Customer Service Glossary

What Is a Chatbot?

A chatbot is an artificial intelligence (AI)-powered software that companies use to interact with customers through live chat, website-based instant messaging platforms, mobile applications, or telephone calls. Many chatbots use technologies such as machine learning, natural language processing, and natural language understanding (NLU) to generate human conversation and engage with clients in real-time. 

Chatbots are often considered an advanced application of artificial intelligence. When businesses incorporate chatbots into their customer service offerings, shoppers can immediately connect with the bot, eliminating the lag-time inherent with live staff members. However, chatbots are also known to be a significant source of customer frustration, too.

The quick assistance – along with the personalized aid provided by some chatbots – can result in a slight boost in customer satisfaction and user experience. That said, chatbots vary in ability. Companies can opt for basic answering services that follow a strict, limited script. However, businesses may also choose a more advanced digital assistant that delivers relevant, human-like responses based on the context of the conversation. 

How Do Chatbots Impact Customer Service?

Chatbots were once considered a “nice to have” feature. In recent years, chatbots with human support have become a necessary addition for companies that want to gain a competitive edge in their market while ensuring that their customers can enjoy a consistent, satisfying user experience. As a result, Forbes estimates that the chatbot market will reach a valuation of $1.25 billion by 2025

With that in mind, instant messaging chatbots benefit customer care departments in several ways, including: 

1. Reduced Costs

Chatbots help reduce customer service costs by as much as 30%. The conversational system does so by aiding customers in reaching a suitable solution through self-help resources, scripted answers, and escalation to a live agent when needed. 

As a result, organizations can hire fewer agents to manage the same number of support requests. In addition, agents can prioritize sensitive tickets while the automation program handles minor issues and common questions. 

2. 24/7 Support

Unlike their human counterparts, chatbots work 24/7 to assist shoppers through phone calls, computer-based instant messaging platforms, mobile applications like Facebook Messenger, and other communication channels. Customers can ask a question and receive immediate assistance with purchasing problems, order inquiries, or other concerns. 

3. Advanced Lead Qualification

Chatbots are well suited to busy customer care departments. However, businesses can also use them to qualify leads through an automated sales funnel. Further, the bots provide AI-powered presale assistance and other automated marketing tools that increase conversion rates. 

4. Improved Engagement

Chatbots help improve customer experience through personalized, real-time, and relevant assistance. Firms can program chatbots to initiate conversations at certain times, encouraging customers to interact with the bot and take the next step on the buyer’s journey. 

5. Increased Customer Satisfaction

Chatbots can help boost customer satisfaction through friendly, customized conversation and immediate assistance. Customers can access chatbot technology at any time and from any location through social media sites or instant messaging platforms like Facebook Messenger.

Additionally, chatbots store user history and past conversations, making it easy to retrieve customer information for a seamless, personalized experience. 

Types of Chatbots

Generally speaking, businesses can choose from two types of chatbots, including:

1. Data-Driven Chatbots

Also known as virtual assistants, data-driven chatbots combine sophisticated AI with increased contextual awareness to deliver a personalized, human-like experience. Data-driven chatbots are powered by pattern recognition, machine learning, natural language understanding, and natural language processing.

%uFEFFThe bots combine the AI processes with predictive tools and data analytics, resulting in a fully personalized customer care experience.

2. Task-Oriented Chatbots

Task-oriented, or declarative, chatbots typically perform a single function: generating short, scripted responses to FAQs or simple requests. Task-oriented chatbots use NLP to ensure that their answers are conversational. Despite their limited functionality, task-oriented chatbots are the most commonly used bots. 

Why Businesses Choose Chatbots for Customer Support

Businesses across virtually every industry use chatbots to enhance customer satisfaction, streamline the buyer’s journey, and create a more efficient customer care department. The bots can handle as many as 80% of customer requests and reduce customer support costs by as much as 30%, helping businesses save money while increasing scalability and minimizing customer churn.

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