What is a Chatbot?

Chatbot is a software application designed to replicate human conversation. The bot employs pre-established rules to simulate real-life interactions and respond to customer inquiries promptly.

What is a chatbot?

Chatbot is an automated program that operates as a valuable tool to enhance customer convenience. It interacts with users in a manner similar to human conversation. What sets them apart is their cost-effectiveness. They require little to no expense for engagement. Thus making them a practical and efficient solution for various customer interactions.

How do chatbots work?

Chatbots primarily fall into two categories: rule-based chatbots and AI chatbots.

01. Rule-based chatbots

Rule-based chatbots generate responses based on a predefined set of rules. These rules are established by their developers. These bots typically analyse input, whether it be text or speech, for specific keywords. Then, they generate responses based on these identified keywords.

For instance, if a user informs a rule-based chatbot, "I'm really excited for the upcoming basketball game," the bot may recognise keywords like 'basketball' and 'game' and reply with a prompt such as, "Tell me your favourite sports team."

While rule-based chatbots operate on a straightforward set of rules, they often prove effective enough to successfully navigate basic interactions. And even pass the Turing test* in many instances. However, for more in-depth conversations, AI chatbots tend to provide a more convincing experience.

*The Turing test was devised by renowned computer scientist Alan Turing. The test assesses a machine's ability to exhibit human-like behaviour. If a human cannot discern whether they are interacting with a human or a machine, the machine is considered to have passed the Turing test.

02. AI chatbots

An AI chatbot uses machine learning to enhance its capabilities through interactions with users. Unlike rule-based chatbots that rely on keywords, AI chatbots are crafted to comprehend language intricacies.

The power of AI chatbots lies in their ability to simulate realistic human conversations more effectively. However, designing and managing AI chatbots poses significantly greater challenges. Additionally, the costs are significantly higher.

Furthermore, design flaws in these bots can result in unexpected and undesirable behaviours. A notable instance is Microsoft's 'Tay,' an AI chatbot introduced on Twitter in 2016. Unfortunately, within 24 hours of its launch, Tay began producing offensive and inflammatory comments. The comments were partially influenced by a few Twitter users who quickly learned how to manipulate the bot's behaviour.

Why is a chatbot important?

Chatbots enhance operational efficiency and cost-effectiveness for businesses. Also delivers convenience and additional services to both internal employees and external customers. They streamline the resolution of various customer queries and issues. It also diminishes the dependence on human interaction.

The versatility of chatbots enables businesses to scale, personalise, and proactively engage with customers simultaneously. Plus, it serves as a significant differentiator.

With the ability to interact personally with an unlimited number of customers, chatbots can be flexibly adjusted. It can be adjusted based on demand and business requirements. Utilising chatbots enables businesses to deliver humanlike, personalised, and proactive services to a vast audience simultaneously.

01. Cost-effective and improves operational efficiency.

Operating a customer support centre around the clock is an expensive task. Moreover, addressing repetitive queries and ensuring consistent training for such responses also incurs significant costs. Today, outsourcing these functions to overseas enterprises is an option. But it comes with its own set of expenses. Often, this diminishes control over a brand's customer interactions.

In contrast, a chatbot can efficiently handle inquiries 24/7. It serves as a valuable initial support line. It supplements human assistance during peak periods and handles monotonous, repetitive questions. This enables human agents to concentrate on more complex issues.

By leveraging chatbots, businesses can decrease their reliance on human assistance. They can enhance their ability to scale up staff efficiently. Primarily, to meet heightened demand or address requests during off-hours.

02. Achieve customer engagement and loyalty.

Before the era of chatbots, addressing customer questions, concerns, or complaints, regardless of their significance, required human intervention.

Customer issues could emerge during off-hours, weekends, or holidays, requiring timely responses. However, maintaining customer service staff is difficult. Especially, managing them around the clock to meet unpredictable demands proves to be a costly and challenging task.

Today, chatbots offer a solution by consistently managing customer interactions 24/7. It also enhances the quality of responses and minimises costs. These automated systems streamline workflows, liberating employees from mundane, repetitive tasks.

Additionally, chatbots play a crucial role in reducing wait times for phone-based customer support. It also addresses delays in email, chat, and web-based support. Since they are instantly available to multiple users simultaneously.

This results in a superior user experience. Plus, it improves customer satisfaction and increases the likelihood of brand loyalty.

03. Attract and generate leads.

Chatbots play a vital role in enhancing sales lead generation and boosting conversion rates. Consider a scenario where a potential customer explores a website to find information about a product or service. They may have queries regarding various features, attributes, or plans.

A chatbot can promptly supply these answers on the spot, facilitating the customer's journey towards making a purchase. Consider that a user is involved in complex purchases with a multi-step sales funnel. In such cases, a chatbot can engage in lead qualification. It can do so by asking relevant questions and seamlessly connecting the customer with a knowledgeable sales agent.

Types of chatbots:

Some common types of chatbots include the following:

01. Scripted or quick reply chatbots.

Scripted or quick-reply chatbots are the most fundamental type. It operates as a hierarchical decision tree. These bots engage with users using pre-established questions that lead to the chatbot's response upon progression.

A counterpart to this type is the menu-based chatbot, which prompts users to choose from a predetermined list or menu. This interaction helps the bot gain a more profound understanding of the customer's requirements.

02. Keyword recognition-based chatbots.

Chatbots based on keyword recognition represent a slightly more complex category. They strive to interpret user input and craft responses based on keywords extracted from customer replies. This type of bot blends customisable keywords with artificial intelligence. This blend helps generate suitable responses. However, these chatbots face challenges when confronted with the repetitive use of keywords or redundant questions.

03. Hybrid chatbots.

Hybrid chatbots integrate features from both menu-based and keyword recognition-based bots. Users have the flexibility to receive direct answers to their questions. Or else utilise the chatbot's menu for selections. This is in cases where keyword recognition proves ineffective.

04. Contextual chatbots.

Contextual chatbots represent a higher level of complexity compared to other types. It focuses on a data-centric approach. Leveraging AI and ML, these chatbots retain information from user conversations and interactions. Thus, utilising this data to evolve and enhance their capabilities over time. Unlike relying on keywords, these bots analyse the nature and phrasing of customer queries. Then, it offers responses and continuously refines their performance.

05. Voice-enabled chatbots.

Voice-activated chatbots represent the future of this technology. These chatbots utilise spoken dialogue from users as input to trigger responses or perform creative tasks. Developers can craft these chatbots by employing text-to-speech and voice recognition APIs.

Research and reports

In 2021, there was a 20% increase in buyer frustration when attempting to access basic business information. The buyer's expectations for easy and personalised experiences saw a substantial 26% growth since 2020. Moreover, the demand for immediate responses witnessed a remarkable year-over-year surge of 64% across nearly every conversation category.
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A “must have” chatbot for your organisation

The buying journey is getting more complex. It is crucial for businesses to eliminate friction from the digital experience. Chatbots play atn important role in enhancing both the buyer and customer experience. Since it offers a continuous channel for site visitors to engage with brands around the clock. Thus, eliminating the necessity for human intervention.

Frequently Asked Question (FAQ)

01. What are the FAQs for chat bots?

A chatbot is specifically created to respond to common user queries. And the answers are delivered through a conversational interface. Its purpose is to assist users. It helps users swiftly obtain answers without the need to navigate through knowledge base articles or search the website.

02. What are the benefits of a chatbot?

Utilizing a chatbot offers advantages such as improved efficiency in customer service. It provides a quicker response time, decreases operational costs, and increases customer satisfaction. These chatbots provide round-the-clock support. They efficiently manage multiple queries simultaneously. Thereby allowing human agents to focus on more complex tasks.