Did you know that 59% of customers are more likely to complete a purchase when brands answer their queries within a minute?[1] A study by Business Insider also found that 45% of consumers don’t care if they interact with a live agent or a chatbot, as long as the service is effective, convenient, and fast.[2]
So, whether you run a gift shop, a global financial institution, or fall anywhere in between, a chatbot can grab your customers’ attention at the right time to deliver the right message, offer easy access to information, and significantly improve any customer journey.
In this article, we will talk about what chatbots are, the different types of chatbot technologies, why chatbots are important to customer journeys, how to build one and how different industries are leveraging them.
Let’s dive in!
What is a chatbot?
A chatbot is a computer program that can mimic a human conversation and answer user questions in real-time. Basic chatbots run on scripted rules, which are predefined questions for which the bot is being programmed. However, more recently, apart from scripted answers, chatbots can also use artificial intelligence, machine learning, and natural language processing to understand user intent, answer questions in a conversational tone, offer alternative options, resolve common issues and transfer conversations to a human agent.
Today chatbots are used in a variety of channels, such as instant messaging apps, websites, and mobile apps. Sometimes people confuse chatbots with virtual assistants such as Amazon Alexa, Siri, Microsoft Cortana, or Google Assistant. Although they both aim at making human lives easier through conversations, there is a stark difference when it comes to their functionality.
While virtual assistants can help you with basic everyday tasks such as making a phone call or checking the weather, a chatbot on the other hand can help you with FAQs, payment queries, order details, ticket bookings, scheduling meetings, and much more in real-time.
Types of chatbot technologies
1. Linguistic Based (Rule-Based Chatbots)
Sometimes referred to as ‘rule-based’ chatbots, these types of chatbots use ‘if/then’ logic to create basic conversational flows. These chatbots are set up with workflows that recognize specific words, their order, synonyms, or common ways they are phrased in a question, and then show appropriate responses based on the rules assigned.
Although interactions with rule-based chatbots are quite specific, these chatbots can also refer users to relevant information within your knowledge base where they can find further information. These bots can be further trained on different variations of the same question to ensure that questions with the same meaning receive the same answer.
2. AI Chatbots
AI chatbots are more complex than rule-based chatbots. They use deep learning to understand customer intent and are more conversational, data-driven, and predictive.
These types of chatbots generally offer more interactive and personalized interactions as compared to rule-based chatbots. These chatbots leverage natural language processing (NLP) to understand and apply predictive intelligence to personalize the user experience.
AI chatbots are impressive but developing machine learning algorithms and predictive analyses in-house is an expensive task for a lot of businesses, both in terms of cost and effort. So instead of developing AI and ML technology all by yourself, it’s advisable to go for AI-powered chatbots that require no coding know-how and that you can directly integrate with your website, CRM, or customer support software.
3. Hybrid Chatbot – Best of both worlds
Although rule-based chatbots and AI chatbots have several advantages, they have their own limitations when used individually.
A rule-based model is simple to set up and is extremely efficient when it comes to answering common questions and following a specific set of rules. But these bots are incapable of understanding customer intent and providing a smart answer.
On the other hand, AI chatbots have nailed the smart and predictive answers based on user intent, but it is usually a time-consuming task to train them, the process requires a lot of data, and it cannot deliver 100% final resolution or even seamless interactions when sufficient data is not available.
And that’s where the hybrid approach comes into the picture. It combines the capabilities of both models to deliver a more complex conversational AI chatbot solution.
The hybrid model uses the rule-based model to answer basic and repetitive queries and build a conversational system even without data. At the same time, it uses machine learning & neuro-linguistic programming to learn from the data over time to make smart and complex conversational flows that are impossible to create using just rule-based chatbots.
Here is a great use case explaining why you should use a hybrid chatbot and how it can help you achieve your business goals.
That’s why a hybrid model is a way to go if you are a business that is looking for a flexible, smart, and fast way to improve customer service.
What are the benefits of chatbots?
Today chatbots are supercharging customer support and by the end of 2023, they will save 2.5 billion hours for businesses. Although most companies are using chatbots to improve customer service, here are a few data points to help you understand why you should use chatbots today.
- Better engagement – 40% of the millennials claim to engage with bots on a daily basis [3]
- Quicker complaint resolution – 90% of the businesses experienced quicker complaint resolution after using chatbots.[4]
- Reduce cost – Chatbots can help businesses save up to 30% on customer support costs.[5]
- 24×7 support – 51% of consumers say a business needs to be available 24/7 to answer customer questions. [6]
- Higher response rate – Using bots with more engaged audiences will lead to an 80-90% higher response rate.[7]
- Personalized support – 64% of businesses believe that chatbots help them provide a more personalized support experience to their customers.[8]
- Millennials prefer chatbots – 67% of US millennial internet users would purchase a product/service from brands using chatbots. [9]
How to build an AI chatbot in 3 easy steps
Although a typical chatbot development involves a lot of coding, setting up a chatbot using Freshchat is so easy that you can set up a basic chatbot flow even during your lunch break.
Here are 3 quick steps to get you started with Freshchat’s chatbots.
Step 1: Sign up for Freshchat. After signing up, navigate to the chatbot section and create a new bot.
Step 2: Create answers or custom flow – Identify the most commonly asked question, create answers and complex chat flows.
Step 3: Preview and publish – Preview the bot flow to check how it works in real-time and once you’re done, hit the publish button to make it live.
For a detailed step-by-step guide to set up chatbots for your business, read our guide on how to build a chatbot.
Ultimate library of chatbot examples
Chatbots are used in different industries to automate FAQs, have better customer interaction, achieve higher conversion rates, and ultimately improve customer satisfaction. Here are two examples from our chatbot examples library that will help you better understand chatbot use cases.
E-commerce
Healthcare
Head over to our chatbot examples library for more use cases and chatbot templates.
Final thoughts
While rule-based chatbots and AI chatbots have their own place in customer service, the hybrid model leverages the true potential of chatbots. With Freshchat’s chatbots, you get the best of both worlds. Choosing Freshchat as a chatbot provider will save you the development cost of ML and AI technology, you can build chatbots without writing a single line of code and can deploy them on the web, your apps, and on messaging channels such as WhatsApp, Apple iMessage, Facebook Messenger, and LINE messenger.
We will do all the heavy lifting for you so that you can start delivering a delightful customer experience.
Try Freshchat for Free
Sources
1. http://public.ifbyphone.com/wp-content/uploads/2012/05/Ifbyphone-Consumer-Response-survey-May-2012.pdf
2. https://www.businessinsider.com/consumers-are-abandoning-traditional-customer-service-channels-2018-1?IR=T
3. https://www.marketingdive.com/news/study-chatbots-gain-popularity-with-consumers-especially-millennials/447490/
4. MIT technology review
5. https://www.ibm.com/downloads/cas/GQDGPZJE
6. https://www.inc.com/nicolas-cole/the-power-of-live-chat-5-surprising-statistics-that-show-how-consumers-want-thei.html
7. https://mhb.xyz/essays/chatbot-marketing/
8. https://www.smallbizgenius.net/by-the-numbers/chatbot-statistics/
9. https://www.emarketer.com/articles/topics/retail-ecommerce
