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

Engati Team
.
Aug 20
.
10-12 mins

Table of contents

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What are Chatbots?

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. But you’ve probably had a very vague understanding of chatbots, which might have left you wondering - “what exactly are chatbots?”

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.”

A chatbot is a software program that can hold a conversation with a human user. They essentially automate one-to-one conversations. But don’t be fooled into thinking that all they do is talk. They can do everything from turning your lights on to advising you on what investments you should be making.

For example, 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 may have 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.

How do chatbots work?

Chatbot acts as an intermediary that imitates human conversations by initiating chats instantaneously and responding tirelessly to the user queries at any point in time. Chatbots correspond to the backend system, retrieve required data from data storage and knowledge base in real-time, and answer back to the raised queries after processing the data through NLP algorithms. 

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

How chatbots work

Knowledge Base/CMS

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

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.

Data Store

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 the advantages of Chatbots?

Source: AI Multiple

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 personalized experiences

2. They're faster and more accurate

3. They work round the clock

4. They're economical

5. They provide a better experience for customers

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What are the different types of Chatbots? 

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

Based on the deployment platform, we have 3 types:

  • Those built into messengers
  • Those that use standalone applications
  • Those deployed over a website.


There are 6 other ‍chatbots based on their capabilities;

1. Rules-based chatbots

How Rules based chatbots work
www.engati.com/blog/benefits-of-chatbots

2. Menu-based chatbots

3. Keyword recognition-based chatbots

4. Machine Learning chatbots

5. The hybrid model

6. Voice bots

How can businesses benefit from chatbots?

benefits from chatbot


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.

Industries that will benefit the most from chatbots
Who benefits from chatbots the most?


The latest technology is changing the landscape and dynamic of the business world and eradicating the distance between business and consumers. With conversational chatbots, customers can connect and engage with their favorite brands at their fingertips. Following are the ways Let's discuss how chatbots can benefit businesses across different functions and processes. 

Benefits of Chatbots


1. Handle multiple customers at the same time

2. Personalize conversations with your customers

3. Collect data and customer insight

4. Make brand/ business available 24/7

5. Reduce average resolution time

6. Proactive support and educating customers

7. Automate processes like marketing, human resources, and promotions

8. Broadcast communication, offers, and updates

9. Connect with an international audience with multiple languages

10. Easy deployment on websites and apps

11. Integrate software and business tools


Chatbots are used across industries and businesses to automate different functions and processes, allowing concerned teams to focus on the core elements of their businesses. Chatbots can do more than mere engagements, from generating leads to updating customers about their orders, raising tickets, booking appointments, and much more.


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.


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%. 


3. Garasi

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


Channels Engati supports

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:

  • WhatsApp
  • Facebook
  • Telegram
  • WeChat
  • 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. 

Salesforce
Zendesk
Google Calendar Integration‍
Google Sheets Integration
SMS Integration
JSON API 
Zapier 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:

Chatbots of the future



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.

3x your revenue with Chatbots and Live Chat
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Engati Team

At the forefront for digital customer experience, Engati helps you reimagine the customer journey through engagement-first solutions, spanning automation and live chat.

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