With the huge inflow of repetitive queries coming, it was difficult to scale and attend to these customers in real-time. With Engati’s
extensible integrations, the bot was able to fetch the contact
numbers from the database and reply to the customers, and achieved a 77% reduction in response time.
4. Mall of Emirates
Enhancing customer engagement and retention rate was becoming increasingly difficult due to the high volume of incoming customer queries. After deploying the WhatsApp chatbot solution, they've increased customer retention and reduced response time.
How to build a chatbot with Engati?
Once you’ve registered, you have to follow these simple steps-
Step 1: Select the Create a Bot button on the portal’s homepage.
Step 2: Give your chatbot a name, a description, and assign a category.
Step 3: Then you’ll be presented with a library of our templates. You can either browse through and select the one that suits your use case or click Skip and build the chatbot from scratch.
Step 4: Next is channel setup. Here, you can customize your chat window for web chat and select which channels you’d like to deploy the chatbot. Then click Next for the live chat menu.
Step 5: If you’d like to support your chatbot with live chat, enable it in this menu.
Step 6: The conversational intelligence step will allow for quick FAQ set up and customizing the welcome path for your bot.
Step 7: Finally, review all changes, and your bot is ready to be deployed!
You can also watch this complete step-by-step tutorial on getting started with Engati!
How do Engati integrations and deployment help?
Engati chatbot deployment channels
Customers are omnipresent. They interact, engage, and communicate with brands and seek instant answers to their queries. It is over the odds to lose out on customers across digital platforms who can bring potential value to a company. Engati provides easy deployment of chatbots across multiple digital platforms to stay connected with all your customers.
We also support deployment for channels such as:
- Website and native mobile applications
- And more
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.
The same Engati chatbot could serve as a social media chatbot, a website chatbot, and much more - create your bot once and deploy it across all your channels.
Engati Integrations for your chatbot
With a robust, flexible integration platform, you can easily integrate data flowing from multiple sources, whether it's on-premise or on the cloud. Engati provides easy integration with the following platforms.
Google Calendar Integration
Google Sheets Integration
Social Media Integration
Why Chatbots are the future?
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 the 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!
Here’s a quick infographic that could help you understand why chatbots are the future:
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.