8 most important benefits of chatbots

Konstantin Sadekov
June 9th, 2021

benefits of chatbot

Chatbots are here to stay. They’re not a trend or a hype. Instead, they have become necessities that are continually offering intuitive conversations to improve customer service and facilitate seamless customer support across different platforms. Chatbots not only analyze customer feedback and personalize customer interactions, they also empower the customer support team by giving valuable insights into customer behavior.

benefits of chatbots cover

According to tech research firm Gartner, chatbots will become crucial “co-workers” in the modern workplace. By 2022, about 70% of white-collar workers will interact with conversational AI platforms such as chatbots to perform their tasks more efficiently and get instant solutions to their concerns.

In general, the benefits of chatbots can vary depending on the industry, type of chatbot, and size of the organization, but the main benefits are cost savings. AI-powered chatbots save time and money, particularly manpower expenses.

After reading this article, you will have a better understanding of why chatbots are powerful tools, what are the most important benefits, and which ones actually have the business value.

What are chatbots?

chatbot software ui

Most people have interacted with a chatbot or have heard of it, at the very least on the concept level.

In fact, it has become an essential part of many businesses that have customer service or a service helpdesk, especially if they are within a mature or important industry with high customer expectations and fierce market competition.

Chatbots are artificial intelligence (AI) programs that can mimic human conversations or chat through messaging interfaces. These interfaces include websites, mobile applications, and messaging apps such as Facebook Messenger, WhatsApp, WeChat, and Viber.


Client-facing systems like a customer service chatbot automate customer communication and answer customer queries. They also support staff by handling repetitive tasks and even answering common but complex queries. They can also store and collect customer data for lead generation or targeting potential customers.

What are the types of chatbots?

There are two main types of chatbots used today when it comes to customer service automation.

rule based chatbot

Rule-based chatbots are based on pre-programmed responses guided by a decision tree or triggered by given keywords. They are commonly used in Facebook Messenger to automate certain aspects of customer support. They’re often split into a sales track for capturing contact details (sales funnel) and a support track for providing answers to basic queries or links to further information. In general, rule-based chatbots can only do common tasks and are limited in what they can do.

ai chatbot

AI-based chatbots use artificial intelligence/machine learning models to increase their functionality, gauge users’ intent, and in some cases, solve customer issues without the input of human agents. API integration with back-end systems can further enable bots to perform actual tasks for customers, rather than merely providing them with self-service instructions. This makes them a valuable asset for larger companies in telecommunications, banking, or the public sector.

What are the benefits of chatbots?

There are 8 most important chatbot benefits that provide value both for the user and organization.

The list of benefits is based on our experience working with the Governments of Estonia and the biggest Corporate companies like Elisa, Swedbank, and Veon.

1. They’re available 24/7.

You probably have no idea how many users are browsing your website off-hours with questions about the service or a product. It might be that they would want to cancel their subscription, or a potential user is researching a service. Some companies hire additional people to serve customers at later hours. However, it still does not mean that customers are willing to wait long for their requests to be handled.

In some industries, even a one-minute waiting time can either turn potential customers into paying ones or drive them away altogether.

The intelligent chatbot does not have waiting time issues as it can answer numerous inquiries at the same time. Enhanced natural language processing models (NLP) can address customers’ inquiries with a high first-contact resolution rate. These models truly perform tasks without any human assistance.

Even if you have a call center and customers are turning to you during off-peak hours, AI chatbots are able to handle these requests by implementing additional components from a callbot solution. The speech recognition model transcribes the call in real-time and the NLP classifier identifies the issue behind the request. If a chatbot provides an answer and the customer agrees to continue the conversation, an SMS with a link is sent to the customer, which can resolve the issue without human assistance.

2. They create personalized experiences.

Another important chatbot benefit that is sometimes overlooked is client personalization and better customer engagement. As revealed in the Segment research, 71% of the consumers are not happy when their shopping experience is impersonal. A chatbot is able to process customers’ personal data while browsing, which allows the bot to make a specific suggestion or troubleshoot when problems arise.

ai chatbot vs regular chatbot

Intelligent chatbots can integrate with back-end systems through an API connection. This can lead to higher customer engagement as the bot can instantly analyze relevant background information. It will solve issues based on personal data collection.

For example, instead of providing generic information about invoices, the bot looks at the person’s invoice data and communicates the necessary details. It can also make transactions instead of giving generic instructions. A case study from the leading Nordic Telecommunication company Elisa that implemented an AI assistant Annika, provides a good overview of the capabilities of such enhanced systems.

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3. They answer customer questions and detect sales opportunities through customer data.

There are various ways that a chatbot can leverage revenue. One of these is the outbound models that you probably have encountered on some websites. Such bots push messages with different options, e.g., booking a barber visit or purchasing a service that does not require human agent intervention. These bots send messages while you are browsing a website or an e-commerce store and allow integrating sales funnels with lead magnets and follow-up messages. Such chatbot conversations are limited to a specific function and may sometimes annoy customers.

chatbot benefits

Some enhanced AI chatbots are able to detect sales opportunities and forward these to the appropriate agent or department. This is crucial for large businesses with thousands of inquiries a day. With long waiting times, some of the sales opportunities are lost as customers leave.

For instance, the Titan AI Chatbot implemented at one of our telecommunication industry clients detects an additional 5% of contacts with sales potential, 50% of which turn into paid customers. The AI chatbot can also automate the sales process if back-end integration through an API and business decisions allow it.

4. They cut down costs.


Based on our experience and feedback from customers, the average cost per human customer service contact is EUR 3 to 5, depending on the market, the complexity of the questions, and the industry. The calculation can be performed by dividing the operational costs (OpEx) related to human agents by the number of contacts handled.

A truly intelligent chatbot can automate around 60% of all the customer contacts, from which it can fully resolve around half. The resolution rate can even increase up to 70%, depending on the case. This means that with 5,000 incoming customer inquiries per month and 60% bot automation, a company will save EUR 10,500 on costs. Of course, these numbers may vary depending on the industry, the specifications of the implemented chatbot, and the company’s business operations.

5. They improve new customer service agent onboarding.

Even the best AI chatbots can automate only 60% to 80% of the incoming inquiries. Still, some requests require a human touch—for instance, questions regarding contract termination or complicated technical issues. In big companies, such as those in telecommunication or banking, hundreds of different questions crop up daily. Knowing everything can be tricky even for experienced employees, especially since answers are written in manuals that are only updated from time to time. Also, businesses should keep in mind that customer support agents do not work longer than 2 years in the same position, meaning that companies have to constantly onboard and train new employees.

Some enhanced chatbots provide specific clusters of questions to certain employees. This does not only increase the speed of staff onboarding but also the quality of the answer, as it is easier to become an expert in one question than dozens at the same time.

6. They can turn CapEx into OpEx.

Nowadays, many companies switch from traditional hardware and software ownership to SaaS (software as a service) business models. This helps to optimize capital expenditures (CapEx) and increase the amount of free cash flow that can be reinvested into other parts of the business.

When it comes to customer service and an increasing number of customer contacts, building additional customer contact centers and hiring new agents are not efficient. It requires significant investment into the building and the infrastructure. Besides, if you rely on outsourcing your customer service, it is more difficult to control quality. As the COVID-19 crisis showed, some companies were forced to completely restructure customer service within one day.

In contrast, chatbot software technologies allow scaling the business fast to accommodate a sudden increase in customers. You can turn your CapEx into OpEx, as you will pay only for the contacts handled.

7. They can standardize solutions & create a knowledge base.

Human beings are predisposed to interpret an answer based on their personal understanding. In customer service, people might answer questions based on what they think is right, as people tend to rely on their experiences and can have many assumptions. Even if most agents follow manuals, it will not guarantee that customers will get the right answer, as manuals are often outdated. Without a proper solution, customer agents will give wrong or insufficient answers based on their personal interpretation of a possibly outdated manual.

solution flow example

A chatbot allows standardizing the knowledge base across all customer services. This almost entirely eliminates human error and guarantees meeting the expected SLA. For instance, Titan AI Chatbot uses a unique process of solution flow creation, which allows instant changes in the dialogues in case of some product updates.

We define this unique process as product management 3.0 that enables the product owner to be in charge of the dialogue creation, which helps them to better understand what are the actual problems of clients and how to solve them efficiently. Read our story about truly automated customer service to understand how chatbots improve customer problem resolution.

8. They increase customer satisfaction by assigning cases to agents responsible for results.

When communication goes through many people (agent, customer service manager, and finally the person who deals with that part of the business (subject matter expert or SME)), responsibility is shared. In this case, it becomes very complicated to understand the root cause of customer queries and improve client service procedures.

With chats, it’s easier for the SME to review how the issue is handled and suggest or make improvements. This helps to standardize the process and ensure that the provided information is up-to-date. For instance, the Titan chatbot software uses solution flow management that allows product owners to be in charge of creating dialogues to understand customers’ reasons for seeking support, and to eliminate unnecessary contacts in the future. This eliminates confusion and intervention from numerous people, and instead focuses on providing timely and meaningful solutions.

In summary

The numerous benefits of chatbots are too significant to ignore. Depending on the industry and specific use case, the greatest advantages from the business perspective are the significant decrease in customer service costs, the ability to collect valuable information for sales opportunities, and the optimization of the employee onboarding process. From the customer’s perspective, a chatbot gives them a personalized experience and matches their expectations better because the answers are instant, just like with Google. If businesses will not start investing in automation, they will be left behind.

We recommend reading our article about truly automated customer service that will give you a deeper understanding of how to automate customer service with enhanced AI or machine learning systems. If you are planning to implement a chatbot in the near future, please keep in mind that you can’t treat it as a regular IT project. We have seen cases where companies fail due to an incomplete understanding of the process. Make sure to consult with a trusted AI solution service provider to help guide you to success.


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