Chatbots Explained: The Complete Guide to Conversational AI

Remember when droids and bots seemed so far fetched? All the work fields around the world now rely somewhat on chatbots. This technological advancement has successfully paved its way into the business, the technical, and the entertainment markets.

Chatbots Explained: First Things First

Chatbots are one of many fruitful merits of web developing. Experts agree that chatbots are one of the most efficient ways to communicate between individuals and robots or between bots and other bots.

They are the natural extension of years and years of constant work to offer time-efficient and innovative solutions. Bots could help business owners and service providers to ensure customer satisfaction.

Moreover, the perks of using chatbots are endless. Companies have shifted to bots after the program showcased its capabilities in the business world. Not only do bots present an alternative to calling centers and support contacts, but they have proven to be just as efficient as human customer service personnel in some cases.

Bots were designed to be responsive. They carry out various functions at very little costs. Thus, saving up a lot of money that previously went to other employees. Bots cannot be confused with employees, on the contrary, the former was developed to facilitate the lives of customer support agents and allow them to focus on the truly intriguing parts of their job instead of spending relentless hours on answering FAQs.

In addition to saving cost and time, bots render users’ feedback. Also, it saves up the complaints and inquiries received. Thus, provide business owners with valuable data that can be used later to develop the company’s performance and also get a better glimpse of the current market trends.

Chatbots Explained: Getting Started

Any beginner has one of two options, either to read into building a bot by himself or by consulting an expert and hiring a company to do it. Anyway, this guide will illustrate what chatbots are and why businesses need to get started with building their own in order to improve their performances. It will also get into the nuts and bolts of chatbots and how they can be used to boost a company’s marketing strategy.

What Is a Chatbot and How Does It Work?

As defined by Webopedia, the term “Chatbot” is short for a chat robot. A chatbot is also an interchangeable name for virtual assistant and conversation agents. “It is  a computer program that simulates human conversation, or in order words, chat, through artificial intelligence.” Originally, chatbots were designed to conversate with human beings, but since its initial success, programs have also developed bots that can communicate with each other.

These talkative robots became essential in today’s work field; they are heavily used in e-commerce customer service, service providers, call centres and online gaming. To understand the differences between chatbots and more advanced conversational agents, IBM explains that for instance, chatbots can freely inform users about the weather, while agents can grasp that users are asking about the type of clothes they should be wearing in that weather.

Conversational programs in general employ language recognition technologies which helps them further in understanding and responding to users. Mega companies such as Microsoft, Amazon, and Facebook have developed Natural Language Processing tools (NLP) that allow the bots to capture the users’ intents – still NLP technologies do not suffice to run a fully functional bot.

What Should Chatbots Provide?

• Responsive, interactive experience with the customers or users.
• Real-time, efficient answers.
• Reduction of customer service personnel costs.
• Improving overall user satisfaction.
• Acceleration of chatbot development with the integration of AI capabilities.

Building a Bot

Contrary to popular belief, building a chatbot is not complicated. Yet, before illustrating the steps into building one, here’s why any business can use a chatbot.

1. Chatbots offer a responsive, conversational channel that will increase the interactions between businesses and users.
2. Chat widgets help companies keep track of the most frequently asked questions and complaints received.
3. They provide an immediate reaction, thus, improving the brand’s responsiveness image.
4. Keeps personnel costs at low.

According to IBM Cloud Education, building a chatbot starts off with the same questions one should ask himself when starting a new project:

Goals and Scope

Clear identification of goals and project scope. What exactly does the business need a chatbot for? Are there any challenges halting its progress?

Conducting Searches

Research about the potential users; their most common complaints, searches, and language. Equipping the chatbot with the intended user drives will definitely improve the program’s logic and, ultimately, the overall user experience.

Data Needed

Definition of the entities (objects or topics) relevant to the end user’s intent. Chatbots should offer valuable data that serves the user’s needs.

Front-End Apps

The previous three points are basically everything a business needs before it starts developing its microservice or front-end web app. At this stage, a chatbot is easily integrable into a customer support website.

As IBM elaborates: “The front-end app you develop will interact with an AI application. That AI application — usually a hosted service — is the component that interprets user data, directs the flow of the conversation and gathers the information needed for responses. You can then implement the business logic and any other components needed to enable conversations and deliver results.”

Things to Pin Down While Building a Bot

Businesses have two options when starting off with bot building. Firstly, they can always code their own bot. While this an extremely hard procedure, its merits are great! Customised chat robots offer more flexibility. The second option is building the bot on a specialised platform.

What Is Chatbot Technology?

According to this study by Petter Bae Brandtzaeg, “the real buzz about this technology did not start before the spring of 2016. Two reasons for the sudden and renewed interest in chatbots were [number one] massive advances in artificial intelligence (AI) and a major usage shift from online social networks to mobile messaging applications such as Facebook Messenger, Telegram, Slack, Kik, and Viber.”

Chatbots are changing the web as the world knows it. This powerful and extremely innovative technology could eventually outgrow into a fully-fledged personal assistant that can pretty much do everything! Chatbots inform users with delays in their schedules, updates on their packages and they can just as easily respond to daily tasks such as calling an Uber, phoning someone or even setting up a meeting.

“Many businesses already have phone trees and they do work though most users get grumpy using them. Text-based response trees are much easier and faster and that is what I expect a lot of early bot interactions to be. Sometimes with the ability to chat with a live person.” — Josh Elman, Partner at Greylock.

The first thing that strikes new users when trying out chatbots is whether the bot can handle complex questions; truth be told, this depends on how advanced the robot is, but the good news is that some bots have human personnel behind them to answer the most complicated questions and inquiries.

Forrester’s Julie Ask said: “[Chatbots] certainly have very limited functionality… Most of them are hard-coded decision trees. Most of them need to escalate to humans very quickly to do anything more than answering a simple question.”

Why Chatbots Are Important

“Chatbots represent a new trend in how people access information, make decisions and communicate…Messaging has become a huge component of how we interact with our devices, and how we stay connected with the people, businesses and the day-to-day activities of life.

Chatbots bring commerce into this part of our lives, and will open up new opportunities,” Christie Pitts of Ventures Development of Verizon Ventures said. These applications are the connection between people, services and improving customer experience as the market knows it.  Chatbots are the natural evolution of messaging for companies. Not only do they make the employees’ lives easier, but they also cut HR costs significantly.

Companies can determine the right applications that best fit their needs by exploring the combinations of AI techniques such as natural language processing (NLP), machine learning and semantic understanding.

Why Employ a Chatbot?

Chatbots can enhance the overall user experience in several ways:

• They allow websites to increase their responsiveness levels: In today’s business world, having quick responses became the norm. Users and potential clients will not tolerate waiting for an email or phone-based customer services, they want everything and they want it as soon as possible. And having a chatbot will provide them with just that.
• Chatbots offer 24/7 visibility: Allocating costs for a human customer support representative all day long is extremely expensive and hectic. Chatbots, however, provide an alternative solution that is more cost-effective and is not bound by weekends or national holidays.
• Bots are better than FAQ sections: Keeping the tone conversational is much more efficient. They allow users to ask questions in a casual manner, ask follow-up questions, and customise their inquiries. As opposed to FAQs which might be relevant but not address the exact question.
• Users now expect informal assistants: As said before, chatbots are essential for 2019’s consumer experience. People have grown used to having personal assistants on their smart devices. They use the same level of informal interaction to get information online via search engines, or any place else.

Cutting costs

Aside from being practical and time-convenient, chatbots guarantee a huge reduction in support costs. According to IBM, the influence of chatbots on CRM is staggering.  They provide a 99 percent improvement rate in response times, therefore, cutting resolution from 38 hours to five minutes. Also, they caused a massive drop in cost per query from $15-$200 (human agents) to $1 (virtual agents). Finally, virtual agents can take up an average of 30,000+ consumers per month.

Being on the Customer’s Good Side

Having functional chatbots will improve brand loyalty and consumer satisfaction. Why? Simply put, because they cultivate the connection between the company and its customers. Whether the bot answers mere technical questions, or provide info about employees’ corporate benefits, they do make a big difference. 

How Chatbots Explained Their Advantages to the World

These six perks stated Digital Doughnut summarise why chatbots are here to stay:

Staying Trendy, Taking Part in Messaging Platforms

Users are not so keen on downloading lots of apps, especially since all users rely on core apps such as Facebook, Whatsapp, Instagram and more. Instead of trying to branch out of the trend, integrating a chatbot within these popular platforms can be a potential cost and time saver.

Real-Time Assistance

Users, particularly online shoppers, need support during their purchasing spree. At these times, having a responsive assistant is crucial, it could be a potential deal maker or breaker. Shoppers might need information on the product they are looking for, they may have inquired about the prices and the post-purchase insurance.

Or simply, they may be experiencing registration or check out hazards that they need help to overcome. Moreover, chatbots mimic real-time purchase experience with a salesperson. Thanks to the interactive technologies and the quick grasp of questions and inquiries asked.

24/7 Customer Support

This point bears repetition. Customer support is a fundamental part of any user-friendly website. Chatbots can be adjusted to provide an automated answer to common questions, similar to the FAQ section on websites. Companies can also program bots to forward complex questions to a human customer service representative for extensive assistance. The beauty of these bots is that they are capable of addressing multiple customers at a time. No queues involved.

Active Customer Engagement

Typically, companies applied a passive engagement method with consumers. In other words, customer support only responds to complaining consumers – but never initiate any conversations or look for feedback. While this method was fine for a long while, it doesn’t work anymore with millennials. Users want to communicate with attentive brands who have a 24/7 support system and they won’t settle for anything less.

Increased Customer Engagement

According to Bain & Company, “We found that customers who engage with companies over social media spend 20 percent to 40 percent more money with those companies than other customers. They also demonstrate a deeper emotional commitment to the companies, granting them an average 33 points higher Net Promoter® score (NPS®), a common measure of customer loyalty.”

Collecting Data and Consumer Insights

Chatbots are great information collectors that not only communicate with customers but also enable companies to understand their targeted segment more. Paying attention to the inquiries received in bots is a possible business advantage.

It allows owners to make improvements to their services and making changes to enhance the overall consumer experience on the website. In addition to general data collection, these conversational agents can, too, allow companies to track buying patterns and consumer behaviours.

Improved Lead Generations

Bots are versatile tools. Companies can utilise them into gathering data that can improve lead generations and possibly higher conversion rates. They can also help businesses determine the value from the not so valuable metrics or KPIs such as budget, relevancy, resources and more.

Tapping Into Global Markets

Relying on a team of human customer service representatives covering multiple languages all year round is every company’s dream. However, this dream is extremely impractical and costly – the next best thing is having advanced bots that can cover this scope of work.

Chatbots are efficient 24/7, 365 days a year – enabling the rest of the company’s employees to focus on improving their products and businesses and scaling up operations to include a global work frame. 

Are Chatbots and Virtual Assistants the Same thing?

This confusing question is very common on several search engines. According to Inbenta, there’s no one answer to whether chatbots and virtual assistants are the same. It depends on the chatbot itself and its capabilities. While chatbot is the more popular term on Google Trends, the variations between both keywords are minor.

Debunked Myths About Chatbots

Chatbots Are Not as Intelligent as They Should Be

The technology integrated into the development of bots enables them to understand the meaning of the inquiry rather than just the keywords typed. The power of natural language processing (NLP) allows chatbots to become smarter and more flexible to commands and questions.

Chatting robots are in constant development and including more and more AI features that further facilitates the conversation between the bot and the end user. Lastly, at times of hesitation, bots can be connected to a human customer service representative to address the complex question more appropriately.

As retrieved from IBM, A Juniper Research report stated that by 2022, chatbots and NLP will save companies about $8 billion yearly in CRM costs. This number far exceeds the humble $20 million in estimated savings for 2017. This data further proves that chatbots are gaining power and popularity by the minute. According to the report: “For every second, chatbots can shave off average call centre handling times, call centres can save as much as $1 million in annual customer service costs.”

Chatbots Cannot Carry out Numerous Functions

Bots vary in their functionality, but their technologies are constantly advancing. Therefore, the gap between what bots are and what users want them to be is narrowing. Chatbots can answer informal questions about diverse topics instead of just responding to keywords.

Virtual Assistants or Chatbots Can Remember Contexts Excellently

Although this update can easily happen in the near future, chatbots still have trouble in remembering keywords and information entered during a conversation. However, certain programs are customised to store data such as email addresses, passwords, and phone numbers.

Chatbots Explained with Examples

What better way to demonstrate the functions of chatbots than by illustrating the market’s top programs? While the masses still argue whether chatbots, virtual assistants or conversational agents are actually the same thing. Developers and business tycoons such as Microsoft, Facebook and Apple have already worked to bridge the gap between all three.

Siri

Is Siri a Chatbot? Siri is Apple’s very own version of a conversational agent or bots. It relies on voice commands instead of texting. Here are the pros and cons of Siri:

The Pros:

1. Siri is extremely easy to use: even for those who are new to smart devices, Siri is a popular app. All it needs to operate is Wi-Fi or connection to a cellular network. Apple users can turn it on from Settings > Siri.
2. Multi-functional: Apple users love treating Siri as their virtual assistant. And frankly, the program does a great job at it. Users can ask Siri to activate low power mode, call someone, enable do not disturb, or even entertain them when they’re bored.
3. Can be used on all Apple devices: Yes, Siri is available on iPods, iPads, iPhones,  Apple TV, Apple Watch and Mac computers.

The Cons:

1. Cannot operate offline: Siri’s charming personality and witty answers actually rely on cloud computing, therefore, to this date, it has to have an active connection to Wi-Fi or cellular network to work.
2. Listening issues: Siri has got a reputation for mishearing. In order for the chatbot to understand the command, users have to speak very clearly; people with strong accents or who speak quickly can struggle with this program. 

Google Assistant

This app is Google’s new replacement for “Google Now” which grew very popular among Apple and Android users; it’s considered much more developed than Siri. Google Now was characterised with its advanced voice search functionality. Since it combines Google’s search algorithms and complex g (NLP) technology.

Just last month, Google launched its latest Google Assistant. To help readers get a better glimpse of the redesign, Google’s Scott Huffman explained: “Since the Assistant can do so many things, we’re introducing a new way to talk about them. We’re them Actions. Actions include features built by Google—like directions on Google Maps—and those that come from developers, publishers, and other third parties, like working out with Fitbit Coach.”

Thus, this program can be a great option for doing traditional research on search engines, inquiring about the weather and cooperating between third-party apps. “All in all, today there are more than a million Actions you can take with your Assistant,” he added.

Alexa

Amazon’s Alexa, too, is known for being a know-it-all assistant and voice-control system. It was named after the great library of Alexandria. When compared to other phone-based assistants in the market today, Alexa always comes out victorious. The bot is great for granting easy wishes such as playing music, getting an Uber or even dimming the lights. Alexa can also add items to Amazon lists via voice command. What sets this chatbot apart from others is the ability to build personalised “sub-bots” as per one’s demands.

Seconding The Wirecutter: “What sets Alexa and Echo speakers apart from first-generation voice assistants is their responsiveness. There’s no activation button to press. Simply say the trigger word (either “Alexa,” “Echo,” “Amazon,” or “Computer”) followed by what you want to happen, and it will usually be done—as long as you’ve set up everything properly and are using the correct command.” While this sounds like a part from a Star Wars movie, it’s as simple as that. Alexa made communication with conversational agents much more natural. 

What AI Techniques Are Used in Chatbots?

Before getting into the utilities of AI, business owners should realise why it’s important to include it in their CRM. “AI allows companies to deliver these smarter, more personalized and predictive experiences that customers have come to expect, but the human touch is still table stakes for customer success.”

The only way to fathom the full potential of chatbots is by understanding how they operate:

There are two types of bots, fixed chatbots and the ones based on machine learning. While the names themselves are self-explanatory, it bears repetition to say that the former type comes with limited capabilities and only follows specific rules and commands.

While the latter includes elements of artificial intelligence that allows it to constantly develop over time. AI integrated bots can improve their understanding of languages and command. They can enhance their absorption of information and responses to interactions.

Understanding Machine Learning in Chatbots

Machine learning by definition is: “A method of data analysis that automates analytical model building. It is a branch of artificial intelligence based on the idea that systems can learn from data, identify patterns and make decisions with minimal human intervention.” In other words, a bot’s focal task is to receive data, interpret it and then translate it into an output value. The interpretation and analysation processes take more effort than simply understanding the information put by users. They also involved contextualisation and relevance that enable the bot to take the appropriate action and give valid responses.

The AI put into any chatbots consists of two things, number one is machine learning or the ability to self-develop and the second is NLP. Bots equipped with machine learning can use being exposed to situations and commands to understand how the human brain work and thus, how to respond to it.

This pattern is called neural networks. ML upgrades by employing algorithms (simple and complex ones) that are then used to respond to any given input. ML enables bots to save former searches and data for future reference, hence, the learning process. In addition to machine learning, more advanced chatbots carry an even stronger learning system called “deep learning” which uses several layers of algorithms or an artificial neural network that operates while maintaining an active development process. What a machine does as time goes by is extracting and saving patterns of data, that way, it can provide correct outputs in spite of the time of inquiry.

As retrieved from Forbes, Salesforce’s chief scientist, Richard Socher talked in a conference about his revelations of NLP and machine translation: “I can’t speak for all chatbot deployments in the world – there are some that aren’t done very well…but in our case we’ve heard very positive feedback because when a bot correctly answers questions or fills your requirements it does it very, very fast.

“In the end, users just want a quick answer, and originally people thought they wanted to talk to a person because the alternative was to go through a ten minute menu or to listen to ten options and then have to press a button – that’s not fun and it’s not fast and efficient,” he added.

Chatbots Explained in AI Terms

Having explained how chatbots can integrate AI, it’s vital to note that a huge cut of the bots on company’s websites are not true AI. Live chats or conversational agents are not able to learn or adapt, they mostly operate by analysing a few keywords and relating them to the data inserted in their back-end. However, this basic technique is not always correct. Bots exposure a very limited understanding of what the users wants, which can be extremely frustrating.

Chatbots being marked as AI can be confusing, as argued by Business.com. These assistive robots cannot do much to complex questions except referring them to a human customer service representative. So, it’s vital to have both integral parts of the CS team in order to run a successful support system.

Main Differentiations between Chatbots and Practical AI

In a nutshell, chatbots do not improve, while practical AI does. Bots can give answers to what users already know, or shave a couple of minutes of their time to look up. Sometimes, basic chatting robots cause businesses more frustration than good. Without the proper data references, the bots might not be able to respond to questions and can only provide predetermined answers to straightforward inquiries.

Another downside between the two types, is that bots do not learn over time. Regardless of how many times they receive a specific question, they may always answer with the same faulted mistake. Whereas with AI, the machine will recognise the error and improve it with its next response.

Shane Mac, CEO of San Francisco-based Assist, warned from challenges businesses face when trying to implement chatbots into their support teams: “Beware though, bots have the illusion of simplicity on the front end but there are many hurdles to overcome to create a great experience. So much work to be done. Analytics, flow optimization, keeping up with ever changing platforms that have no standard.

For deeper integrations and real commerce like Assist powers, you have error checking, integrations to APIs, routing and escalation to live human support, understanding NLP, no back buttons, no home button, etc etc. We have to unlearn everything we learned the past 20 years to create an amazing experience in this new browser,” he added.

Things to Live by When Setting Up Chatbots

Ensuring a running, hassle-free chatbot sounds easy. However, it requires multiple adjustments and optimisations. In order for businesses to ensure a smooth experience, they have to note the following:

Chatbots Must Be Professional and Bug-Free:

The performance of bots can tell a lot about the company. It’s important to work towards building a beneficial bot that can respond to users fast.

The Bot Has to Be Aligned with the Brand’s Identity: 

Chatbots are a part of the company’s marketing and customer support systems. Whether they were placed on social media outlets or websites, they have to look well-integrated with other visual and written elements.

Good Linguistics:

Linguistics Are a Force Not to Be Reckoned With! Chatbots need to be adapted to language variants. The inclusion of different language variances will allow bots to pick up requests more effectively.

Rich Reference of Data:

Backing up the chatting bot with relevant information will enable the program to perform more naturally: The lack of sufficient data is one of the major reasons behind the failure of chatbots.

Operate Efficiently on a Desktop as Well as Mobile Devices: 

Having a functional chatbot on desktop websites alone is not enough. The percentage of browsing and shopping via mobile devices is increasing each year. Every successful business should invest in a responsive website.

Chatbots Cannot Replace People Entirely: 

These programs are great for reducing the personnel costs, however, they cannot replace the entire human support staff. Why? Simply because most chatbots are not equipped to handle complex inquiries since they lack the AI required.

Optimisation Is Crucial:

Business owners should incorporate the appropriate tasks, have a variation of welcoming messages, update info and products often, include pricing changes and place offerings and promotions in the bots, too.

Starting Small and Focusing on ROI: 

As ChatbotLife explained, developing bots is not the same as building apps. While apps specialise in a number of functions, chatbots have a bigger capacity for inputs. The trick here is to start with a simple objective and focus on doing it really well (i.e., having a minimum viable product or ‘MVP’). From that point onward, businesses can upgrade their bots.

How Chatbots Can Improve the Business You Run

Sales and Marketing

The power of chatbots in enhancing sales and marketing is often underestimated. If used properly, bots can increase orders via social media channels such as Facebook Messenger.

Human Resources and Recruiting

Bots can increase or maintain levels of employee engagement. They save workers tons of time of shuffling between HR specialists. That way, employees can easily transfer their requests to the HR department or get real-time answers from dedicated chatbots.

Social Media Chatbots

Deciding between used website chatbots or social media chatbots is something business owners have to think about wisely. Social media platforms are great for increasing engagement rates and attracting potential consumers, but website-based bots can be a better option for service providers. 

The most popular outlet for this, and possibly the best pool for customers, is Facebook Messenger. Retailers and start-ups have reported a raise in the number of orders received via Messenger alone. Moreover, other booming message-based apps such as WhatsApp are always becoming a visible channel for businesses to demonstrate their products and services.

WhatsApp now has 1.5 billion users and sees 60 billion messages sent per day. (Source: TechCrunch) the hitting app has released a B2B application to enrich the communication between users; the application includes creating chatbots.

Benefits of Social Media Chatbots

• Sending direct reminders, alerts and notifications to users.
• Real-time response to complaints, inquiries, and comments.
• Assisting consumers in exploring product catalogues.
• Sending updates on product ticket statuses and resolutions.
• Collecting users’ feedback easier.

Chatbots Explained: Summary

This article has explained the vitality of implementing chatbots whether on a website or on social media channels. From the basics such as building a bot or the technology integrated into their formation. Chatbots guarantee instantaneous responses, they improve the website’s performance by highlighting a 24/7 support system. Sure, websites might still hold on to their FAQ section, but users today have grown into time-efficient solutions and might be looking for the bot when there isn’t any.

In addition to exposure all year round, chatbots are the trendy way to go for new website owners and rising start-ups. They show that the company is up-to-date with what the market needs and that it’s not some outdated service that users can easily find elsewhere.

Following trends, eventually, supports the next point, keeping the users satisfied. Customer satisfaction is an undeniable dealmaker or breaker. Developing chatbots has proven to improve brand loyalty percentages and enhance the all-over user experience.

Last but not least, data collection. It’s needless to say that users’ data and preferences are the most valuable asset to in content creation. Information collection enables companies to tailor messages as per their audience’s needs, demographics, and according to their suggestions, too. 

Final Pieces of Advice

Consider building a chatbot as an investment. These marvellous bots can contribute into executing better marketing plans, the save up costs, and gather important Intel. Since there are several types of bots, and they also vary in quality and functions, carefully consider the kind that best suits the company.

Whether a business decided to start off with a basic chatbot or go all the way with a program that integrates machine learning; the options are flexible. A lot of people try out the ones with limited functionality and then upgrade when necessary. Do not be afraid of bots, they are here to facilitate everything for businesses and users combined.