Chatbots Explained: Why Your Business Needs Them and How To Choose the Right One

You’ve had this experience before: you open a website and something in the bottom-right corner pops up with a bleep. That’s a chatbot demanding your attention. At first, it looks like a nuisance and yet so many organizations have chatbots now.

So, what is a chatbot? Is it just a silly robot or does it bring benefits to both organizations and their clients? How do they work? Where are they used and what for? These are the questions we answer in this article.

What is a chatbot?

A chatbot is a program that simulates a conversation according to a scenario set by a human. This conversation resembles a question-answer kind of dialogue.

Microsoft researcher Jonathan Grudin splits all chatbots into three major categories: task-focused, intelligent assistants and virtual companions.

Capabilities Used in Example
Task-focused Limited Ecommerce, digital marketing Facebook bot for a pizza company
Intelligent assistant Average to impressive Mobile phones, banking Siri, Alexa, Google assistant
Virtual companion A+ Psychotherapy, AI research Cleverbot, ELIZA

The majority of businesses only ever use task-focused chatbots. They’re not as intelligent as the other two types but their capabilities are enough to do the job. By going through training, they get better.

How do chatbots work?

A chatbot receives information in a request and it has to return a satisfying answer. To do the latter, it has to understand a request. How to make sure this happens?

Task-focused chatbots work according to a predefined script. A person maps this script out thus training a bot and creating as many possible conversation scenarios as possible. The more you know about your customers and their needs, the better you can train your bot and give clients the best solutions.

Do not confuse chatbots with bots. Bots have got a bad reputation in recent years for being used in hacker attacks. Chatbots are merely tools to help marketers and customers solve issues faster. However, for the sake of brevity chatbots are often called bots.

More sophisticated bots have the capabilities to learn by themselves. To do it, they use such tools as Machine Learning, Artificial Intelligence and Natural Language Processing. They analyze large amounts of data and learn from it which lets them hold real-life conversations.

4 main ways brands can benefit from using chatbots

Chatbots are handy replacements or extensions for a customer support team but they also make and save money. Here are the four major ways businesses can do well by using a chatbot.

Give customers 24/7 support

When used in this role, a chatbot handles the most popular questions about product inquiries, password reset, contact information, etc. It gives users solutions to the questions they search for.

an example of a customer support bot
Source: Chatbot.com

The speed of response matters a lot. 82% of customers expect instant responses when they contact a brand and 40% don’t care if they speak to a chatbot or a human agent as long as they get the support they need.

Since chatbots don’t sleep, they’re available to customers all the time. Not many companies can afford a support team, let alone one that works 24/7. A chatbot won’t keep clients hanging with their requests on holidays or at 3 AM.

Save costs on the support team

A chatbot can partially or fully replace customer support and thus save a lot of money. Up to 30% some say, although the number can rise to 100% if you fully automate customer support.

One more benefit is the precious time your team saves by handing over requests like “track my order” or “how can I pay” to a chatbot. Having done that, people in your organization can focus on more meaningful tasks.

Use chatbots as sales channels

Customers no longer need to make calls to order a pizza or a taxi. Instead, they can do it with chatbots that give a list of options to choose from or let customers type a request. This is a win-win situation because it saves time for both companies and their clients.

GIF with an order for pizza via a chatbot
Source: Tars

Clothing, software, electronics companies also use chatbots as sales tools to introduce products. If a chatbot is integrated with a payment service, customers can close sales without leaving the bot.

By introducing customers to products and accepting payments, chatbots turn into powerful selling machines. On average, chatbots increase sales by 67%.

The projected worldwide market revenue from chatbots for 2022 is $107 million and it’s not going to stop. By 2027, the figure is expected to quadruple to $455 million.

Generate leads

Chatbots can turn random visitors to a website into new clients.

First, a bot has to proactively start a conversation. At some stage, the bot offers a discount, a free course or a limited offer. In return, it asks for a phone number or an email.

So, even by talking to users through automated responses, chatbots can capture new contacts and enlarge the database of clients for a brand.

an example of lead generation through a bot
Mindvalley’s Instagram chatbot offers a free masterclass in return for an email. Source: ManyChat

Most common types of chatbots

The majority of chatbots used in digital marketing are simple task-focused types. There’s a class of conversational AI-based chatbots — machine learning and voice-enabled — which we also mention below.

Menu-based or button-based

Menu-based chatbots are the most basic chatbots. They function according to a script — a set of limited predefined commands. What a user clicks on determines the next set of commands.

GIF with a menu-based bot in action
A menu-based chatbot in action. Source: Landbot

Menu-based chatbots can’t learn through artificial intelligence because they have none — it takes training to make them better. The training process is a human adding more possible sets of commands or editing inefficient scripts.

Menu-based chatbots are great solutions for simple tasks. For example, they help navigate on a website, make a quick order, contact a live agent. They can also act as lead magnets or allow customers to close sales.

Keyword recognition-based

In principle, keyword chatbots act the same way as menu-based ones but there’s more freedom on the user’s side.

Instead of clicking buttons, users type words. A chatbot picks keywords out, searches for scripts that can be triggered and gives a response.

Keyword-based chatbots are often combined with menu-based ones. It makes sense to give users two options of input because a click saves time.

Keyword chatbots with a menu option are popular on Facebook, here’s one example.

GIF with a keyword bot in action
Domino’s chatbot is trained to recognize “pick up” but is not trained to deal with my ramblings

If you set up a keyword recognition chatbot you need to map out as many user scenarios as possible. The training is needed because outside the script, this chatbot is useless.

Keyword chatbots are also a good opportunity to learn about your customers if you can spot trends in user requests.

Machine learning chatbots

Machine learning chatbots are as if keyword-based chatbots could learn by themselves from repeated interactions. Such a chatbot relies on Artificial Intelligence to store information: the more data it collects, the better it becomes. They’re also known as conversational or contextual chatbots.

They’re highly intelligent but they require a staggering amount of data and well-trained human specialists. They’re no longer sci-fi tools for a distant future — they’re slowly becoming a reality. These chatbots are especially popular in the banking sector as virtual assistants.

In 2018, Bank of America launched a virtual assistant Erica that helps clients manage their money. One cool feature about it is it understands a voice and speaks back. Erica schedules payments, updates on spending, shows recent transactions. It even raises safety concerns if it sees a drastic increase in spending.

GIF with the Erica bot in action
Source: Erica

Erica is a highly intelligent chatbot and as of 2021, it had 19.5 million users. But although a machine learning chatbot is a fantastic technology, it’s not worth the fuss if you need a simple chatbot for the most basic ecommerce needs, that is to cut costs and boost sales.

Voice-enabled chatbots

Voice-enabled chatbots take a lot of technology to process a human language and give a good response. The likes of Apple’s Siri or Amazon’s Alexa are these types of chatbot.

Voice inputs and outputs for chatbots have been a thing in the banking sphere for a while. As shown with the Erica example, some banking chatbots are smart enough to learn from human interactions. They’re rightly called conversational chatbots.

Doubtless, they are the future of human assistance. However, what’s true of machine learning is also true of voice-enabled chatbots — they may not be worth the effort in digital marketing in 2022.

What is worth the fuss in digital marketing in 2022 is personalization, optimization, preheader tricks and a bunch of other things — see in our list of email marketing tips.

The hybrid model

The hybrid model is the combination of machine and human. It comes last on this list but it’s probably one of the best solutions for digital marketers looking to exploit chatbots.

A hybrid chatbot steps forward and tries to deal with a request but if it can’t, a human assistant takes over the conversation.

GIF with a hybrid bot in action
Here’s my attempt at talking to this type of chatbot. Once it can no longer hold a conversation it switches to a human agent

You may be wondering — why not go to human agents straightaway? Two good reasons for it.

First, not all organizations can afford a support team, let alone one that works 24/7. Add to that the problem of many languages for multinational organizations. Second, the majority of user questions are easy enough for a chatbot to answer. Up to 80% of standard questions can be answered by a chatbot.

Choosing the right platform for your needs

Chatbots can be added to a website, integrated into a social media platform or have their own app.

A lot depends on where your customers spend their time. If they use WhatsApp, you should set up your brand’s bot in this messenger. Or if they use WhatsApp, Facebook and Instagram, you’ll need a platform that integrates your chatbot across several channels.

Below is our list of six services where you can create and integrate a chatbot without having to learn code.

ManyChat

Best for: boosting sales through Facebook Messenger  Pricing starts at: 15$/month

Manychat lets you build simple task-focused chatbots. The drag-and-drop editor and a set of predefined templates make it a quick experience.

The chatbots can be integrated with such ecommerce channels as email, Shopify, SMS but the main focus is Facebook Messenger.

Create automated conversations in order to drive sales and get more leads through ManyChat’s chatbots. You can also integrate payments.

GIF with ManyChat’s bot in action
Source: ManyChat

Chatfuel

Best for: quick set-up  Pricing starts at: $15/month

Chatfuel is a good alternative to Manychat as it also mostly focuses on Facebook’s products. It can also be integrated with Instagram, Shopify, Google Sheets, Zapier.

The bot is taught to recognize keywords and respond with short responses. You can also map out conversation flows

GIF with Chatfuel’s bot builder
The arrows create conversation flows

The drag-and-drop editor is intuitive and the developers added around 30 templates for the most popular chatbot uses.

One extra feature of Chatfuel is that bots store data on their users which allows you to contact customers in the future.

MobileMonkey

Best for: lead generation  Pricing starts at: $19/month but most plans start at $119/month

MobileMonkey has the same drag-and-drop editor as the services above but it has different payment plans for agencies, in-house marketers and creators.

While MobileMonkey is good for beginners, more experienced users will enjoy advanced automation for Facebook, Instagram, SMS.

Their chatbots focus on lead generation tools such as drip campaigns, chat blasts (messages sent to all users or a specific segment) and list building.

MobileMonkey’s bot builder
A lead generation chatbot is being set up in MobileMonkey’s builder. Source: MobileMonkey

SendPulse

Best for: payment integrations  Pricing starts at: $10/month

SendPulse chatbots are integrated with the most popular messengers: Facebook, WhatsApp, Telegram, Instagram.

Their chatbots are triggered by keywords. A user types a request and receives a quick automated response.

The SendPulse developers also created an app for you to manage chatbots on your smartphone. Use it to speak to your customers, work with subscriber data and analyze this information.

The best feature about SendPulse though is you can close sales right in the chatbot. They integrate with PayPal, Stripe, Fondy allowing customers to complete a purchase.

visualisation of payment process in SendPulse’s bot
A SendPulse chatbot. Source: SendPulse

SnatchBot

Best for: reaching as many channels as possible  Pricing starts at: $30/month

The chatbots made with SnatchBot boast a great deal of integrations with so many channels, more than usual chatbot services. To name a few: Facebook Messenger, email, SMS, Slack, Skype, Google Sheets, Microsoft Teams, mobile apps — and the list is still incomplete.

Among the many solutions it provides, SnatchBot is good for building customer service and ecommerce bots, both for B2B and B2C.

One disadvantage is the bot builder itself. It’s not the drag-and-drop type but a more robotic (the irony!) editor with a seemingly umpteen number of possibilities. We guess that’s the price one pays to access so many channels.

SnatchBot’s bot builder
Far from smooth but the developers seemed to focus on functionality rather than design. Source: SnatchBot

Conclusion

  • Chatbots are strong sales tools. They help brands generate leads while helping customers do online shopping.
  • Chatbots are great customer assistants. They are available for FAQs 24/7 and can handle many customers at the same time. They also allow organizations to cut costs on human assistants.
  • Chatbots automate the routine. They replace human assistants for the most basic tasks and thus save companies money.
  • Basic chatbots tick most boxes for digital marketers. Task-focused chatbots are limited in scope but leave many customers happy because most of the time, they do what’s required.
  • Chatbots are easy to set up. The majority of web services have simple editors that allow you to create scenarios for a chatbot.

How do chatbots perform for you?

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