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What is an AI chatbot?

by | Oct 12, 2021

To understand AI chatbots, let’s first define a chatbot. Chatbots are software programs that interact with humans using written or spoken language via online messaging apps. Chatbots may be rule-based or use artificial intelligence. They often take the place of a live agent.

Rule-driven chatbots are designed for specific tasks, working from standard question-and-answer templates. For example, when a customer arrives at a website with a rule-driven chatbot, the bot initiates an automated conversation, asking, “How can I help you?” The customer types in a question, and the bot routes the customer to the web page that provides the answer, like an FAQ page. Alternatively, the bot may contact live person support during active hours.

The accuracy of the referral depends on how the bot was programmed. Bots cannot deviate from the rules. If no rule exists that corresponds to the query, it isn’t answered. AI bots, on the other hand, aren’t restricted to programmed rules.

What is an AI chatbot?

Artificial intelligence chatbots understand language outside of pre-programmed commands. They learn from ingesting volumes of customer data, applying algorithms, and using the results to create a response.

The more the AI chatbot interacts, the more data it gathers. It updates its programming with the growing data to deliver targeted answers. This type of machine learning also supports conversational AI rather than stilted, pre-programmed interactions.

How does an AI bot work?

Trained AI bots can operate independently using natural language processing (NLP) and machine learning. NLP combines language rules with language context to interpret what is being communicated to enhance natural language understanding. With practice, the best AI chatbots learn to recognize verbal cues that help them better understand the user’s sentiment.

At a basic level, an AI bot using NLP works as follows:

  • A human asks a question.
  • AI algorithms are applied to the text of the customer question.
  • The AI program delivers a response to the consumer via text or SMS messaging.

It is during Step 2 that AI technology and NLP apply. This is where technology identifies the user’s intent and determines specifics about the request (known as entities). Algorithms based on previous data can infer feelings, such as frustration or anger so that the AI bot can deliver a more targeted response via a realistic conversational experience.

Chatbot platforms create AI chatbots to be intuitive. So, with practice, they learn more effective ways to respond. They develop more sensitivity, resulting in more accurate answers and better customer interactions. Bots can be trained to triage questions at the start of a session to immediately route the query to the appropriate endpoint, sometimes to a live agent. Chatbots developed with API also support integrations with other applications.

Where are AI bots used?

Bots are deployed across many business sectors from eCommerce to healthcare, with many useful chatbot applications. AI bots help answer questions for educators and manufacturers. They provide a seamless experience for customers and employees looking for information. AI bots can support workflows, CRM, and better customer interactions. Most social media platforms now integrate AI bots. With a flexible framework, chatbots can be adapted to any industry or application. Use cases demonstrate their effectiveness.

AI bots help streamline healthcare services.

Healthcare organizations use bots to help with appointment scheduling and capturing initial patient symptoms. If the reported symptoms indicate a more serious condition, the AI bot notifies health professionals and contacts patients. Chatbots help pharmacists and physicians find answers regarding drug interactions. Healthcare providers can even automate bots to remind patients to take medications, record health data, and schedule tests.

Financial services use chatbots for enhanced customer support.

In the financial sector, bots answer consumer questions. Whether they need information on mortgage rates or the difference between A and B shares, AI bots provide detailed data that helps individuals make financial decisions. In many places, customers can no longer drop by a local bank branch or an insurance agent’s office without an appointment. Bots can schedule those appointments and collect information about the upcoming meetings to streamline customer interaction.

Filing insurance claims or disputing bank charges may be standard practice but are friction points for customers. Chatbots can make the process easier by acquiring the information and completing the form for customer approval. Drag-and-drop features help with this process. AI bots can provide investment advice based on individual financial behavior, suggesting low-risk investments for risk-averse consumers.

AI bots automate eCommerce.

People often have questions about products on a website. Deploying an AI bot allows consumers to receive answers quickly. They just ask the bot. With AI, a bot can easily search available data and return a response in seconds, making it easy for the consumer to purchase the item, supporting your Salesforce, and delivering customer satisfaction.With more interactions, AI can learn what additional information consumers need before purchasing a product. Chatbots can then ask for those details to ensure a more positive customer experience. A chatbot builder can program the bot to integrate brand messaging and company messaging while helping customers.

Why use a chatbot?

As technology advances, so will the capabilities of AI bots. They will be able to answer more complex queries and resolve more consumer issues without involving employees. As NLP improves, chatbots will be capable of addressing the nuances of human language. For now, AI chatbots provide companies with the following benefits:

  • Cost savings
  • Increased sales
  • Improved customer experience
  • Better CRM

In addition to these benefits, employers can deploy AI bots to address employee requests for information, reducing the time it takes to complete a task. They can operate as a virtual agent or virtual assistant in real-time, supporting your business and your customers.

Conversational AI provides cost savings.

Answering customer service questions occupy many support team hours. Often, the questions are so similar that human agents feel like they’re answering the same question for eight hours. AI chatbots can reduce customer service costs by answering those repetitive questions instead of your employees.

Sales and productivity grow with AI bot use.

AI bots can increase sales because they are available 24/7 and can respond to questions in seconds. If a consumer has a product question at two in the morning, who will answer it? If no one can answer the question, the customer is likely to move on to another site. 

Not only will bots be available to answer questions in real-time, but they can also make recommendations based on past behaviors. As customers browse through the recommendations, they may find another item to purchase. The longer a consumer is on an eCommerce site, the more likely they will buy an item.

AI bots improve customer experiences.

Chatbots collect customer data. They know a customer’s peak buying times, shopping history, and preferences, like their favorite color. Unlike other tech tools, such as mobile apps, AI bots can apply this detailed information to anticipate customer questions, improve customer support, provide personalized experiences, and enhance brand messaging.

Insights gained from big data are a competitive advantage. Chatbots can help with those insights by making data available to other applications. As AI bots grow in intelligence, they can acquire critical customer information for more accurate insights.AI chatbots incorporate the latest technology in machine learning, artificial intelligence, and natural language processing to deliver a cost-effective solution that improves customer interaction. Chatbots enhance customer engagement, aid market research initiatives, and generate more promising leads with these integrations.

Further Reading


What exactly is an AI chatbot?


An comprehensive introduction to chatbots


What is chatbot automation?