Want to build a chatbot for your business? Here is what chatbots are, the main types and benefits, a 10-step guide to building a great one, and the industries that gain the most.
Key takeaways:
- A long history: Chatbots date back to Joseph Weizenbaum’s ELIZA in the 1960s, and today’s versions talk by text or voice.
- Three types: Rule-based, smart (AI and ML) and hybrid chatbots each suit different needs.
- Clear benefits: Chatbots give your brand a face, reveal customer insights, work 24/7 and cut costs.
- 10 simple steps: Know the components, define scope and use cases, know your users, add personality and flow, plan for edge cases and errors, pick platforms, then test and monitor.
- Wide use: Ecommerce, travel, healthcare, real estate, hospitality, HR and banking all benefit.
On almost every website today, a virtual assistant pops up on your screen. It helps you navigate by asking for relevant information. Then it either answers your question or passes you to a human who can help. Ever wondered what this little window is? It is called a chatbot. And if you want to scale your business website, you can build one too.
Yes, chatbots have become a trending technology that will completely change how you do business. Using AI to mimic human language and conversation styles, chatbots give businesses a smarter solution for employees, partners and, above all, customer satisfaction. Intrigued? Here is everything you need to know: what a chatbot is, why it is the future, how it helps your business and how to build a chatbot in a few simple steps.
Building a chatbot: the what, why and how
First, let’s understand what a bot is. Simply put, a bot is an automated software application that carries out tasks without human input each time. Thanks to AI, bots have evolved a lot. They can book hotel stays, make restaurant reservations, remind you of meetings and much more. They work much faster than people and with far greater accuracy. Bots usually run over a network and come in different types, one of which is the chatbot.
A brief history of chatbots
Did you know Joseph Weizenbaum laid the foundations of the chatbot around 1964? He created ELIZA, a computer program that could hold “human-like” conversations. Back then, it caused quite a buzz. It was so convincing that Weizenbaum once found his secretary talking to ELIZA as if it were a trusted confidante. By around 1967, using principles from the psychology of empathy, he had built a program that could hold coherent conversations. This became the world’s first chatbot as we know it.
Since then, chatbots have had a complete makeover. A big reason for their popularity is that you can now talk to them through a chat window or by voice, just as you would talk to a person.
Bots vs. chatbots
“Bot” is short for robot, while a chatbot is a set of programs that simulate human conversation. Put simply, a chatbot works like instant messaging. Using machine learning, it replicates human interaction patterns and can learn and work on its own. So when you ask a question, it answers from a predefined script. If it cannot answer, it passes you to a human or shows an error message, depending on its programming.
How do chatbots process human language?
How does a chatbot understand human language? Like any computer application, it has an app layer and APIs. So users can easily access it and add details as needed. The chatbot keeps a log of past conversations and responses to guide future interactions. In addition, training a chatbot is much easier than training a person, which adds to its appeal.
Types of chatbots
Before we get into the details, let’s look at the three main types of chatbot.
1. Rule-based chatbots
This is the oldest and simplest type, and people still use it today. Users chat with the bot using buttons and preset options. The chatbot collects the relevant information and gives a specific answer. Notably, it draws no conclusions from earlier conversations, so it suits straightforward dialogues best.
Example: Think of ordering a burger. A restaurant asks about fillings, cheese and single or double patties. A rule-based chatbot asks the same simple questions in order. Once you answer them all, it processes your order.
2. Smart (AI-powered) chatbots
This more advanced type works independently. It uses machine learning (ML) and AI to understand human emotion, sentiment and intent. A smart chatbot learns from every conversation and can even make small talk. That is the main reason it is so popular.
Example: Siri on the iPhone is a virtual assistant that learns from human interactions. Every conversation adds to its data, which it then uses to answer questions.
3. Hybrid chatbots
As the name suggests, this mixes smart and simple chatbots. Why have a hybrid? Sometimes you need simple answers, and other times you need intelligence. Hybrid chatbots sit comfortably in the middle. They handle rule-based formats and also understand human intent and sentiment.
Now that you know what chatbots do, you can choose the type that suits your needs.
Benefits of using a chatbot
A few years ago, if someone said robots would rule the world, you would have laughed it off. With chatbots, though, it is becoming reality. Given their many benefits, businesses are jumping on board to scale. Here is what a chatbot can do for you:
- Gives your business a face. A unique chatbot makes your website memorable. For many customers, your chatbot is the first point of contact. Its personality, name, phrasing and tone all shape whether visitors stay.
- Helps you know your customers. Chatbots collect and record data from every conversation. This shows what customers need and which products and services interest them. It also reveals market trends and demand that can help you grow.
- Offers 24/7 customer service. Unlike staff, chatbots have no time limits. So you are available at odd hours and on holidays, without being there. Over time, this builds a reliable business.
- Improves customer satisfaction. AI chatbots understand sentiment and regional nuances, so they can show more empathy. You can have a truly lifelike conversation with AI chatbots. They also understand informal language, which makes them friendly and approachable.
- Cuts costs. A chatbot automates customer service. Staff who once spent hours on simple questions can focus on more important work, while the chatbot handles routine chats. In the long run, this saves money.
- Delivers cost-effective marketing. A chatbot is also a marketing tool, because it promotes your brand and builds awareness. Install it on Facebook, Instagram and Twitter, and it attracts new customers automatically.
Why chatbots are worth it
Chatbots are a new way to optimise your business, and there is no reason not to use one. Virtual assistants like Alexa and Siri are popular because they simplify daily tasks. Text-based chatbots, meanwhile, help businesses appear across many channels, which simplifies marketing and promotion.
All in all, chatbots make life simpler with quick answers and solutions. And building one no longer needs heavy programming skills. Chatbots now work in many areas, which we cover below, and they are fairly easy to build. Let’s look at the simple steps to build a chatbot of your own.
How to build a chatbot in a few simple steps
To recap, a chatbot is a conversational interface that understands human sentiment and language. It is powered by AI and has several components.
1. Learn the components of a chatbot
- Bot middleware: This is the heart of a chatbot. It receives voice and text messages and understands their context. It works with NLP to extract intent, searches back-end storage for user information and stores key details from each conversation. You can install it like the back end of any mobile app.
- Channel connector: This links the bot’s back end to user interface channels. Its mapping lets one generic message format work across all channels.
- NLP engine: NLP (natural language processing) extracts the intent and sentiment behind each customer message. This guides the bot’s next action.
- Context store: Picture a storehouse of all your conversations. It helps the bot understand intent and keep a sensible conversation going, even hours later.
Beyond these core parts, chatbots can include optional extras like voice and tone analysis, image recognition and language translation.
Choosing the right build
Also remember that the right build depends on your use case. For example, creating a Discord bot that sends text messages means coding in platforms like Node.js. By contrast, a chatbot that finds answers to questions in any language needs no coding skills. The simplest route is a chatbot builder like BotSpice, which makes your work much easier. At the top end, a conversational AI assistant understands complex conversations, but it is equally complex to build and needs advanced coding.
So whether you are a student or a business owner, understand these details before you take the next step. Then you can build your own or hire a third party, depending on the complexity.
2. Define your chatbot’s scope
The first step to a successful chatbot is defining its scope and intent. What goal do you want to achieve, and what should your chatbot do? For example, you may want to boost customer service and satisfaction. In that case, the chatbot handles basic Q&As while your care team handles complex queries. If you want help with marketing, build a bot that pushes deals, offers and branding across social media.
3. Decide its use cases
Next, work out exactly what your chatbot will do for users. Run a hotel? Your chatbot might help customers make reservations. In tourism, it might show deals, book flights or recommend new destinations. The options are endless, and your business will guide your chatbot’s role.
4. Get to know your users
Once you know the why and what, find out what your customers want. What will they ask? What is their background, and what challenges do they face? Are they tech-savvy? Can they hold a meaningful conversation with a chatbot? Do they know your business? Which platforms do they use? With this research, choosing where to place your chatbot becomes much easier.
5. Give your chatbot a great personality
Once you know who your chatbot will talk to, give it character, too. Without one, your chatbot will fail to impress, like a date gone wrong. Write conversations and responses that are interesting and engaging. Use your brand image to open the conversation and gradually draw customers in.
6. Give your conversation a flow
Every part of the conversation should make sense and follow a “happy flow”. The conversation should go exactly as the customer wants, without friction. Most designers start by mapping this happy flow. It shows how the conversation will go and where users might hit problems, such as unanswered questions. The best way to map it is to have two people sit together and act out a normal conversation. This gives you a clear sense of the flow.
7. Plan for edge cases
People say all sorts of informal things, including to chatbots. It is natural to chat as if talking to a friend, and we may say something odd. The chatbot must still understand and respond properly. Different people also phrase the same thing differently. For example, a diner might ask whether you serve gluten-free or vegan food, or a guest might ask about accessibility for people with disabilities. These questions fall outside a basic chatbot’s scope. The solution? Include them in your happy flow.
8. Leave room for error
Of course, errors are natural in conversation. Say a user asks, “Where can I find a cheap hotel in London?” If the bot replies, “I can tell you more about London,” the conversation is lost. So train your chatbot to understand intent. And to allow for errors, always ask customers for honest feedback so you can improve.
9. Choose your platforms
Once you have the structure, personality and conversation pattern, decide where your chatbot will live. Websites, Facebook, Instagram, WhatsApp and Twitter each have their own features and limits. So fully understand each platform’s technical side to make sure your chatbot runs smoothly.
10. Test and launch
Finally, test your chatbot. Share it with friends or business partners to check it is ready to launch. Ask for detailed feedback:
- Is the tone friendly, and does it fit your brand?
- How was the overall chat experience?
- Did it answer their questions?
- Could they close the conversation successfully?
These are key measures of your chatbot’s performance before launch.
You may think your work ends once the chatbot is live. It does not. The most important work comes next. Once your chatbot goes public, monitor and rate each conversation, gather feedback and keep improving the user experience. After all, that is the end goal. For ready-made starting points, see these easy-to-use chatbot templates for websites.
Industries that benefit from chatbots
The chatbot revolution across industries began a few years ago. Today, major industries like travel and tourism, hospitality and aviation already benefit. Chatbots help businesses cut costs, free up time for important work and greatly improve customer experience.
Gartner predicted that by 2022, AI chatbots would become the norm, with nearly 70% of white-collar workers interacting with conversational chatbots. Here are industries using chatbots to scale:
1. Ecommerce
Ecommerce has boomed since 2017. In 2021 alone, global ecommerce sales reached nearly 4.9 trillion US dollars. With sales climbing every year, traditional channels like email, phone and social media alone cannot keep up. You would need a huge sales and support team, which is not feasible. Conversational chatbots step in to save time, energy and money, and they greatly shorten the sales cycle. You can also add chatbots to many channels, which boosts brand recognition and sales. To learn more, read how to boost customer conversion using chatbots.
2. Travel and tourism
Travel has grown hugely since the rise of social media. People spend money every year on new, mostly international, destinations. As a travel company, you must handle questions at any hour, because many clients are global. People cannot work around the clock every day, but a chatbot can. It can help with sales, reservations and tourist information, such as seasonal advice, weather, Covid-19 safety rules and directions from the airport.
3. Healthcare
Similarly, healthcare is under great pressure everywhere, especially since Covid-19. Doctors, nurses and other staff are already overloaded. Chatbots can take on small but important tasks, such as scheduling appointments, admissions, discharge paperwork and form filling. This reduces human effort and maximises results.
4. Real estate
Likewise, real estate is another booming industry with a promising future. Sales calls matter more than anything here, and busy schedules mean you may miss prospects every day. Chatbots can take this task off your hands and help convert prospects into clients. They can schedule viewings, share property details and exchange documents.
5. Hospitality
The hospitality industry is driven by technology and relies heavily on guests being online. Here, a chatbot can book and cancel reservations, order taxis and food, and share local tips like good restaurants and places to explore. You can also teach it about in-hotel services, such as a spa, library or sports facilities.
6. HR
In addition, chatbots in HR have become popular in recent years. A chatbot can give new employees key information, such as company policies and rules on parental, casual and sick leave. It can also help with recruitment, onboarding and initial training. In addition, it can track employee records, office hours and attendance. See more in employee recruitment simplified with AI.
7. Banking
Last but not least, banking benefits from conversational chatbots too. With everything a click away, customers can transfer money, verify account details, open accounts and much more. Chatbots available 24/7, wherever and whenever customers are, make this easier.
Other industries and small businesses
Beyond these major industries, chatbots help education, food, aviation and other small and medium businesses too. A chatbot can redefine customer service by being available around the clock and giving meaningful, one-on-one answers with a personal touch. As a result, customers spend longer on the chatbot. The end result? More sales.
If you run a small business, you may be short-staffed at first, with a lot to handle. A powerful chatbot helps by generating leads, promoting your brand, sending deals and handling customer service. You can also train it to monitor customer data for insights, such as buying patterns, popular items and which deals to push. It keeps a log of conversations, too, which you can analyse to serve customers better. Chatbots can also focus on marketing, using targeted messages to engage your ideal audience.
Chatbots also help after a sale by making onboarding seamless. For example, a chatbot might ask customers whether they found what they wanted, and offer help if not. This steers the conversation positively towards the right product.
Move your business forward with conversational chatbots
In short, the age of conversational chatbots is here to stay, and it is time to get on board. Chatbots are steadily transforming customer satisfaction, and you can shape yours to suit your purpose. So plan how to get the most from your chatbot for lead generation, customer insights and support.
First, decide why you need a chatbot and what you want it to do. Always test it first to avoid bumps along the way. After launch, keep monitoring and gathering feedback so you can improve. You can build a chatbot on platforms like Drift, BotSpice, WotNot and Intercom. These platforms help you create a conversational bot that serves your business goals. To compare more options, see the top customer support chatbot platforms.