What is a chatbot?

When you hear the word “chatbot,” your mind may wander to robots on the silver screen. While movie robots and chatbots can both carry a conversation, chatbots are far different from C-3PO and Optimus Prime. Instead of assisting in saving Princess Leia or fighting off Decepticons, chatbots have a different mission: improving your customer experience (CX).

In a perfect world, all businesses can provide support around the clock, but not every organization has this luxury. Chatbots can help you inch closer to that ideal state, offering always-on support and boosting agent productivity. Follow this guide to learn what chatbots are, why they were created, how they have evolved, their use cases, and best practices.

More in this guide:

• How do chatbots work?
• Why were chatbots created, and how have they evolved?
• The importance of chatbots
• What is a chatbot used for?
• Chatbots vs. AI chatbots vs. virtual agents
• Chatbot best practices
• How to create a chatbot
• The future of chatbots
• Frequently asked questions

How do chatbots work?

Chatbots use predefined conversation flows, natural language processing (NLP), and/or machine learning (ML) to answer users’ questions and guide customers through different scenarios in real-time, such as:

• Log-in issues
• Payment problems
• Booking instructions

AI chatbots can also learn from each interaction and adjust their actions to provide better support. While simple chatbots work best with straightforward, frequently asked questions, chatbots that leverage technology like generative AI can handle more sophisticated requests. This includes anticipating customer needs and supporting customers using natural human language.

Why were chatbots created, and how have they evolved?

In the 1960s, a computer scientist at MIT was credited for creating Eliza, the first chatbot. Eliza was a simple chatbot that relied on natural language understanding (NLU) and attempted to simulate the experience of speaking to a therapist. Since then, chatbots have come a long way.

In the world of customer service, modern chatbots were created to connect with customers without the need for human agents. Utilizing customer service chatbot software became more popular due to the increased use of mobile devices and messaging channels like SMS, live chat, and social media.

Using advanced AI technology, chatbots have evolved from answering a limited number of common questions to understanding customer sentiment and answering complex queries in your brand’s tone of voice.

The importance of chatbots

Chatbots are important because they are a valuable extension of your support team, helping both customers and employees. Follow along to explore the key benefits of chatbots, from 24/7 support to personalized conversations.

• 24/7 support: Customers today expect help as soon as they need it on the channels of their choice. Deploying a chatbot across preferred customer channels ensures customers get seamless, always-on support.
• Scalability: Small business and enterprise chatbots can serve as extra support agents, answering frequently asked questions without human intervention. As a result, teams can scale quickly and assist more customers without hiring more staff.
• Conversion opportunities: Customer service bots can boost lead conversions, nudging consumers to take action by presenting them with image carousels, forms, picklists, and other messaging elements. This also helps increase customer engagement.
• Personalized conversations: As the first point of contact, chatbots help agents by capturing customer details like name, issue type, and contact information. This enables the agent to personalize the conversation when they speak with the customer.

Whether you’re looking to remove repetitive customer queries from your agents’ plates or extend your support hours, implementing a chatbot can help take your CX and employee experience (EX) to the next level.

What is a chatbot used for?

Many businesses use chatbots to improve their customer service and foster customer loyalty. Here are some ways companies are leveraging chatbot technology:

• Automating website support: Many businesses take advantage of chatbots’ AI automation abilities for website support. For example, using a WordPress chatbot plugin brings 24/7 customer service to your WordPress site.
• Site navigation: Chatbots can help customers navigate a business’s website and provide instructions for things like signing up for a service or free trial.
• Personalized recommendations: Chatbots can give customers personalized recommendations by analyzing their behavior on the website.
• Tracking orders and inventory: Bots can tell customers whether a certain product is in stock or how long shipping will take.
• Boosting sales: Chatbots for sales can welcome new visitors to your site with a form to collect lead information and pass the details to your sales team.

As you can see, answering customer questions is just the tip of the iceberg when you add a chatbot to your customer support team.

Chatbots vs. AI chatbots vs. virtual agents

You’ve probably heard chatbots, AI chatbots, and virtual agents used interchangeably. However, the three terms have unique differences.

• Chatbots: A chatbot is any software or computer program that simulates human conversation, whether powered by advanced generative AI or a simple decision tree.
• AI chatbots: An AI chatbot is a chatbot powered by artificial intelligence, including ML, NLP, and NLU.
• Virtual agents: A virtual agent or virtual assistant is more advanced than an AI chatbot. Virtual agents often utilize robotic process automation technology that enables the agent to take further action based on what a user wants.

Now that you know the differences between chatbots, AI chatbots, and virtual agents, let’s look at the best practices for using a chatbot for your business.

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Chatbot best practices

If you’re ready to add a chatbot to your customer service strategy, consider these best practices:

1. Tell users they’re interacting with a bot: Informing consumers that they’re conversing with a chatbot provides transparency, sets expectations, and promotes acceptance and trust.
2. Make it easy to reach a human agent: Sometimes, a customer may prefer to speak to a human agent, so you’ll want to give them the option to do so. It’s also important to ensure your bot can pass on the customer context and conversation history so agents have the necessary details.
3. Choose the right chatbot persona: This is your chatbot’s personality. Picking the right persona can allow your chatbot to become an extension of your brand’s identity, leading to cohesive support experiences.
4. Incorporate bots into your self-service strategy: A chatbot can help customers self-serve by highlighting FAQ pages and other resources, such as your return and shipping policies. You can also incorporate a chatbot into your knowledge base so customers can find the right articles for their questions.
5. Use chatbots to collect customer context: Chatbots can gather key customer information up front, like their order number, email, and location. This gives agents the details they need to personalize conversations and resolve issues more efficiently.
6. Use data to improve your bot: Getting your bot up and running isn’t the end of your chatbot strategy. You’ll also need to track chatbot analytics—including use rate, chat volume, and most answered questions—to improve and get the most value out of the tool.

Whatever you use your chatbot for, following the above best practices can help you start your chatbot experience with your best foot forward.

How to create a chatbot

Businesses most commonly create chatbots using chatbot software. With a chatbot solution like Zendesk, companies can deploy bots that sound like real people, all with a few clicks. This enables businesses to increase their support capacity overnight and begin offering 24/7 support without hiring new agents.

But not all chatbot software is created equal. In some cases, businesses may need to configure complex software and hire a team of developers to get their chatbots up and running. With Zendesk, that isn’t the case. Zendesk chatbots work out of the box, so your team can begin offering meaningful chatbot and omnichannel support on day one.

The future of chatbots

As technology rapidly evolves, so do the capabilities of chatbots. Most notably, chatbots are evolving to sound more like humans. This results from generative AI, a cutting-edge technology helping drive the future of customer service chatbots. Take Zendesk as an example: Our generative AI-powered chatbots enable businesses to deploy bots that support customers and employees with natural-sounding language.

And with Zendesk AI, answering questions is only the beginning. We train Zendesk chatbots using billions of real customer interactions. This allows our bots to detect customer intent and provide agents with the necessary customer context to offer better service.

With chatbot functionality quickly advancing, you don’t want to get left in the dust. Choosing a chatbot solution powered by generative AI and rich with features can help your business deliver excellent support and stay ahead of the curve.

Frequently asked questions