The Ultimate Guide to Chatbots

August 31, 2024
AFIFA ANSARI

How do chatbots work?

Driven by AI, automated rules, natural-language processing (NLP), and machine learning (ML), chatbots process data to deliver responses to requests of all kinds.

There are two main types of chatbots.

Task-oriented (declarative) chatbots are single-purpose programs that focus on performing one function. Using rules, NLP, and very little ML, they generate automated but conversational responses to user inquiries. Interactions with these chatbots are highly specific and structured and are most applicable to support and service functions—think robust, interactive FAQs. Task-oriented chatbots can handle common questions, such as queries about hours of business or simple transactions that don’t involve a variety of variables. Though they do use NLP so end users can experience them in a conversational way, their capabilities are fairly basic. These are currently the most commonly used chatbots.

Data-driven and predictive (conversational) chatbots are often referred to as virtual assistants or digital assistants, and they are much more sophisticated, interactive, and personalized than task-oriented chatbots. These chatbots are contextually aware and leverage natural-language understanding (NLU), NLP, and ML to learn as they go. They apply predictive intelligence and analytics to enable personalization based on user profiles and past user behavior. Digital assistants can learn a user’s preferences over time, provide recommendations, and even anticipate needs. In addition to monitoring data and intent, they can initiate conversations. Apple’s Siri and Amazon’s Alexa are examples of consumer-oriented, data-driven, predictive chatbots.

Advanced digital assistants are also able to connect several single-purpose chatbots under one umbrella, pull disparate information from each of them, and then combine this information to perform a task while still maintaining context—so the chatbot doesn’t become “confused.”

The Value of Chatbots

One way to stay competitive in modern business is to automate as many of your processes as possible. Evidence of this is seen in the rise of self-checkout at grocery stores and ordering kiosks at restaurants.

The value of chatbots comes from their ability to automate conversations throughout your organization. Below are five key benefits businesses realize when using chatbots.

1. Save Time & Money

By automating conversations that would otherwise require an employee to answer, organizations save time and money that can then be allocated to other efforts.
Instead of having your reps spend all of their time answering inbound questions, those individuals reallocate time to proactively finding relevant conversations to join with social listening tools.

2. Generate Leads & Revenue

Chatbots use direct messages to gather information necessary to provide effective support. For example, asking users why they’re visiting your page is one question that is likely asked in every engagement.
Automating this initial interaction allows users to share the information needed for the agent to better serve them without requiring a human to ask for it
This chatbot automatically delivers qualified leads to the sales organization while also fighting the fatigue caused by answering the same questions over and over. You’ll find the team is happier with more quality leads and time to spend on more meaningful work.

3. Guide Users to Better Outcomes

Customers don’t always know where to go to find the information they’re interested in. In fact, your customers may not even know what it is they’re interested in. Maybe they just heard your brand name in passing and decided to explore. By asking a series of qualifying questions, you route users to the best place for them to find the information they want.

Think through some of the questions to ask that will route your visitor to the best possible solution. These questions vary by business type, but some common ones are:

What problem are you trying to solve?
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Where are you located?
What department are you in?
What industry are you in?
Would you like personal support?

Imagine a global organization such as an airline. Between departing locations, arrival locations, potential upgrades, and a myriad of places to purchase tickets, there are an almost infinite number of combinations for purchase.

By personalizing the questions, a chatbot asks those airlines direct customers to the best way to buy and create a better user experience.

4. Provide ‘After Hours’ Support

As we saw from the Drift data, the most popular use of chatbots is to provide quick answers in an emergency. However, organizations that don’t offer 24-hour support won’t provide answers when the office is closed.
By using a robust chatbot when your business is closed, customers still gain access to the information they need. This is especially important as consumers expect a quicker response than brands can guarantee. Chatbots help you significantly decrease the average time to respond, bringing you closer to your customers’ expectations.

5. Engage Users in a Unique Way

Traditionally, customer questions were routed to businesses via email or the telephone, which made user experiences fairly standard and non-customized. But chatbots offer a new, fun, and interactive way to engage with brands.
One great example is Domino’s Pizza’s Twitter. Domino’s allows customers to order pizza by simply sharing an emoji. The Domino’s bots then route those orders and ask additional questions if necessary. These seamless and memorable user experiences ensure that your users will think of your bots the next time they’re looking for dinner and a movie.

Common chatbot uses

Chatbots are frequently used to improve the IT service management experience, which delves towards self-service and automating processes offered to internal staff. With an intelligent chatbot, common tasks such as password updates, system status, outage alerts, and knowledge management can be readily automated and made available 24/7, while broadening access to commonly used voice and text-based conversational interfaces.

On the business side, chatbots are most commonly used in customer contact centers to manage incoming communications and direct customers to the appropriate resource. They’re also frequently used for internal purposes, such as onboarding new employees and helping all employees with routine activities including vacation scheduling, training, ordering computers and business supplies, and other self-service activities that don’t require human intervention.

On the consumer side, chatbots are performing a variety of customer services, ranging from ordering event tickets to booking and checking into hotels to comparing products and services. Chatbots are also commonly used to perform routine customer activities within the banking, retail, and food and beverage sectors. In addition, many public sector functions are enabled by chatbots, such as submitting requests for city services, handling utility-related inquiries, and resolving billing issues.

Conclusion

There are some misconceptions about the term chatbot. Although the terms chatbot and bot are sometimes used interchangeably, a bot is simply an automated program that can be used either for legitimate or malicious purposes. The negative connotation around the word bot is attributable to a history of hackers using automated programs to infiltrate, usurp, and generally cause havoc in the digital ecosystem. Chatbots are conversational tools that perform routine tasks efficiently. People like them because they help them get through those tasks quickly so they can focus their attention on high-level, strategic, and engaging activities that require human capabilities that cannot be replicated by machines.