What is a Chatbot & How does it work? The Ultimate Guide

A Chatbot is a software application that can simulate human conversation and provide 24/7 support.

Chatbot definition

A talkbot is a kind of conversational AI that firms can use to automate interactions with customers in friendly and familiar ways. Further, bots are core to messaging strategies; thus, resolution within a company is faster and 24/7. Therefore, customer satisfaction is higher, and efficiency greater.

When you hear the word “chatbot,” your mind may wander to robots on the silver screen. While movie robots and chatbots can both carry a conversation, chatbots are far different from C-3PO and Optimus Prime. Instead of assisting in saving Princess Leia or fighting off Decepticons, chatbots have a different mission: improving your customer experience (CX).

In a perfect world, all businesses can provide support around the clock, but not every organization has this luxury. Chatbots can help you inch closer to that ideal state, offering always-on support and boosting agent productivity.

How do chatbots work?

Talkbots are software applications that simulate human conversation and provide 24/7 support using NLP, ML, and predefined conversation flows.

• Log-in issues
• Payment problems
• Booking instructions

AI chatbots can also learn from each interaction and adjust their actions to provide better support. While simple talkbots work best with straightforward, frequently asked questions, chatbots that leverage technology like generative AI can handle more sophisticated requests. This includes anticipating customer needs and supporting customers using natural human language.

Why were chatbots created, and how have they evolved?

In the 1960s, a computer scientist at MIT was credited for creating Eliza, the first chatbot. Eliza was a simple talkbot that relied on natural language understanding (NLU) and attempted to simulate the experience of speaking to a therapist. Since then, chatbots have come a long way.

Mobile devices and messaging channels like SMS, live chat, and social media have made customer service chatbots popular. talkbots powered by AI can now understand sentiment and answer complex queries in your brand’s voice.

The importance of chatbots

Chatbots are important because they are a valuable extension of your support team, helping both customers and employees. Follow along to explore the key benefits of chatbots, from 24/7 support to personalized conversations.

• 24/7 support: Customers today expect help as soon as they need it on the channels of their choice. Deploying a chatbot across preferred customer channels ensures customers get seamless, always-on support.
• Scalability: Small business and enterprise chatbots can serve as extra support agents, answering frequently asked questions without human intervention. As a result, teams can scale quickly and assist more customers without hiring more staff.
• Conversion opportunities: Customer service bots can boost lead conversions, nudging consumers to take action by presenting them with image carousels, forms, picklists, and other messaging elements. This also helps increase customer engagement.
• Personalized conversations: As the first point of contact, chatbots help agents by capturing customer details like name, issue type, and contact information. This enables the agent to personalize the conversation when they speak with the customer.

Whether you’re looking to remove repetitive customer queries from your agents’ plates or extend your support hours, implementing a chatbot can help take your CX and employee experience (EX) to the next level.

What is a chatbot used for?

Many businesses use chatbots to improve their customer service and foster customer loyalty. Here are some ways companies are leveraging talkbot technology:

• Automating website support: Many businesses take advantage of talkbots ’ AI automation abilities for website support. For example, using a WordPress chatbot plugin brings 24/7 customer service to your WordPress site.
• Site navigation: Chatbots can help customers navigate a business’s website and provide instructions for things like signing up for a service or free trial.
• Personalized recommendations: Talkbots can give customers personalized recommendations by analyzing their behavior on the website.
• Tracking orders and inventory: Bots can tell customers whether a certain product is in stock or how long shipping will take.
• Boosting sales: Talkbots for sales can welcome new visitors to your site with a form to collect lead information and pass the details to your sales team.

As you can see, answering customer questions is just the tip of the iceberg when you add a talk bot to your customer support team.

Chatbots vs. AI chatbots vs. virtual agents

You’ve probably heard talk bots, AI chatbots, and virtual agents used interchangeably. However, the three terms have unique differences.

• Chatbots: A chatbot is any software or computer program that simulates human conversation, whether powered by advanced generative AI or a simple decision tree.
• AI chatbots: An AI chatbot is a talkbot powered by artificial intelligence, including ML, NLP, and NLU.
• Virtual agents: A virtual agent or virtual assistant is more advanced than an AI chatbot. Virtual agents often utilize robotic process automation technology that enables the agent to take further action based on what a user wants.

Now that you know the differences between talkbots, AI chatbots, and virtual agents, let’s look at the best practices for using a chatbot for your business.

Chatbot best practices

If you’re ready to add a talkbot to your customer service strategy, make sure you consider these best practices:

1. Notify users they are interacting with a bot: It is worth mentioning at the very beginning that it is a talkbot with whom consumers are having a conversation. This brings transparency into the communication and sets expectations, promoting acceptance and trust.
2. Customers often want to talk to a human, so provide this option. Make sure you can pass the customer context and conversation history to the agents so they’re armed with the right details.
3. When choosing a persona for your talkbot, you are giving it a personality that extends your brand identity and provides a cohesive support experience for your customers.
4. Embed bots into your strategy for self-service: A talkbot will help customers self-serve by underlining FAQs and other resources, such as your return and shipping policies. You can also put a chatbot inside your knowledge base to let customers find the right articles for their questions.
5. Use chatbots to acquire customer context: Talkbots might ask for essential information from customers at the very start of an interaction, such as their order number, email address, and location.
6. Use data to enhance your bot: Getting the bot up and running isn’t the end of your chatbot strategy. You will also need to track chatbot analytics—including use rate, chat volume, and most answered questions—to improve and get value out of the tool.

If you’re ready to add a chatbot to your customer service strategy, consider these best practices to start on the right foot.

How to create a chatbot

Businesses most commonly create chatbots using chatbot software. With a talkbot solution like Zendesk, companies can deploy bots that sound like real people, all with a few clicks. This enables businesses to increase their support capacity overnight and begin offering 24/7 support without hiring new agents.

Chatbot software can be complex, and some require developers to get them up and running. Zendesk chatbots are different; they work out of the box and provide meaningful support.

The future of chatbots

As technology rapidly evolves, so do the capabilities of talkbots. Most notably, chatbots are evolving to sound more like humans. This results from generative AI, a cutting-edge technology helping drive the future of customer service chatbots. Take Zendesk as an example: Our generative AI-powered chatbots enable businesses to deploy bots that support customers and employees with natural-sounding language.

And with Zendesk AI, answering questions is only the beginning. We train Zendesk chatbots using billions of real customer interactions. This allows our bots to detect customer intent and provide agents with the necessary customer context to offer better service.

With talkbot functionality quickly advancing, you don’t want to get left in the dust. Choosing a chatbot solution powered by generative AI and rich with features can help your business deliver excellent support and stay ahead of the curve.

Frequently Asked Questions

What is the difference between a bot and a chatbot?

A bot is a generic term for software that automates tasks and workflows. On the other hand, a chatbot is a type of bot created to simulate human conversation. In some cases, you might hear people use the term “bot” as shorthand for “chatbot.”

What are the different types of chatbots?

Businesses can use different types of chatbots, including:

• Help center chatbots: These chatbots suggest help center articles to customers or employees based on the content in your knowledge base. They recommend the right resource on any page of your website, inside your mobile app, over email, or via messaging apps like WhatsApp or Messenger.
• Decision tree chatbots create conversation flows that answer customer questions, suggest knowledge base articles, and include triggers for handoffs to agents. This speeds up getting help.
• Task-specific chatbots are designed to help customers with a particular task. They are specialized and understand a wide range of questions. When they have access to the right customer data, they can provide personalized service.

How are chatbots changing CX?

Chatbots are changing CX by automating repetitive tasks and offering personalized support across popular messaging channels. This helps improve agent productivity and offers a positive employee and customer experience.

Are chatbots bad?

No, chatbots are not bad. The word “chatbot” should not be associated with the type of bots that hack accounts and carry out cyberattacks.

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