What are chatbots and why are they important?

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It might sound like science fiction, but if you’ve ever gotten customer service assistance on a website, chances are you’ve had a conversation with a robot. Now, before you start imagining the machines of science-fiction blockbusters like The Terminator and iRobot, the robots we’re going to talk about here are a little bit more harmless. We’re going to talk about chatbots.

Whether you like them or not, chatbots have become a fixture of online experiences. This is in large part due to advancements in technology, such as machine learning and natural language processing. These improvements have made chatbots smarter and a more convincing conversational experience.

A consumer having a customer service conversation with a chatbot

Just as the phone you have now is way more advanced than anything on the market even in the mid-2010s, chatbots today are more responsive and a lot more useful than they’ve ever been.

Since chatbots are such an excellent tool for simplifying interactions between humans and computers, it makes sense why businesses would use them on their websites and for social media marketing. However, chatbots can do more than be on the front lines of customer service.

This is going to be a guide to chatbot technology. Our table of contents to make you a chatbot expert includes:

After reading this, you’ll be more familiar than ever with chatbots. Not only will you be more aware of what chatbots are and how they work, but you’ll also understand why businesses use them and how they can benefit you.

A quick history of chatbot platforms

The first idea of a chatbot can be traced to Alan Turing and his famous 1950 paper, “Computing Machinery and Intelligence”. In it, he proposes what we now call the Turing Test. The test is meant to judge the ability of a computer program to emulate a real person in real-time. The human judge must decide whether they’re talking to a human or a computer, based solely on the written conversation (live chat) they’re having.

Naturally, this idea of a computer deceiving a person into thinking they’re interacting with a real human caught the interest of many computer scientists.

The first chatbot would not come about until 1966. Its name was ELIZA. It was pre-programmed to move conversations forward in a meaningful way. An example of this is if it were to see “mother” anywhere in the person’s message, it would ask the person about their family.

Nowadays, chatbots have become so popular that there are actual chatbot competitions focused on passing the Turing test. And they’re only getting smarter, faster, and easier to use. Who knows what the next generation of chatbots will bring?

The fact is, you don’t need a computer science degree to be a bot builder. Many communication platforms, such as RingCentral, can integrate with chatbot software, helping you utilize them to improve your business (keep reading to find out how).

What is a chatbot and how does it work?

The definition of a chatbot is “a piece of artificial intelligence software that can have a conversation (or chat) with a real person using natural language.” Chatbots are typically used online as a way of interacting with customers rather than having them directly contact a human agent.

They’re a computer program designed to simulate the way people would naturally have conversations. In this way, they’re trying to be a convincing conversational agent to best help the real person they’re “talking” with.

Typically, people come across chatbots in two different ways. Either customers access them through web-based applications or they encounter them in standalone apps. The most likely context in which you’ll find chatbots today is in customer service. Chatbots have taken on the roles that were traditionally performed by real living human beings, such as customer support operatives and sales team associates.

What is chatbot technology?

If we were to look behind the scenes of how a chatbot works, we would see it performing two sequential tasks:

  • First, the chatbot tries to analyze the customer’s input (what the real person wrote to the chatbot). 
  • Then, the chatbot comes up with a response and offers it to the customer.
A chatbot reading a user’s message for keywords and processing a response
First step: Analysis of the customer’s request

The first thing that a chatbot does is ”read” what the customer wrote to them. In this case, read is in quotation marks because a chatbot is not reading the same way you or I would.

What the chatbot is actually doing are these two things:

  1. It’s trying to identify the intent behind the user’s request and
  2. It’s trying to pick out relevant entities.

Note:  “Entities” are typically keywords or phrases the bot was designed to notice.

Essentially, the chatbot is trying to understand what a person wants. It could be that the person is writing to ask about a product, or they’re trying to resolve an issue they’re having. Understanding the intent behind a received message is the most important step for a chatbot. If it can’t identify what the customer wants, then it can’t help them.

Second step: Return a response

If you’ve got an intelligent chatbot, it’s identified the intent of the real person’s message after the first step. From there, the chatbot attempts to give the most appropriate response it can to the customer. The response could be a prewritten and generic text, or it could be a response it’s retrieved from a knowledge base that stores different answers.

With more advanced chatbot applications and software, the response can be more nuanced. Some examples of more state-of-the-art automated conversations include:

  • Responding with contextualized information based on the customer’s original message
  • A response based on the chatbot interacting with backend applications, or
  • The chatbot answers with a question that’ll help it to better understand what the user is requesting

What are chatbots used for?

There are many different applications of chatbots since they’re super useful. In this section, we’ll cover the most common types of chatbot roles.

Chatbots for customer service and marketing

One of the most popular uses of chatbots is for customer service.

Many businesses have already seized the opportunity to employ chatbots as a customer service solution that’s faster and cheaper than traditional human labor. In cases like this, they’re looking to replace other communication tools like phone and email with a dialogue between a chatbot and their customers.

Chatbots for marketing is another important use of the technology. Your sales team can use chatbots to promote your business and effectively spread the word about your products and services. They’re able to act as conversation marketers, always upselling your business and advertising what you have to offer.

Chatbots are used on messenger platforms and social media

Many businesses have messenger bots available via SMS or on other messaging app platforms like Facebook and Twitter. Not only does this do a great job of advertising what your business has to offer, but it also allows your business to interact with customers where they are. By having a social media chatbot, you’re able to build relationships with your customers and be available to them whenever they seek to engage with your business.

Chatbots are used on company websites

A website chatbot is very useful. When a customer visits your business’s website, having a chatbot there to greet them and ask if it can assist is a simple and effective way to give a more positive and personal user experience.

When a chatbot window opens on your business’s website seeking to help your customers, it streamlines the customer service process. They don’t have to navigate your website on their own. You can get to their immediate concerns quicker. And you do all this while giving them the choice of whether or not to engage with the chatbot (since customers can always opt-out of talking with the bot).

Other uses of chatbots

While customer service, marketing, and consumer engagement are the most popular uses of chatbots, people have found amazingly creative ways of using these bots. The future of chatbots is wide open and new uses are being imagined all the time.

Some other chatbot examples that you may have never considered include using them in toys— new products on the market able to recognize speech and talk with the children playing with them.

Companion chatbots exist for those suffering from degenerative diseases like Alzheimer’s and dementia. With conversational AI, these bots allow people to have everyday discussions when those things can be challenging to have with other people.

Why are chatbots important?

The reason why chatbots are so important is that they do an excellent job of making interactions between businesses and people easy. Essentially, they’re a tool that enhances customer experiences.

Benefits of chatbots

Let’s go over some specific benefits of using chatbots. Not only can these chatbot features be good for your business, but they also have many benefits for your customers, too.

First, we’ll cover what benefits your customers can expect from chatbots. Then we’ll discuss the value of chatbot technology for businesses.

The benefits of chatbots for customers

  1. Quick replies
    A human customer service rep needs to focus on one customer at a time to perform well and satisfy their customer’s needs. This is not the case for a chatbot, which can have the ability to answer hundreds of questions from various customers. Faster internet and the speed of the cloud means a chatbot can respond to a customer almost instantly.
  2. Consistency
    Customers can expect to receive the exact same service from your company’s chatbot every time they contact your business. This avoids any compatibility issues a customer might have when dealing with human customer service reps.

    Also, customers won’t be tempted to message or call your business again hoping to get a different representative since the chatbot experience will always be the same.
  3. Chatbots have infinite patience
    When a consumer is seeking customer service, they’re usually doing so when they have a problem. Meaning, a customer may not be in the best mood when they contact your business. While a real customer service agent may become agitated or have their mood affected, a chatbot has endless patience.

    Receiving assistance can also be a time-consuming effort. Chatbots will never lose their patience as they guide customers through the customer service process.
  4. 24/7 availability
    With chatbots, you can maintain a response system that provides constant communication between your business and your customers all day, every day. Even if this response system is simply to inform a customer when regular business hours are, your business will never be unreachable when you use chatbots.

The benefits of chatbots for businesses

  1. Chatbots provide cost savings
    While the implementation of chatbots does require an investment cost, that cost is much lower than the amount needed to pay, educate, and maintain the infrastructure for human customer service reps.

    Also, the costs of improving and maintaining chatbots will only decrease as technology advances. Think about the cost of a TV ten years ago compared to what something bigger and better costs you now.
  2. Programmability
    Chatbots can be programmed to automate many common tasks, such as scheduling meetings and sending reply emails when you’re out of the office. In this way, chatbots can act as digital assistants handling small tasks, which allows you and your team members to focus on more important tasks.

    Pro-tip: One specific way chatbots can increase your sales is by having one make recommendations to your customers. These recommendations can introduce your customers to new services and products your company offers. Recommendations can be made after a purchase or as your customers are shopping on your website.

  3. Increases engagement with customers
    Chatbots provide another communication channel for your customers to reach out to your business. With 24/7 availability, your chatbots can increase customer engagement by giving timely offers and deals. And, your chatbot can be interacting with your customers on social media anytime they want to contact your business.

Limitations of chatbots

While there are many benefits to using chatbots, we can’t forget that they come with some limitations as well. Knowing about the limits of chatbot technologies helps you understand where they’d be helpful for your customers. This section has a list of some of those limitations.

  1. Natural language processing is limited by irregularities
    Essentially, what this means is that if the person speaking to a chatbot doesn’t use perfect English and grammar, then the chatbot may not understand them. This can happen when someone makes a spelling mistake.

    While we humans would understand a misspelled word like “hellp” to mean help, a chatbot may not recognize it as a word. Or, if someone is writing the way they speak, and they speak with an accent, then the chatbot wouldn’t recognize the words that aren’t in its vocabulary.
  2. Conversation options are restricted
    When a chatbot is “reading” your message it’s looking for keywords and phrases to help it understand what you want. So, if you’re asking multiple questions at a time it’s not going to understand what you want. The system’s going to be confused.

    Conversing with a chatbot effectively means that you must deal with one thing at a time, which isn’t the usual way customers interact with customer service representatives.
  3. Some people are uncomfortable dealing with an AI chatbot
    While chatbot technology does streamline interactions between people and businesses, it may not be for everyone. The simple fact is some customers aren’t comfortable dealing with chatbots and would rather talk with a real person.

    It can be a personal preference issue, as it often is for people who did not grow up with automation and chatbot tools. Also, if it’s very obvious that customers’ requests are being dealt with by a machine, customers can feel as if they’re not being heard and are not being treated with the care they deserve.
  4. Machine learning needs a lot of data to program
    For chatbots to understand what people are asking of them, they require a lot of data to work. This doesn’t just include the entire language the chatbot is hoping to work with (for example English), but it’s also all the idioms and colloquialisms use daily (particularly, industry parlance).

What are the best chatbots?

The best chatbots are the ones that make life easier for real people. Although getting started with chatbots may seem like an enormous task now, their benefits and uses mean they are a very worthwhile investment.

Essential features of chatbot applications

Make sure the chatbot you’re investing in does what you need it to do. Let’s look at five must-have features of chatbots.

  1. Pre-trained
    You can save yourself from needless headaches if you get a pre-trained chatbot. With pre-training, your chatbot will be able to understand industry and brand specific terms and knowledge. These kinds of chatbots can also be pre-configured to answer common customer questions and resolve frequent requests.
  2. Autonomous reasoning
    A chatbot developed with autonomous reasoning can reason without requiring human intervention. This lets it solve problems quickly without needing to involve your other team members. An example of this kind of reasoning would be a chatbot inferring solutions for a customer based on other relevant interactions it’s had.
  3. Conversational maturity
    You’ll want a chatbot that converses in the same language as your target audience. By having a chatbot with the same conversational maturity as your customers, you can be sure that it’s interacting with your customers on their level.

    Also, with natural language understanding, chatbots will do a better job of identifying customer intent and can even seek out information to better assist your customers, such as asking clarifying questions.
  4. Emotional intelligence
    The best chatbots are able to understand a customer’s tone and sentiment during a conversation. With this ability, they can give a more personalized user experience. Also, emotionally intelligent chatbots will know when it’s time to transfer the customer to a live-agent when necessary.
  5. Omni-capability
    Make sure you can use your chatbot across any of your communication channels. If it’s omni-capable, a chatbot can converse in any channel while retaining its data and context for a greater user experience.
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