What is a chatbot and when do you need one? A comprehensive review

If you work in customer service, you’ve probably heard a lot about chatbots over the past couple of years. One of the most widespread and successful customer-facing AI applications, chatbots are just about everywhere nowadays – in our favorite messaging apps, on the websites we use every day, and even in our social media direct messages.

In this article, we’ll take a look at

What is a chatbot
What are the benefits
Why are they important
What is the technology behind
What is a chatbot useful for
Do you actually need a chatbot?

Only a few years ago, the idea of talking to a bot felt both intriguing and a little bit strange. But recent technological advances have made chatbots a valuable and cost-effective addition to a range of everyday business applications. What is a chatbot, and how do they work? Let’s find out.

What is a chatbot?

Chatbots are basically artificial intelligence programs that can simulate human conversation or chat through messaging interfaces, such as websites, mobile apps or popular messaging platforms such as Facebook Messenger, WhatsApp and WeChat.

You’ve undoubtedly already come across a chatbot today – they tend to pop up within a few seconds of you arriving on a homepage, asking you what they can help you with or if you’re looking for anything in particular.

Chatbots may feel like a relatively new development, but they’ve actually been around for several decades – the first ever chatbot, known as ELIZA, was developed by a MIT professor back in the early 1960s. But while conversing with a bot (or attempting to do so) used to get surreal relatively fast, modern chatbots are able to understand complex queries, gage the intent behind a question and provide highly relevant answers. What’s more, they can learn over time to provide increasingly personalized responses.

How do they do that? The answer is AI.

What are the benefits of chatbots and why are they important?

There are several reasons why businesses across the world are making chatbots part of their day-to-day operations. The first and most obvious is that people love to text. Take a look at the person sitting next to you on the train: there’s a pretty good chance that they’re hunched over a messaging app, such as Facebook-owned WhatsApp, which currently delivers around 100 billion messages a day. Added to this, consumers, especially younger ones, give great importance to swift responses when it comes to customer service. Chatbots integrate with the platforms users know and love to provide quick answers to queries, deliver updates, recommendations, and insights, book appointments and provide after-sales follow-up.

But chatbots do so much more than just respond to queries. They can also act as fast, efficient, and cost-effective virtual assistants, supporting your human resources, IT desk, and marketing teams by handling routine queries, helping qualify leads, optimizing schedules, and streamlining operations – all for a fraction of the cost of recruiting new personnel.

What is the technology behind chatbots?

Advances in Natural Language Processing (or NLP) are what makes modern-day chatbots a true asset to the workplace. NLP is a branch of computer science that studies the interactions of computers and human language: basically what makes it possible for machines to process, analyze and interpret the way we humans speak.

Contrary to what you may think, not all chatbots use NLP: the kind you encounter on messaging apps are most often programmed to use keywords to respond to non-complex queries or carry out simple actions, such as booking appointments. This limits them to a very small number of questions they can handle, but still, such chatbots are good for ordering pizza or making a hotel booking.

AI-based chatbots, on the other hand, use deep learning to gauge users’ intent, carry out contextual analysis and provide highly relevant personalized answers. This enables them to provide services that go beyond simply providing flight schedules or booking manicures. Sophisticated AI-based chatbots can pick up on subtle conversational cues that enable them to identify causes of customer dissatisfaction, provide actionable insights and hand the interaction over to a human agent if required.

What is a chatbot useful for? What are the use cases?

Chatbots’ ability to save time and money, streamline operations and improve responsivity makes them valuable across a wide range of industries. Here are a few examples:

Healthcare: let’s be clear about one thing: chatbots aren’t going to be replacing trained medical professionals anytime soon. One thing they can do is considerably relieve pressure on strained human and financial resources by gathering information from patients,, streamlining appointment management, and helping ensure people follow their treatment plan with timely reminders, among other applications. In 2019, VCs invested more than $800 million in start-ups working on chatbots for healthcare.
Retail: chatbots aren’t just a great way for e-commerce stores to provide customers with personalized recommendations and customer services. Brick-and-mortar retailers can use chatbots to create meaningful online/offline experiences that help customers find the closest store with the products they want in stock, locate the best prices and identify other products they may be interested in. Major cosmetic brands such as Sephora and Estee Lauder use chatbots to research customer preferences and enable buyers to try out products using augmented reality.
Customer service: customer experience is a fundamental part of brand loyalty: research shows that 93% of consumers are prepared to make repeat purchases with companies that offer great service. But even for large banking and telecommunications firms, having a multilingual, round-the-clock support team on call is easier said than done. Enter chatbots, which can take the weight off the shoulders of agents and enable them to focus on more complex cases that require a human touch. For example, telecommunications company Elisa Estonia found that their chatbot was able to automate and answer up to 60% of customer queries.

Are chatbots right for your company?

Getting started with chatbots can be a daunting prospect, but with some preparation and a little expert help, you can have your new team member up and running in next to no time. One thing is worth knowing however: AI-enhanced chatbots require a little more work than those that simply follow a flow of commands (i.e, the majority of the chatbots we come across today). Here’s how to ensure your chatbot is truly valuable to your company:

Identify your use case and define your KPIs

Work with your team and stakeholders to identify the key areas where an AI-enhanced chatbot can make a difference. Ask yourself what you hope to bring to your company and keep end value for your team and customers in mind at all times. Here at MindTitan, we reckon that companies having more than 1000 customer conversations per month will draw the greatest benefit from having a chatbot.

Ask yourself where chatbots can improve your customer service

Chatbots have a wide range of applications, but that doesn’t mean they’re right for all customer service cases. Does your business rely on highly—personalized, one-to-one contact with your customers? A simple chatbot probably won’t be able to help you with that as in this case you will need full customer service automation. But if you also need to automate basic processes, such as accessing information from your CRM, a chatbot will be a valuable asset.

Find the right partner

AI-enhanced chatbots can bring true value to your company and your processes, but their implementation requires expertise and a strategic approach. Opt for a partner with a proven track record in developing custom AI chatbots and machine learning solutions for companies such as yours.

In summary

So what is a chatbot, in a nutshell? Chatbots are increasingly sophisticated artificial intelligence programs that come with a wide range of benefits for businesses across many different industries. Their ability to automate time-consuming everyday processes, streamline business operations, improve the customer experience and provide valuable insights make them a worthwhile investment for companies large and small. To find out how chatbots can benefit your business, get in touch with the MindTitan team.

Do you want to implement a chatbot?

Kristjan Jansons
Co-founder, CEO

Kristjan has helped various companies from Japan, Saudi Arabia, and Switzerland to implement the latest AI solutions. Having a strong technological background and understanding of the business processes helps him to understand specific business needs and offer necessary AI solutions for matching these goals.

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