What is a Chatbot? A Definition

A chatbot is a software program that simulates human conversation. In its simplest form, a chatbot uses automated, pre-set responses to answer customer service queries. By integrating Machine Learning (ML) and Natural Language Processing (NLP), more advanced chatbots can provide sophisticated, personalized exchanges that feel like real human-to-human conversations.

Automated chatbots help you support customers while driving efficiency and reduced costs.

How Does an AI Chatbot Work?

In its basic form, a chatbot uses pre-programmed workflows to understand what a user needs. It collects data that can help identify an appropriate response based on set rules.

An AI chatbot (also known as conversational AI) uses a more sophisticated workflow that can “learn” from previous interactions and customer data. This means it can ask clarifying questions and analyze customer sentiment with a more natural, human-like tone. ML and NLP are used to apply conversational analytics to every interaction so an AI chatbot’s responses can improve over time.

Why are Chatbots Important?

Your company can use AI chatbots to provide excellent customer service while enhancing the efficiency of business operations. Chatbots can handle tens of thousands of interactions simultaneously. Automating these interactions enables staff to focus on more strategic, high-value activities.

Chatbots are most commonly used to:

Provide the first line of online customer service, gather information and direct customers to live agents only when necessary.
Answer customer queries and recommend appropriate solutions and services.
Run surveys and collect feedback.

How Chatbots Create Value for Businesses

From education to healthcare and from finance to food service, organizations are boosting their efficiency and productivity by using chatbots for repetitive tasks. This includes addressing common customer queries and managing internal matters such as training and scheduling.

Chatbots also help companies decrease their overheads by allowing them to more selectively allocate responsibilities to human agents while remaining responsive to customer needs.

Chatbots can create value for your business by:

Offering convenience and responsiveness to your employees and customers.
Resolving first-line customer queries without human interaction.
Scaling customer service capacity by engaging with an unlimited number of customers at the same time.
Automating services and delivering speed and efficiency beyond the capacity of human workers.
Increasing operational efficiencies and cutting costs associated with pre- and post-sales customer support.

A Brief History of Chatbots

In 1950, when Alan Turing first conceived of a machine that could interact like a human, AI was still the stuff of science fiction. Since his initial Turing Test, interactive bots have evolved from if/then programming to the sophisticated responses of Siri and Alexa.

Initially, chatbots could only perform simple tasks. They completed basic information requests based on specific user queries, such as providing weather forecasts and stock market updates. AI, ML and NLP have since set the stage for smart, conversational interactions that can transform the way business is conducted.

Conversational AI is a far cry from the limitations of traditional rules-based chatbots that offer scripted, robotic responses. It gives you the power to automate your customer service communications, expand support hours and analyze customer sentiment and user data to improve customer experiences and your company’s bottom line.

Challenges for Chatbots Today

Most chatbot implementations today still rely on rules-based technology. But the market is moving in the direction of smart, AI-driven chatbots that are more like digital personal assistants.

Consumers and employees increasingly expect chatbots to respond like humans, but they also expect fast, reliable and appropriate responses. Organizations must therefore continually improve and update the way their chatbots interact with users, both internal and external. This not only ensures user satisfaction but presents your brand in the best light.

The Pros of Chatbots

By using AI chatbots for business, you can unlock the following business benefits:

Enhanced customer experience: 24/7 availability and ubiquitous deployment, offering personalized conversations, faster customer service and the ability to handle multiple customer interactions simultaneously in several languages.
Varied applications: Automation of numerous processes, reducing errors and operational costs.
Data analysis: Collection and analysis of data for enhanced customer insights.
Revenue and business growth: Lead generation and increased sales and customer engagement.
Ease of integration: New technologies are easy to deploy, requiring no specialized AI training or data prep work.

The Cons of Chatbots

As with any evolving technology, there are some drawbacks to replacing human interaction with machines. The challenges chatbots in business pose include:

Scope: Simple chatbots cannot manage lengthy or complex queries, or those with multiple variables.
Misunderstanding: Although NLP has facilitated great progress in this area, chatbots do not always understand speech or intent. Phrasing, spelling and query inaccuracies can impact a chatbot’s ability to resolve queries to the customer’s satisfaction.
Security: Data security and privacy concerns continue to add layers of complexity. Data transmission and the type of information chatbots request during each interaction must be carefully managed to prevent breaches of personal identifiable information (PII).
Cost: Although the long-term financial benefits of implementing chatbots can be substantial, more sophisticated chatbots require higher investments.

Looking to the Future of Chatbots

As chatbot adoption continues to move toward more intelligent, analytics-based predictive conversations, interactions with customers will become increasingly human-like. Each customer interaction will be personalized to improve the customer experience and build loyalty.

Additionally, advanced AI, NLP and sentiment analysis will allow business intelligence bots to assess customers’ moods and respond appropriately, as well as direct customers to the correct channels or individuals as needed. AI’s predictive and analytical capabilities also help companies automate more of their business processes and predict customer behaviors.

The use of chatbots on messaging platforms and for automated purchasing is also poised for growth, helping companies increase their marketing engagement and sales on social media. Customers are more likely to purchase items from within the apps they are already using, and companies can scale their customer outreach easily and cost-effectively within these platforms. This is having a profound effect across a range of industries like fitness, human resources, finance, and IT.

About Sutherland Conversational AI

By integrating with your CRM and enterprise systems, Sutherland can design, develop, monitor and maintain an advanced AI chatbot custom-built for your business needs. Sutherland Conversational AI helps ensure consistent, satisfactory interactions for your sales, support and other enterprise processes.

An evolving service that adapts to the needs of your customer lifecycle, Sutherland’s enterprise-grade Conversational AI applications can help:

Automate customer self-service interactions and business processes.
Convert website traffic and generate more qualified leads.
Improve customer service and user experience.
Expand after-hours support.

Sutherland Conversational AI features:

A dynamic, interactive user interface.
Machine Learning and Natural Language Processing technologies.
Customized conversational design.
Integration with common CRM and enterprise chat platforms.
Conversational analytics.
GDPR-certified program.