Chatbot software is now widely used in customer service, marketing, and even internal company functions.
They can automatically interact with users by answering questions, performing tasks, chatting, and more, all without human assistance.
In this guide, we’ll explore how chatbots work, the types available, and real-world examples of how chatbots are used in a variety of industries.
What is a chatbot and how does it work?
In its simplest form, a chatbot is software designed to mimic human conversation. Chatbots use a combination of natural language processing (NLP), machine learning (ML), and sometimes simple rules to understand what a user says and respond to it.
Here’s a brief explanation of how each part works:
- Natural Language Processing (NLP) Helps chatbots understand and comprehend human language. This includes breaking sentences into smaller parts, figuring out the emotions behind words, and recognizing what the user is trying to accomplish.
- Machine Learning (ML) Allows chatbots to get better over time. By learning from previous conversations, chatbots can become more adept at answering questions and handling more complex ones. Some advanced chatbots even use deep learning to understand language in a similar way that humans learn.
- Rule-based system A simpler chatbot that follows a set of predefined rules. It responds to specific keywords or patterns in what the user says. It is not as flexible as NLP-based chatbots, but it is easier to build and works well for simple tasks.
- Backend Integration Chatbots can schedule appointments, answer specific questions about accounts, and process orders. To handle these tasks, chatbots need to connect to backend systems such as CRM software, databases, or other business applications.
Types of Chatbots
Chatbots come in many different types, each designed for specific tasks and varying levels of complexity. The most common types are:
Rule-based chatbot
Rule-based chatbots are the simplest type. They follow predefined rules and logic and are great for answering common questions, helping with simple customer service tasks, and qualifying leads.
For example, if you’re shopping online, a rules-based chatbot could help you choose a product by helping you choose options like size, color, and category.
AI Chatbot
AI chatbots are a bit more advanced. They use natural language processing (NLP) and machine learning (ML) and are often used in customer service to answer a variety of questions, recommend products, or assist with notifications.
For example, AI chatbots can help troubleshoot device issues by understanding the user’s problem and suggesting solutions.
Hybrid Chatbot
Hybrid chatbots combine both rule-based and AI capabilities. These chatbots can handle simple tasks with predefined rules, but turn to AI when things get more complex.
Integrating these bots can be useful in situations where you need to mix simple and complex interactions.
For example, a banking chatbot might use a rules-based approach to easily tell you your balance, but for something like a loan application, it might turn to AI to guide you through the process.
Voice activated chatbot
Voice-activated chatbots are becoming increasingly popular, especially on smart devices. They use speech recognition to understand what the user is saying and then provide a response based on that input.
You can find these features in virtual assistants like Amazon Alexa or Google Assistant, which can help you with tasks like playing music, setting alarms, and controlling smart home devices.
Social Media Chatbot
Social media chatbots are built into platforms like Facebook Messenger, WhatsApp, and Instagram, allowing you to interact directly with your brand or service within the chat interface.
These chatbots are used for customer support, marketing, and even to help you shop directly through chat.
For example, chatbots in Facebook Messenger let you browse products, make purchases, and track orders without leaving the app.
Transactional Chatbot
Transactional chatbots are integrated with backend systems and focus on booking appointments, processing payments, and fulfilling orders.
For example, a restaurant could use a chatbot to reserve a table, place an order, and even pay through a simple chat.
Contextual Chatbots
Contextual chatbots are the most personalized: they remember your previous interactions and use that information to provide a more personalized experience.
These chatbots are very useful for customer service. Remembering previous issues can make a big difference, and in e-commerce, they can recommend products based on what the user has previously liked.
In healthcare, contextually sensitive chatbots could remember a patient’s medical history and provide advice or notifications based on that information.
Real-world examples of chatbots for businesses
IT chatbots are used in a variety of industries. In online shopping, chatbots help make the experience more personal and enjoyable. For example, H&M has a chatbot on Kik that asks users about their style preferences and recommends clothes they might like.
This helps shoppers find what they want faster, and helps stores increase sales by directing customers to the right products.
Customer service chatbots like Bank of America’s Erica help with everyday banking tasks.
Erica checks customers’ account balances, pays bills, and offers financial advice, helping with routine questions while human managers handle more complex issues.
This frees up human customer service agents to focus on handling more complex issues, while ensuring customers get quick, reliable help with routine questions.
Chatbots are also having a big impact on healthcare. For example, Babylon Health has a chatbot that helps people figure out what might be wrong based on their symptoms.
We can suggest whether you need to see a doctor or if there are simple steps you can take at home. This can help people get quick advice and reduce unnecessary hospital visits.
Chatbots make travel easier to manage. KLM’s Facebook Messenger chatbot helps travelers book flights, check in, and get updates on their travel plans.
In the education sector, IT chatbots, like those used by Duolingo, help people learn new languages. These chatbots simulate real conversations, adapt to the user’s skill level, and provide feedback.
conclusion
Chatbots have evolved from basic rule-based systems to advanced AI tools that can handle more complex conversations.
These services offer many benefits, including providing 24/7 customer service, creating personalized experiences, and improving the efficiency of business processes.
Understanding the different types of chatbots and how they work can help businesses integrate chatbots to better meet their needs, increase customer engagement, reduce costs, and drive growth.
Going forward, leveraging chatbots will not only be a smart choice for businesses, but will also become a necessity for staying competitive in the rapidly changing digital world.
Are you looking to enhance your business with AI? SCAND offers expert chatbot and AI software development services tailored to your needs. Contact us today to find out how we can help you with your needs.