Chatbots 101: What They Are and Why They Matter in Today's World

If you’ve ever interacted with a customer service representative on a company’s website, there is a good chance that you were actually chatting with a virtual agent or a chatbot. Chatbots are computer programs that use artificial intelligence (AI) to communicate with humans through messaging interfaces. They have become increasingly popular in recent years and can be a major game changer for both businesses and consumers.

In this article, we’ll give you a comprehensive overview of chatbots. We’ll define what they are, how they work, and their benefits. We’ll also discuss the different types of chatbots and conversational AI. Lastly, we’ll highlight a chatbot alternative that can help your business generate more leads.

Whether you’re a business owner looking to implement chatbots into your operations or simply curious about this technology, this article will provide you with the knowledge you need to understand and appreciate the impact of chatbots on our world today.

What is a Chatbot?

Chatbots are the new kid on the block in the world of customer service. A chatbot, also called a virtual assistant or conversational agent, is an artificial intelligence software designed to mimic human-like conversation and perform automated tasks. Chatbots communicate with users through text messages or voice commands and can analyze and respond to inquiries in real time.

Chatbots can be useful in various industries—from e-commerce to healthcare to banking to retail and beyond. A chatbot can take orders, make reservations, answer questions, and even provide basic customer support. One of the most significant advantages of chatbots is that they are available 24/7, eliminating the need for dedicated human customer service personnel and allowing for self-service. According to data, 68% of users enjoy the convenience of chatbots, particularly how quickly they receive a response.

Let’s look at a couple of examples of how chatbots are being used today:

1. Domino’s Pizza Bot: Domino’s Pizza has launched a chatbot that allows customers to order food via Facebook Messenger, Twitter, and Amazon Alexa. Customers can place new orders, reorder previous orders, track delivery status, and get assistance with any issues.

2. Endurance Chatbot: Endurance, a fitness app, recently launched a chatbot that allows users to receive real-time coaching via a chatbot. The chatbot analyzes the user’s fitness goals, workout history, and diet and provides personalized coaching to help them achieve their fitness goals.

3. Apple’s Siri: One of the prime examples of chatbots is Siri, Apple’s intelligent personal assistant. Siri can make phone calls, send messages, set reminders, and answer users’ questions through natural language interactions.

Brands that integrate chatbots into their customer service systems can gain a competitive edge and offer a better user experience to their customers.

Why Use a Chatbot?

While it would be nice if we all had unlimited time on our hands to get through our to-do lists, that’s just not the case. To stay on top of a never-ending list of tasks to complete, many companies are incorporating chatbots into their customer service strategies. Chatbots are artificial intelligence software designed to simulate human conversation. They can be programmed to undertake a wide variety of tasks, including customer service. Here are four benefits of using a chatbot.

1. Improved customer service.

Chatbots offer a fast and convenient way to interact with customers 24/7. They can handle multiple tasks simultaneously and can respond to common questions and customer queries promptly. This enables businesses to provide personalized customer support, regardless of the time zones or office hours. By providing rapid responses to customer inquiries, chatbots can improve customer satisfaction, thus increasing customer loyalty.

2. Increased efficiency.

The ability to handle a large volume of customer interactions simultaneously is one of the key benefits of using a chatbot. Chatbots use natural language processing (NLP) technology, which ensures that they understand and respond to customer inquiries quickly and accurately. This can lead to significant cost savings for your business by reducing the operational costs associated with hiring customer service representatives.

3. Personalized interactions.

Chatbots can offer personalized interactions to customers, which can further enhance customer loyalty. They can analyze customer data such as purchase history, geographical location, and website behavior to provide tailored responses to inquiries. This personalized approach helps businesses attract and retain customers by demonstrating that they value their customers’ specific needs.

4. Scalability.

As your business grows and you need to handle an increasing volume of customer interactions, chatbots can scale up to meet the demands. The ability to handle multiple interactions simultaneously and provide personalized responses make chatbots an effective way to handle increasing volumes of customer inquiries.

Chatbots vs. Conversational AI: What’s the Difference?

When it comes to automating customer service and enhancing the overall customer experience, chatbots and conversational AI often come to mind. Although both of these technologies involve automated conversations with users, they have several distinct differences.

1. Different learning capabilities.

Chatbots rely on pre-programmed responses that are designed to react to specific inputs or keywords. As a result, they are only as good as their programmed responses. Conversational AI, on the other hand, is driven by machine learning algorithms that can learn and adapt from interactions with users. This means that conversational AI can improve over time, getting better at recognizing user intent, providing more personalized responses, and even anticipating user needs.

2. Separate use cases.

Chatbots are typically used for simple, transactional interactions, such as answering frequently asked questions, gathering user information, clarifying pricing, or processing basic transactions. Conversational AI, on the other hand, can be used for more complex interactions and intelligent applications. For instance, conversational AI can be used to handle customer support inquiries, provide recommendations, or even help users make purchasing decisions. It can also be used to improve internal operations by automating tasks, enhancing collaboration, or extracting insights from data.

3. Level of complexity.

Chatbots are typically rule-based, meaning they operate within a limited set of predefined rules. They are designed to recognize specific keywords or phrases and respond with a predetermined response. Conversational AI, on the other hand, uses more advanced natural language processing and machine learning technologies. It can understand and interpret human language in a more sophisticated way, allowing for more personalized and contextual responses.

4. Integration capabilities.

Chatbots are usually integrated with specific channels, such as websites, messaging apps, or social media platforms. They are designed to respond to users regardless of the channel they are using. Conversational AI, on the other hand, can be integrated into multiple channels and platforms, providing a seamless and consistent experience across all touchpoints.

5. Scalability.

Chatbots are relatively easy to implement and scale, as they involve a finite set of responses and rules. Conversational AI is more complex and requires more resources to implement and scale. However, once implemented, conversational AI can handle higher levels of complexity, scalability, and customization.

So, to sum it up, while chatbots and conversational AI are both designed to enhance customer service and automate interactions, they have different strengths and applications. If you’re looking for a simple and transactional solution, chatbots may fit the bill. However, if you need a more intelligent and personalized solution that can learn and adapt over time, conversational AI may be the way to go.

How to Find the Right Chatbot for Your Business

Choosing the right chatbot for your business can be challenging—there are so many options. It’s overwhelming. How do you know which one will best fit your needs? Let’s explore five tips that will help you feel confident in your decision.

1. Look for customization options.

One of the most important features in a chatbot is its ability to be customized. A chatbot that can be branded and customized to suit your business can offer customers a personalized experience that will improve customer loyalty. Look for chatbots that allow you to customize the avatar, chat interface, and voice. You can also consider chatbots that allow you to modify the conversation flow or create new conversation scripts to reflect your brand.

2. Consider support and maintenance.

Support and maintenance are essential considerations when choosing a chatbot. You want to choose a chatbot provider that offers 24/7 support in case of an emergency. Additionally, you need to consider a chatbot that is easy to maintain and update. A chatbot that requires little effort to maintain will save you time and resources.

3. Determine your budget.

The cost of a chatbot varies depending on the features and capabilities you need. Determine your budget before you start shopping for chatbots. However, if you are on a tight budget, you can consider free chatbot builders. While these may not offer all the features you need, they can still provide a basic chatbot that can help you get started.

4. Evaluate features and capabilities.

Different chatbots offer different features and capabilities. It’s important to evaluate the features that are essential to your business. For example, if your business relies on e-commerce, look for chatbots that can integrate with your e-commerce platform. You also need to consider chatbots that offer analytics and insights that can help you improve your chatbot’s performance.

5. Consider your audience.

Finally, consider your audience when choosing a chatbot. The chatbot you choose should be tailored to suit your customers’ preferences and needs. If your customers are tech-savvy, you can consider a chatbot that integrates with social media platforms, voice assistants, or messaging apps. However, if your customers are not tech-savvy, look for a simple chatbot that is easy to use.

How Small Businesses Use Chatbots

Using chatbots can streamline business workflows, improve communication, and enhance the customer experience. Here are five examples of chatbot use cases.

• Customer service: Chatbots can be used to provide assistance to customers 24/7, answering frequently asked questions and handling simple requests such as order tracking and status updates. By automating these tasks, businesses can free up staff to handle more complex tasks, leading to higher productivity and customer satisfaction.
• Sales and marketing: Chatbots allow businesses to engage with potential customers, generate leads, and provide product recommendations. By using chatbots on social media platforms, businesses can reach a wider audience and provide personalized experiences that increase conversion rates.
• Internal communication: Chatbots can be used to automate internal communication, such as sending reminders and notifications to employees. By reducing the need for manual communication, businesses can save time and ensure that all employees are up-to-date with important information, leading to a more efficient and effective workplace.
• E-commerce: Chatbots can facilitate transactions, answer product questions, and provide personalized shopping experiences. By using chatbots on e-commerce websites, businesses can guide customers through the purchasing process and offer suggestions based on their preferences, leading to increased sales and customer loyalty.
• Support and maintenance: Chatbots can be used to automate support and maintenance tasks such as software updates, inventory management, and troubleshooting. By using chatbots to handle these tasks, businesses can save time and reduce the risk of errors, leading to a more streamlined and reliable business operation.

By understanding the different areas in which chatbots can be used, you can stay ahead of the competition and get more done without draining time and resources.

Take Your Business to the Next Level with Podium

While chatbots have become a popular tool in recent years, there are certain situations where they simply can’t replace human interaction. However, that doesn’t mean that you’re out of luck when it comes to streamlining your communication efforts.

Enter Podium—the ultimate customer engagement platform that is revolutionizing the way small businesses communicate with their customers. Podium’s Webchat is a live chat tool that seamlessly integrates with your website, allowing visitors to easily connect with your team in real-time. Whether your customers have questions about your products and services or need assistance with an issue, Webchat provides a quick and convenient way for them to get in touch.

Unlike traditional web forms or email, Webchat moves website conversations to SMS messaging, which means that even if a customer leaves your site mid-conversation, the chat can continue uninterrupted. This ensures that your team can stay on top of customer inquiries and provide prompt, personalized solutions to any issues that come up.

Ready to give it a try? Start a free trial today to see what Podium can do for your business.

FAQs

1. What is a bot?

A bot, short for robot, is a program designed to perform automated tasks typically performed by humans. Bots can be found in various contexts, such as social media, online shopping, and online customer service. These bots can seamlessly interact with users, simplifying the task at hand by providing automated solutions.

2. How do chatbots work?

Chatbot technology is designed to mimic human conversations. They use natural language processing, a type of artificial intelligence technology, that allows them to understand and respond to user input. The bot’s database is preloaded with a set of rules and responses to user queries. When a user initiates a chat, the bot receives and analyzes the input. It then generates a response based on the best-matched response stored within its database. Additionally, chatbots can be trained using machine learning strategies to improve accuracy and become more intelligent over time.

3. Can chatbots replace human customer service representatives?

While chatbots are incredibly useful and efficient, they cannot completely replace the value and experience provided by human customer service representatives. Human representatives bring a human touch to the service, and they can provide empathy, emotion, and judgment. Chatbots, on the other hand, excel in handling repetitive and simple queries that do not require human intervention.