What is a chatbot?

Imagine going into a shop and turning to a shop assistant who can guide you through all product features, answer all your questions about the terms and conditions of the purchase, opening hours, etc. However, instead of a physical employee, this assistant is a digital employee that can help you directly on the website or webshop whenever it suits you – and this assistant is most likely built with our chatbot software, here at BotXO.

Chatbots are automated systems that communicate with their users. Chatbots are increasingly used for simple customer service inquiries and marketing activities that require the forming of close customer relationships. Chatbots exist as virtual assistants in different operating systems and platforms. While some perform simple tasks, such as finding information from a database based on a keyword search, others use Natural Language Processing (NLP) and Natural Language Understanding (NLU) systems for more complex and advanced tasks relying on understanding the intent of the input, which essentially makes their understanding and processing of language more similar to those of us humans.

Techopedia defines chatbots as:

“… an artificial intelligence (AI) program that simulates interactive human conversation by using key pre-calculated user phrases and auditory or text-based signals…A chatbot is also known as an artificial conversational entity (ACE), chat robot, talk bot, chatterbot or chatterbox.” (Techopedia, 2019)

The origin of the chatbot

Alan Turing who it all in 1950, when he developed the famous Turing Test, a set of intelligence criteria for computers, which, once fulfilled, would define the machine or program as able to think. In practice, this means that if a computer passes the test, the person interacting with the machine won’t be able to tell whether they are chatting with another human or a computer. The concept of being able to carry out an entire conversation with a computer was, understandably, trendy, and entirely revolutionary, and constituted an essential part of the development of Artificial Intelligence.

Stemming from the spark of interest in automated dialogue systems, more and more programs were developed, and started carrying names. Some of the early chatbot examples are Eliza and Parry. Eliza was created in 1966 and simulated a psychotherapist that people could interact with. Later, in 1972, Parry made an entrance in the AI world in the form of a fictional paranoid psychopath. It was an upgrade from Eliza because it included emotional variables that were aiming to simulate actual human emotions.

Even if the programs essentially already existed – although in their rudimentary form – the term chatbot wasn’t coined until much later. It wasn’t until 1994 when Michael Mauldin coined the word “ChatterBot” to describe a conversational program, that the term originated.

Classification of chatbots

In terms of classification, there isn’t a common way to classify chatbots. There is a distinction between chatbots: some are mainly built to answer questions about the company they represent, and the type of questions are primarily frequently asked questions (FAQ). This type is usually known as specialist chatbots, where their strength is in their ability to help the customer in any major business processes for which they need to be context-aware. However, these types are often not capable of translating and understanding human speech. Instead, they provide predefined options, which are not optimal in more complex situations.

Another type of chatbot category is the voice assistant, which is considered to be incorporated with speech functionality and does not require content awareness. They are generally designed to execute commands to ease our lives, e.g., “Turn the music up!” and without manually clicking a button, the device follows the instructions.

Another chatbot category is the virtual assistant, which is within the range of Google’s Alexa, Apple’s Siri, or Microsoft’s Cortana. This type is characterized by conversational abilities and is able to respond to any question. Consequently, the bots are often asked all sorts of questions, including funny and silly ones, which results in amusing responses.

Siri conversation

Amusing responses from Siri.

Areas of application

As the popularity of chatbots increases, more industries are preparing to join the ride and implement chatbots, whether it is in their business operations, marketing, or sales activities. Some of those industries are also discussed in the chatbots life blog:

Healthcare: Chatbots can help strengthen the link between customers and medical professionals by scheduling appointments and sending reminders to patients, as well as collecting and analyzing the health data.

E-commerce: The use of chatbots in e-commerce is already a common sight. However, the tendency is that chatbots will be equipped with even more capabilities to turn into personal assistants and make the purchase experience smoother.

Hospitality and Travel Agent: Is another industry that can benefit from chatbots by further implementing/updating their system in terms of inventories, bookings, and pricing to mention some. It can shorten the overall time spent on routine processes.

Fast Food industry: In the fast-food industry, bots can be used to alleviate the tasks currently occupied by human personnel, such as taking and confirming orders and receiving payments. It would decrease the number of mistakes and misunderstandings, as well as increase customer satisfaction from the service.

Stock Market Companies: In the stock market context bots can help clients in the choice for the right investment for them, taking into consideration the history and the fluctuations in the stock exchange.

Banking: Due to bots banks, can be transformed into 24/7 service entities that along with assistance, can provide analytical insights.

A skilled customer support employee

Nowadays, it is quite common that a chat window is popping up whenever you surf on the internet or visit corporate sites on Facebook. The chat service allows you to chat directly with representatives of the company that provides you with information regarding the business and offers instant help and support. Generally, it is a real customer service representative sitting behind the screen on the other side and is available within the opening hours. Unlike a customer service representative, the virtual assistant can help 24/7 and thus easily assist customer service.

The chatbot, and the technology behind it, has entirely transformed the user experience and the way customers interact with websites and online products.

Traditionally customers have had a one-way communication with the website and had to navigate their way to the answers they were searching. Now it’s reversed thanks to the technology. Today websites can have a dialogue with the customer through the chatbot. Therefore, it is the task of the chatbot to figure out where the customer wants to go and what the customer needs.

It becomes possible due to the chatbot asking the right questions to the customer and thereby initiating a dialogue – or chat – with the customer. So, if the chatbot is good, as a good customer support employee, it can help answer the questions the customer may have.

Chatbots take the pressure off customer service

Many advantages come with chatbots implementation. One is that a chatbot can mitigate lots of queries that customer service departments usually receive. Customers often turn to customer service departments for questions that already have been answered on the website, but which they were unable to get to. An adequately built chatbot can reduce the number of inquiries to the customer service department.

Likewise, a chatbot can help customers be clarified in a purchase situation. The bot can clarify information about product specifications and thereby help the customer to navigate to the desired product.

A restructuring of the employees’ tasks

Because chatbots reduce customer inquiries, they also help free up time for the customer service representative to focus on some of the more complex tasks. So, for example, if we have a customer service representative whose workload suddenly gets reduced by 50% – which, by the way, consists of many routine inquiries – then the employee will be able to focus the extra time on the customers who need extra customer care.

Similarly, in sales, the bot can help drive leads and increase sales, and thus the employee gets the opportunity to focus more on the follow-up part of the sale, instead of collecting information from the customer in a purchase situation.

Breaking down the silos

Another advantage of chatbot technology is that they can help break down the silos that are often found within big companies. The companies consist of departments of sales, marketing, communication, IT, etc. However, the customers see the company as one big unit, and in a situation where they are in direct contact with customer service, they have questions that relate to different departments. In that case, the company often redirects the customer to the various departments to provide answers to the respective questions.

With the chatbot technology, all systems are integrated as one. Internally in the company, the chatbot dialogue interface makes it easier for employees to navigate the company’s underlying systems and get the information they need. Likewise, it saves time for the customer when searching for the necessary information. Furthermore, it helps to establish an overall impression of the company, which lead to better customer satisfaction and loyalty. Thus, the virtual assistant can help transform a business from the outside and inside.

There are many different types of chatbots, which can be combined to cater to a business’ needs. To learn more about the technology behind a chatbot, you can read our blog post ‘What makes our chatbots intelligent?’.

If you are interested in hearing more about how to get started, please contact us at  hello@botxo.co – or give us a ring if you need more customer cases +45 26 71 58 45 .

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