Joanna Bobrowicz

Product Owner | Partnerships Coordinator

Chatbots: Conversational Bot Handbook

TechnologyE-commerceCustomer ExperiencePortals

According to forecasts, the global chatbot market will reach 1.34 billion USD by 2024. What is the root cause of the success achieved by conversational technologies? And how can companies use chatbots and related technologies to enhance the user experience over online channels?

What is a chatbot?

A chatbot is a program that allows computers to conduct conversations over a text or voice interface. Chatbots can handle many conversations simultaneously and provide the necessary information in a matter of seconds – much faster than any customer service employee can. Their speed and multi-tasking abilities have been successfully employed in business, particularly in various customer channels (e.g. on portals, in e-commerce, in social media, etc.).

However, chatbots are more than simple programs that automatically reply to customers’ most frequently asked questions. Increasingly, they are advanced digital assistants who can learn and grow their skills based on user interactions. They may collect customer information and offer personalized purchase advice, support clients in a multitude of actions (such as hotel booking or arranging meetings) or even help people learn another language.

How do chatbots work?

Chatbots process user queries, using the mechanisms of Neuro-Linguistic Programming and Machine Learning to provide a matching answer or meet a given request. To this end, they apply text and graphic interfaces, audio analysis, and/or video processing. They operate based on automated rules, Artificial Intelligence, or both.

What are the different types of chatbots?

There are two main types of chatbots: task-oriented chatbots and conversational chatbots.

Task-oriented chatbots are the most basic bots; they focus on performing a single function. They will usually answer user questions according to a specific key, which is based on a pre-programmed set of replies. They are useful in supporting various customer service processes, e.g. interactive FAQs.

Conversational chatbots, known also as virtual assistants, simulate a human-to-human conversation. In addition to pre-programmed dialog scripts, they also employ some advanced technologies, such as:

  • Natural Language Understanding.
  • Neuro-Linguistic Programming.
  • Machine Learning.
  • Sentiment Analysis.

They are better equipped to personalize communications, "learn" about their interlocutors, or even recognize users’ moods. Thanks to this, they can provide answers reflecting the conversational context and may anticipate user needs or offer recommendations.

What are chatbots used for?

Currently, companies most often use chatbots to:

  • Answer frequently asked questions 24/7 (interactive FAQs).
  • Automate repetitive processes (e.g. bank transfers, payment enforcement, deadline notifications).
  • Support users in simple tasks (e.g. filling out forms).
  • Assist in routine admin processes (booking taxis, hotels, flights, or restaurant tables, etc.).
  • Improve customer service efficiency through the preliminary classification of customer problems and redirecting customers to the right consultant.
  • Collect sensitive data.
  • Boost user engagement, e.g. by running social media contests.

In which industries are chatbots particularly useful?

Chatbots can be employed in practically any industry that uses the Internet. The following sectors have seen or have the potential to see the heaviest use:

E-commerce: Chatbots can boost sales by guiding the customer through all stages of the purchasing process. A digital assistant may provide an offer that matches the customer’s preferences, or it may help them find the right product by tapping into user data (e.g. how the customer was acquired, their purchase or search history). Chatbots are also used to boost brand awareness, promote new products, create individual discounts, and perform other sales-related activities.

Marketing: Chatbots can help companies reach a wider customer base and effectively generate leads. They boost customer engagement in consumer awareness campaigns and help design personalized user experiences. They are also a useful recruitment tool that can efficiently profile and select promising candidates.

Banking: Virtual assistants can help clients navigate the transaction system, provide information on banking facilities, and effect various financial operations on the customer’s behalf (such as instructing transfers, opening deposit accounts, etc.).

E-learning: Chatbots have become increasingly more efficient in emulating direct student-teacher interactions, thus creating an interactive learning experience for virtual training course participants. Such programs are highly skilled at monitoring participants’ progress and encouraging effort by sending regular reminders and notifications. Using an individual approach to each participant, they can ensure more efficient ways of gaining knowledge and mastering new skills.

Tourism & Hospitality: Chatbots can be used to make mundane travel arrangements – ordering taxis, booking restaurant tables, arranging appointments or travel details (flights, hotels) – easier.

Health: Chatbots can noticeably reduce medical personnel’s workload by responding to patients’ most common questions, managing routine matters like renewing prescriptions and checking interactions with other drugs, making appointments, or providing first aid information.

How do chatbots improve customer experience?

Chatbots can not only reduce customer experience costs, they can above all enhance user experience across many touchpoints. From the customer perspective, implementing a chatbot means:

A simplified purchasing process: Chatbots can guide customers through the entire customer journey, from their first contact with the website to closing the deal. Chatbots can:

  • Share additional product information.
  • Reply to customers' questions.
  • Send personalized messages.
  • Offer individualized discounts.
  • Collect information on payment details, order delivery, etc.

Smooth communication in real time: Customers enter chatbot interactions in the same way as they do conversations with a human consultant. In this scenario, getting the help they need does not require the customer to learn new tools – using chatbots comes naturally. Moreover, most digital assistants are integrated with e-commerce platforms or social media; users do not need to quit their favorite applications to communicate with the brand.

24/7 Accessibility: Chatbots can handle many queries at once and stay accessible to users whenever and wherever needed. Such automation facilitates the customer service process and reduces customers’ wait times. At the same time, chatbots’ efficiency in dealing with problems is about 80 percent. Even if the bot is unable to answer a particular question, it can considerably diminish customer insecurity by arranging a meeting with a consultant during customer service office hours.
Better personalization: Chatbots can collect customer data on an ongoing basis and use it in real time to adjust its communication style to the user or provide purchasing advice. Customers get a sense of a real interaction with a personal advisor, which will grow their engagement with and loyalty to the brand.

More attractive products and services: Chatbots are also employed as customer feedback tools. They have proved much more efficient for this purpose than standard e-mail surveys, which often tend to get ignored. With this information, companies can improve their product offerings, better meet consumer needs, modify price lists, etc.

How do chatbots support customer service?

Chatbots are a great tool for reporting problems and issues. A virtual assistant can respond to the most frequently asked questions and, when the need arises, can redirect the customer to the right consultant. This automation of the customer service process not only reduces the burden of monotonous and repetitive tasks for employees, but it also reduces wait times and enhances the customer experience. Chatbots can also support human consultants during a conversation,  i.e. by providing additional customer or product information.

How much does a chatbot implementation cost?

The cost of implementing a chatbot depends on a number of factors:

  • The type and purpose of the chatbot.
  • Its integration with other platforms (e-commerce, CMS, marketing automation, call center, etc.).
  • The number of queries to be processed.
  • The number of usage scenarios.
  • The client’s additional business requirements.
  • The scale of the project.
  • Any customized requirements.

If you need specific information on the cost of implementing a chatbot for your business, contact us and we’ll be glad to help.

What does the future of chatbots look like?

Along with the development of technologies such as Artificial Intelligence, Machine Learning, and Neuro-Linguistic Programming (NLP), we will be able to design ever more advanced algorithms. Digital assistants will be able to better recognize conversational context and learn user habits. On the other hand, combining chatbots with Augmented Reality may result in the arrival of personal assistants who will help with our everyday chores.

A common goal for conversational technologies is facilitating the communication between humans and computers at a human-like level. As a result, we will be able to delegate ever more complex duties to these digital assistants. For example, Google's Duplex algorithm can already book a restaurant table, talk to pushy telemarketers, and complete a complex online form. Who knows? In the future, interactions between companies and customers may take place solely through virtual assistants.

How have businesses used chatbots?

Sephora has created a chatbot that educates consumers about the range of products available in e-commerce. This digital assistant shares tutorials with users about how to do makeup, offers advice on skincare, and helps users choose (and purchase) suitable skincare products. Combining this with Augmented Reality lets users virtually test cosmetics before they buy them.

DoNotPay and its chatbots help users cancel subscriptions, obtain refunds for cancelled flights, file applications for compensation, etc. Banking on the fact that most of such issues are repetitive, DoNotPay has launched over 100 bots that support customers who are dealing with legal and administrative proceedings.

Santander Bank has implemented a chatbot to assist in their recruitment processes. Thanks to the use of Machine Learning, Artificial Intelligence, and NLP, this chatbot interviews candidates and assesses whether their qualifications match current recruitment needs. Automating the candidate selection process saves time and allows the bank to verify a much larger number of specialists than traditional interviews.

BNP Paribas has created a self-learning chatbot to help bank employees quickly submit internal orders. It has been designed to facilitate the purchasing process and to make it easy and fun, thus turning the bot into a first-choice tool.

The growing popularity of chatbots is buoyed by speedy technological advancements and by the unquestionable benefits bots offer in virtually every online aspect of business operations:

  • Mobile Monkey’s chatbot allowed the company to expand their advertising reach on Facebook by 100%, at the same time reducing the cost of winning new users by 97 percent.
  • L’Oréal’s Beauty Gifter bot engages users 27 times more than e-mail marketing; 82% of customers are satisfied with the experience offered by interacting with the chatbot.
  • Julie, AMTRAK’s virtual assistant, answers 5 million questions each year. Since its implementation, AMTRAK’s number of bookings has increased by 25% and the chatbot has generated a ROI of 800 percent.

The benefits of using chatbots, both for companies and their customers, seem to indicate that they are here to stay and cannot be thought of as just another passing fad.