Everything you need to know about chatbots

Your customer care agents spend a lot of time answering routine customer questions. But it would be nice if they could spend more time solving customer issues instead of fielding simple questions.

Chatbots can help reduce your customer service workload and wait times — they’re generally a win-win for everyone. They also have a wide variety of uses, from answering basic questions to managing complex personalized commands. Learning about chatbots and what they do can help you decide if they’re the right solution for you.

But chatbots can be intimidating, and it’s not necessarily easy to understand how they work. There are multiple types of chatbots available to your business, so it’s good to know which one will work best for your customer service operation. By the end of this article, you’ll have an understanding of the various types of chatbots, how they work, and how they can be used effectively.

In this post, we’ll cover:”

• What is a chatbot?
• The history of chatbots
• How chatbots work
• Types of chatbots
• How businesses use chatbots
• The benefits of chatbots
• Getting started with chatbots

What is a chatbot?

A chatbot is a program that uses artificial intelligence (AI), natural language processing (NLP), and machine learning (ML) to generate automated responses to customer queries. But that doesn’t mean that customers can tell they’re speaking to a robot. Chatbots simulate human conversation so that users feel like they’re talking to a real person while addressing their issues.

Chatbots help businesses keep up with customers’ increasing demand for immediate help without overwhelming the customer service team. Chatbots have a range of capabilities, from answering basic questions to acting as digital assistants.

While they don’t necessarily replace human customer care agents, chatbots can help businesses save time by answering simple customer queries. If a chatbot doesn’t know the answer, it can always route your customers to a human agent, along with a transcript of the conversation.

The history of chatbots

While today’s “smart” chatbots are relatively new, the technology itself is rather old.

Modern chatbots have their origins in phone trees, which customers would navigate by selecting various options. If you’ve ever called the pharmacy, for example, you’ve experienced a phone tree. Businesses used phone trees to route calls to the best contact for the job, reducing the need to hire phone operators.

Fortunately, chatbots are much more user-friendly than phone trees. The first chatbot, as we’ve come to know it, was named ELIZA. An MIT professor created ELIZA in the 1960s with the goal of mimicking human speech using technology. ELIZA was able to recognize key phrases and even respond with open-ended questions. While it wasn’t perfect, many human users couldn’t guess whether they were speaking to a human or to ELIZA.

Technology has improved since the 1960s, and chatbots have evolved to a point where they can learn from massive amounts of data, adapting to user behavior and additional context.

The additions of artificial intelligence, machine learning, and natural language processing make chatbots sound more human — and also make them more useful. For example, chatbots like ChatGPT are making it possible to generate an immense amount of information from a short input query.

Today’s chatbots are able to look for additional context and offer help even when customers ask less straightforward questions. This means users can get better help from a chatbot without the need to route the conversation to a customer care agent.

How chatbots work

Chatbots are automated computer programs, so they work independently of your customer care team. Chatbots use AI, NLP, and ML to process data and respond to queries.

Some businesses use chatbots that work off of a script. These can be effective for basic questions, but they tend to result in a poorer customer experience. Many businesses opt for NLP-powered chatbots to step away from scripts and allow chatbots to generate more intelligent contextual answers.

The type of chatbot you choose will affect how it ultimately functions. There are lots of chatbots on the market, but there are two primary types of chatbots — declarative and predictive.

Declarative chatbots

Declarative chatbots are the most common type of chatbot. They’re typically designed for a single purpose and use sets of rules defined by the owner, as well as limited NLP and ML.

More often than not, businesses use declarative chatbots for common support and customer service questions, such as hours of operation. This means declarative chatbots usually pull from your frequently asked questions.

The downside to declarative chatbots is the fact that they can’t answer more advanced or nuanced questions. This can give your customers a worse experience. However, they’re easier and cheaper to implement, so many businesses opt for these chatbots to save time and resources.

Plus, if the declarative chatbot can’t solve a customer’s issue, it can always route the chat to a human agent.

Predictive chatbots

Predictive chatbots are also known as virtual or digital assistants. They’re more interactive and personalized based on user profiles and past behavior. Apple’s Siri and Amazon’s Alexa are examples of predictive chatbots.

Predictive chatbots take things a step further, using natural-language understanding (NLU) in addition to NLP and ML. They can pull from past contexts and conversations to engage in hyper-personalized conversations with your customers. For example, if a customer recently logged into their account, the chatbot might say, “I saw you logged into the app. Are you having trouble with your account?”

Predictive chatbots offer the best customer experience, but they require a lot of data, intelligent models, and context to work properly. They’re also more complicated and expensive to produce, which is why many companies opt for declarative chatbots instead.

Types of chatbots

Declarative and predictive are the two most common types of chatbots, but there are subcategories of these two types:

• Scripted. This is the most basic type of chatbot. It replies to user questions using a decision tree to spit out pre-written answers to common questions. It usually offers a menu of options that users can choose from to share quick data, like their account balance or shipping information.
• Keyword recognition. This type of chatbot is slightly more advanced. It uses a blend of AI and a keyword bank to guess what your customer needs. This offers more customized help, but it can be difficult if the customer doesn’t use the “right” keywords.
• Hybrid. This is a mix of scripted and keyword-recognition chatbots. Customers can choose from a menu of options or type their queries to use keyword recognition.
• Contextual. AI and ML power contextual chatbots, which allow them to remember user interactions and improve over time. They don’t use keywords — they rely on customer data and assessments to answer user needs. This is the gold standard of chatbots, but it does require a lot of data to work properly.
• Voice-enabled. Users ask for information from Siri, Google Assistant, and Alexa with just their voice. Your customers expect to be able to have voice conversations with your chatbot, and this type of technology allows for that. It uses text-to-speech and voice recognition technology to mimic human conversations.

How businesses use chatbots

While we’re used to asking Alexa about the weather or sending a quick text with Siri, chatbots have plenty of applications outside of our personal lives. In fact, there are a wide variety of uses for chatbots in business, including:

1. Customer service. Answer common questions with the power of a chatbot. If you opt for a predictive chatbot, you can help customers order tickets, book hotels, or access banking services without even leaving the chat.
2. Online shopping. Respond to questions about product availability and cost quickly with an ecommerce chatbot. It can even track a customer’s order with a few clicks.
3. Internal IT self-service. Employees can use chatbots for password updates and to check for outages.
4. Virtual assistants. Siri, Cortana, Alexa, and Google can be helpful virtual assistants for running your business, but they also serve a purpose for SEO. By targeting featured snippets in SEO, you can ensure these VAs choose your content when your target audience types a query into Google.
5. Appointment scheduling. Ask potential customers to do a chatbot assessment before a sales meeting to assess their level of interest before you even speak to them.

The benefits of chatbots

As you’ve seen, chatbots can do a lot of heavy lifting for your business. There are myriad benefits of using chatbots, including:

• 24/7 availability. Consumers expect businesses to be available around the clock — especially if you have an international footprint. Chatbots can manage customer requests while your human team goes home for the day, giving customers the always-on availability they crave without draining your employees.
• Time saved. Chatbots prevent long customer hold times, which saves your customers more time. They also free up employees to focus on more valuable tasks.
• Reduced human error. Chatbots pull from approved data, so the risk of typos is much lower.
• Convenience. Your customers don’t have time for a phone call. Chatbots give your clients an easier way to get help without taking more than 30 minutes out of their day.
• Multiple conversations managed simultaneously. Chatbots can scale, which means you can use the same software to chat with hundreds of customers at the same time.

Getting started with chatbots

Chatbots can effectively and efficiently respond to both simple and complex queries, helping reduce workloads and save time. When you’re ready to get started, think about which type of chatbot would work for your business. You could use anything from a simple scripted chatbot to a hybrid chatbot that collects information before connecting to a human agent.

If you need hands-on help with your company’s chatbot, go with Adobe Marketo Engage. Marketo Engage offers dynamic chat integration, allowing you to engage customers and capture leads efficiently.

Watch an overview video to find out how Marketo Engage can help you use chatbots to create amazing customer experiences.