What is a chatbot and how do they work?
Do you believe that robots will rule the world someday? It is doubtful and the kind of thinking that is best left to the makers of the “Terminator” movies. Right now, the growth of robots in digital marketing is a reality. These are known as chatbots.
The Chatbot Market is Growing
In 2019 the chatbot market was worth more than $2.5 billion, and experts predict that by 2024 this will rise to well over $9 billion. This represents a compound annual growth rate (CAGR) of nearly 30%. Few other industries can claim this level of growth.
You will learn in this guide that there are several benefits to using chatbots for your business, customers, and end users. In this article, we want to ensure that you understand what a chatbot is and how it works.
What is a Chatbot?
A chatbot is computer software which can stimulate conversations with human beings online. Think of a chatbot as an automated version of a virtual assistant that can communicate with users through text via instant messaging platforms. You can also see chatbots used on other live chat websites and forums.
The technology behind chatbots is good, but it still needs improvement. There are limitations with chatbots which we will discuss later in this guide. But artificial intelligence (AI) chatbots are improving all of the time, and they are getting smarter. It won’t be easy to differentiate whether you are communicating with a natural person or a chatbot in a short while.
How do Chatbots work?
Chatbots use two special algorithms so that they can learn from data insights:
- Natural Language Processing (NLP)
- Advanced Machine Learning (ML)
Another form of NLP is neurolinguistic programming, but it is very different to natural language processing, so please understand this. This form of NLP is a computer program’s ability to understand how humans talk and process.
With NLP, a chatbot can respond to human users’ requests in a way they will understand. Many people who use chatbots today have no idea that they are talking with a computer program rather than a natural person.
The Two Components of NLP
When NLP is used with chatbots, there are two processes which are involved:
- NLU (natural language understanding) – the NLU element provides the chatbot program with the ability to understand humans. It does this by taking the text entered by a person and converting it into structured data so that the chatbot software can understand it.
- NLG (natural language generation) – when the NLU has converted the human text into structured data and interpreted it, the NLG component will convert the answer provided by the chatbot software from structured data to text so that the user will be able to read and understand the response.
Don’t worry if you don’t completely understand how the chatbot software works. All we want you to do is understand the concept behind it. Once you grasp the concept, you will be able to fully appreciate the possibilities that chatbot software can provide for your business.
Three Different Types of Chatbot
You need to be aware that three different types of chatbots are in use today. It is important when deciding what chatbot software to implement in your business. The three different types of a chatbot are:
- Chatbots that are Rule Based
- Intellectually Independent Chatbots
- Chatbots that use AI power
With a rule-based chatbot, the user can interact with it by using predefined options and clicking on buttons, for example. These are the least sophisticated form of a chatbot, and the user is limited to the selections that they can make. Rule-based chatbots are usually the slowest when providing the answers that users want.
An intellectually independent chatbot uses ML technology to learn from the requests and inputs provided by a user. When you set up this chatbot, you can train it to understand words and phrases, which will then trigger the appropriate responses. This type of chatbot will learn over time and will be able to train itself to understand more inputs and provide the correct responses.
AI powers the most sophisticated type of chatbot. It is a combination of a rules-based chatbot and an intellectually independent chatbot. With the power of AI and NLP, this type of chatbot will be able to understand the user input and remember the context of the conversation, including the user’s preferences.
The benefits of chatbots for the users
By understanding the benefits that a chatbot can provide to the user (your customers and potential customers), you will see that they can provide your business with a competitive edge.
You are Available 24/7
Many studies show that more than half of the participants feel that a business should be available to its customers on a 24-hour basis. Many businesses want customers from all over the world, and using chatbot software overcomes time-zone issues.
These days, people do not have a lot of patience, and they don’t want to wait for the next available human assistant to help them. Some people will go elsewhere even if they only have to wait a few minutes for a response from a natural person. When you use a chatbot in your business, there is no waiting time for the customer.
Your customers will appreciate that you are always available, even if you use a chatbot to serve them. The benefits the customer receives from using your chatbot depend on the type of chatbot you deploy, of course.
Implementing the simplest form of chatbot that cannot respond correctly to the simplest of customer queries is no use. It will alienate your customers and negate the benefit of your business being available 24/7.
So, with this in mind, you must choose the correct type of chatbot that will be able to understand what the customer is asking and respond in the right way. Sometimes things can go wrong, and a chatbot may be unavailable for various reasons. If this is the case, your customers will feel aggrieved and dispute that you are available 24/7.
Users receive Instant Answers
When you have real people answering your customers’ questions, they can only deal with one person at a time. Unless you have many operators available, some customers will need to wait for the answers they need.
This is different from a chatbot as it can deal with thousands of questions from different customers at the same time. Your customers will perceive that they are receiving instant answers to their questions which will make them happy.
The Answers are Consistent
Human beings are not machines and sometimes have bad days. When customers talk to real operators, they are never guaranteed to receive consistent answers to their questions. Sometimes a customer might perceive that a human representative of your business is not as helpful as they could be.
When you have a chatbot that can respond appropriately to customers’ questions, they will always receive consistent answers. Chatbots do not have mood swings and off days and will always provide the same answers to the same questions.
There is a Record of the Communication
If a customer is discussing their issue with a natural person, then it is unlikely that they will want the conversation recorded. Many companies record these conversations for “training purposes”, which is usually a smoke screen for other reasons to want to maintain a record.
When a customer uses a chatbot to ask questions, it is straightforward for them to take screenshots of the provided responses. It can be important for them to recall the conversation they had and challenge any of the responses the chatbot provided to them.
Chatbots are very Patient
Human communications can sometimes fall due to one of the parties losing their patience. While this is usually the customer, it is not unknown for customer service representatives to “lose it” with a customer. You want your people to maintain their patience with customers, but this is likely to happen at some stage.
Some customers are just downright rude and will test the patience of a customer service rep to the limit. Good training can help customer service reps keep their cool, but at the end of the day, they are human, and there is only so much they can take.
This is never a problem with a chatbot. They will always maintain their patience when communicating with a customer, no matter how upset the person becomes. Chatbots will continue to try to answer any customer question in any situation.
A Chatbot can Perform Instant Transactions
A chatbot can do more than communicate with your customers. You can set it up so it can perform transactions that the customer could require. For example, a chatbot could query a record on behalf of a customer and even make changes to records. Customer satisfaction should increase as a result of this.
You can Automate Common Tasks
As you have probably gathered by now, a chatbot can do more than just “chat”. You can program a chatbot to perform several everyday tasks, such as making customer appointments.
Your customers will appreciate the convenience of this. They can do this instantly if they want to make an appointment to meet with one of your company representatives. They may need more information about your products and services before purchasing. Program your chatbot to provide your customers with the information that they want.
Provide a Personalized Experience
When a business has a lot of customer service representatives, a customer can never be sure that they will speak to the last person they communicate with. This person may be unavailable that day or tied up with another customer.
Suppose good records are not kept on customer interactions. In that case, the customer will probably have to explain their situation to the new customer service rep because they are unaware of the previous conversation. It can be very frustrating for the customer and will undoubtedly set the conversation on the right foot. Have you had this experience?
A chatbot can access the history of communications that a customer has had with it. Doing this can provide a more personalized response to the customer and not ask them to repeat everything they have previously said. The customer will be a lot more satisfied with this arrangement.
The benefits of chatbots for your business
You are now aware of chatbots’ benefits to your customers and your business. You must understand that you will need to do some preparation work and put in some effort when you purchase chatbot software. No chatbot program will be ready right out of the box for your business.
Want are your Goals for your Chatbot?
You need to set goals to get the most out of your chatbot marketing. It would help if you thought about what you want to achieve with your chatbot strategy and wrote this down. A chatbot can help your business in several important areas, such as:
- Increase sales of current products and services
- Promote new products and services that you are planning to launch
- Generate new leads for your business over multiple platforms
- Provide customer service assistance and solutions
You need to think through all of these scenarios and decide how a chatbot will provide the right solutions for you. If one of your goals is to sell more of your current products and services, what revenue increase are you looking for? What products and services do you want your Chatbot to promote the most?
Using a chatbot to help launch new products and services is a good strategy. What are your goals with this? How will you make your customers aware that you are launching new products and services using your chatbot software?
Lead generation is essential for all businesses. How many new leads do you want to generate over some time? What process will you use to generate these leads? Will you use an email list to set up your Chatbot to encourage visitors to opt into your email list?
Customer service requests can be many and varied. It would help if you defined what you want your Chatbot to do to increase customer satisfaction. If you measure customer satisfaction (which you should), what increase are you looking for with the deployment of chatbots?
What are the Needs of your Audience?
You will likely connect with your audience in a variety of different ways. Some will use your website and may already be customers of your business. Others will find you on social media, and you must use a different chatbot marketing approach here.
You will need to decide on an approach for the different types of visitors you receive. The way that Facebook users will interact with your business is likely to be different to how Twitter users will, for example. For visitors to your website, you will need a different approach again.
How will you Engage with your Customers?
Customer engagement is critical; when you get this right, you will have the maximum chance of improving your conversions. You need to decide what kind of content you will use to engage your customers when you use a chatbot.
Suppose you regularly receive customer questions about your products and services and other aspects of your business, such as payment terms and guarantees. In that case, it is a good idea to start by creating a frequently asked questions (FAQ) section. You can add this to your website, which is good content for your chatbot program.
Do you have customer service representatives in your business now? If so, ask them what kind of questions customers regularly ask. Do you have a sales department where customers can discuss their requirements? Again, find out what customers ask when they are looking to purchase your products and services.
When operating different channels, such as your website, a mobile app and social media profiles, you need to know what information customers are looking for with these different channels. You want to create chatbots for these channels that can provide instant answers that will meet your customers’ needs.
You are now in the planning stage with your Chatbot. We will cover this in more detail later in the guide. Use the goals you created to drive the plans you make for your Chatbot. The type of content that you use to engage your customers needs to align with your chatbot marketing goals.
What Personality do you want for your Chatbot?
It’s OK; we haven’t gone crazy! We know that a chatbot is just a computer program, but you can set it up with a personality. You want your Chatbot to greet your visitors in a friendly way and be as friendly as possible.
Why not give your Chatbot a name that your customers will remember? You can get creative here, and we encourage you to do that. When you have a friendly chatbot that will give your customers the perception that it will take care of them, you are on to a winner.
You aim to make your Chatbot feel as “human” as possible. Think about how you would want a chatbot to treat you. Make your Chatbot courteous and ask customers how it can help them.
How will you Welcome your Customers?
Only some of your customers will be thrilled by the prospect of dealing with a chatbot. You need to make everyone happy to use the Chatbot; the best way to do this is to create a great first impression.
A compelling welcome message from your Chatbot will go a long way to making your customers happy. The last thing they want is to feel like they are dealing with a dull, automated machine. Remember that you aim to get your Chatbot to engage with your customers, so make your welcome message memorable.
Tell your customers that they are dealing with an automated service. If you try and trick people into thinking that they are dealing with a natural person, they will find you out and spread the word like wildfire. It would be best if you made everything clear from the start. It is essential that you set the right expectations when you are using chatbots.
Get your Chatbot to ask your customers questions. If you were talking to a customer, you would do this to keep the conversation going, so set up your Chatbot in the same way. When your Chatbot asks your customers questions, you can glean important information about what they want.
Let your customers know that you have put a lot of time and effort into setting up your Chatbot, but you accept that there is always room for improvement. Let your customers suggest improvements to your Chatbot if they want to do that. You can tell your customers that your Chatbot is brilliant but also tell them that it is less intelligent than theirs.
This article is split into three different articles. Every week we will publish an update about this article. So stay tuned and signup for our newsletter.