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

Chatbots Explained: Why Your Business Needs Them and How To Choose the Right One
04 November, 2023 • ... • 599 views
Eugene Vasilev
by Eugene Vasilev

You open a website and something in the bottom-right corner pops up with a bleep. That’s a chatbot demanding your attention. It’s likely you, as many of us, find chatbots annoying, and yet so many businesses and organizations have them now.

So, what is a chatbot? Is it just a silly robot or does it bring benefits to both businesses and their customers? How do chatbots work? When will they be most helpful, and what are the options available on the market? These are the questions we answer in this article.

What is a chatbot?

A chatbot is a computer program or an artificial intelligence (AI) system designed to simulate a human conversation. They are typically used in various applications to interact with users through text or speech in a natural language, providing information, answering questions, and performing tasks.

Do not confuse chatbots with malware. Bots, as an entity, have got a bad reputation for being used in hacker attacks. Chatbots are merely tools to facilitate communication between businesses and customers. For the sake of brevity, chatbots are often called bots too.

Microsoft researcher Jonathan Grudin divides 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, so we’ll be covering mainly them in this article.

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. They are meant to automate routine tasks, such as order tracking or appointment scheduling, and reduce the need for human intervention. The more you know about your customers and their needs, the better you can set up your bot and provide your clients with the best solutions.

More sophisticated bots powered by Machine Learning and Natural Language Processing can analyze large amounts of data and learn from it, which allows them to handle a wide range of conversations.

Four main ways businesses can benefit from using chatbots

Chatbots can be a handy replacement or extension of a customer support team but they can also make money. Here are the four major ways businesses can benefit from using a chatbot.

Provide customers with 24/7 support

A chatbot can provide users with answers they might be looking for. For example, it can handle the most frequent questions about the product, help with password reset, provide contact information, etc.

Chatbot dialogue window. The chatbot asks what the user wants to talk about while offering options like learning about product features, pricing, and free trial or having a call with sales and returning to the menu.
Source: Chatbot.com
Another chatbot dialogue window. A user has questions related to support. The chatbot asks how it can help and provides four options right away: open the Help Center, remind password, change the plan, or return to the menu.
Source: Chatbot.com
Chatbot dialogue window. The user selects the option “Remind password,” and the bot fetches an article on how to reset a password, implying that the user might have forgotten the current one. The bot then offers two new options: either reset the password, or return to the menu.
Source: Chatbot.com

The speed of response matters a lot. In fact, 64% of people, who participated in the recent study on consumer patience, said speed is as important as price. 54% said that speed and responsiveness are also very important when they need to get help with the product or service they purchased.

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.

Shameless plug 🙂

Selzy has a stellar support team who are there for all our users 24/7! 

Yup, you’ve heard that right even our free users can reach out and get a reply within five minutes or so. No bots involved!

Sign up now for free to get help with setting up your first email campaign or a Telegram chatbot.

Reduce customer service costs

A chatbot can partially or fully replace customer support and thus save a lot of money, especially if you fully automate customer support.

But even if you have no intention nor need to completely replace your support team, you can still use a chatbot to handle requests like “track my order” or “how can I pay.” With a chatbot at hand, your support team will be able to focus on more complex issues.

Use chatbots as sales channels

Customers no longer need to make calls to order a pizza or a taxi. Instead, they can do it through 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.

A GIF illustrates ordering pizza through a chatbot. The chatbot collects the customer's name, address, and pizza preferences. For some questions, the customer has to type in the answer, while for others, they can select it from the list, for example, the specific pizza matching their request for non-vegetarian options.
Source: Tars

Clothing, software, and electronics brands also use chatbots to introduce their products. If a chatbot is integrated with a payment service provider, customers can complete purchases without leaving the bot.

No wonder that in 2023, the global market for chatbots is worth $5.5 billion. By 2028, the figure is estimated to triple to $15.5 billion.

Generate leads

Chatbots can turn random people visiting your website into new clients.

All you need to do is to enable the bot to proactively start a conversation. Program the bot to offer a discount, a free resource, or a limited-time offer. To get it, the person will have to disclose a phone number or an email to the bot.

So, even by guiding visitors through a scripted conversation flow, chatbots can collect leads and enlarge the brand’s client base.

The screenshot shows a conversation between a customer and Mindvalley’s chatbot. When the chatbot offers course options, the customer types in “energy.” The chatbot returns info about a free 90-minute masterclass, prompting the customer to sign up.
Mindvalley’s Instagram chatbot offers a free masterclass in return for an email. Source: ManyChat

Most common types of chatbots

While the majority of chatbots used in digital marketing are task-focused, we are also going to mention conversational chatbots in this section to give you the full picture.

Menu-based, or button-based chatbots

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

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

Menu-based chatbots can’t learn through interaction with people or data. The only way to improve them is by adding more possible sets of commands or editing out inefficient scripts.

Menu-based chatbots are great solutions for simple routine tasks. For example, they can help navigate a website, make a quick order, complete the purchase, or contact a support agent. They can also offer lead magnets in exchange for contact details.

Keyword recognition-based chatbots

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

Instead of just clicking buttons, users can also type words. A chatbot picks up keywords, and starts searching for scripts that can be triggered to give a response.

Keyword recognition-based chatbots are often combined with menu-based ones. It makes sense to provide users with both input options of input since clicking saves time.

Keyword chatbots with a menu are popular on Facebook. Here’s one example:

A GIF with a keyword bot in action
Domino’s chatbot can recognize the phrase “pick up” but can't handle my ramblings 🙂

If you set up a keyword chatbot you need to map out as many user scenarios as possible because, outside the script, such a 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 and voice-enabled chatbots

Machine-learning chatbots are somewhat similar to keyword-based chatbots.  What sets them apart is their ability to learn from repeated interactions. The more data it collects, the more intelligent it becomes. However, for a machine-learning chatbot to work effectively, one needs a staggering amount of data and a team of engineers and data scientists.

Machine-learning chatbots are also known as conversational or contextual chatbot and are especially popular in the banking sector playing the role of virtual assistants.

In 2018, Bank of America released a virtual assistant Erica to help their clients manage money. What makes Erica is her ability to recognize human voices and speak back in addition to interactions via text messages. Erica can schedule payments, updates customers on their spending, and show recent transactions. She can even raise safety concerns if she notices a drastic increase in spending.

A woman asks Erica when was the last time she spent money at The Lime Truck, and Erica replies with December 15th.
Source: Bank of America

Erica is a highly intelligent chatbot and as of 2023, it has over 37 million users.

While machine learning chatbots are a fantastic technology, they might not be worth the fuss if you need a chatbot to cover the basic ecommerce needs, that is cutting costs and boosting sales.

What is worth the fuss in digital marketing in 2023 is personalization, segmentation, responsive emails, and a bunch of other things — find them in our list of email marketing tips.

Generative chatbots

Generative chatbots use a broader range of data than machine-learning chatbots, generating responses based on learned patterns rather than specific data or scripts. This is how they are able to answer almost any question and maintain a coherent conversation, regardless of the topic. 

ChatGPT is the most well-known generative chatbot, and thanks to OpenAI’s API it can be easily integrated with other chatbots, apps, and services.

To give you just one example of such integration: in 2023, Expedia launched an in-app travel planning experience powered by ChatGPT.

A user asks for various advice on their honeymoon trip to Hawaii: which island to pick, whether April is good for surfing, and what hotel to book. The bot then saves the hotel recommendations in the “My trips” section of the app.
Source: Expedia

Hybrid chatbots

Hybrid chatbots combine a chatbot and a live chat with a support agent in one interface. They come last on this list but they are probably one of the best solutions for digital marketers looking to employ chatbots.

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

A GIF with a hybrid bot in action
Here’s my attempt at talking to a hybrid chatbot. When it could no longer handle the conversation, it redirected me to a human support agent.

You may be wondering — why not redirect customers to human support agents straightaway? There are at least two good reasons for it.

First, not all businesses can afford a support team, that works 24/7. Add to that the problem of many languages for multinational companies. Second, the majority of user questions are easy enough for a chatbot to answer, meaning the customers won’t have to wait to get the information they need.

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 configure your brand’s bot for this messenger. Or if they use WhatsApp, Telegram, Facebook and Instagram all at once, you’ll need a chatbot that will work across multiple channels.

Below is our list of five services where you can create and launch a chatbot without having to learn how to code.

Selzy

Best for: email marketers and business owners who want to go beyond email at no additional cost

Pricing starts at: $11/month or $126/year when paid annually. Selzy’s chatbot builder is included in the Standard plan.

Selzy is an email marketing automation platform that also allows its users to create chatbots for Telegram.

If you wonder why Telegram, you probably don’t know that it’s one of the top 3 messengers globally. It has 500+ million active users per month and, what’s even more important, an 80% message open rate.

Chatbots created with Selzy can respond to user messages, commands, and actions or connect a human support agent to pick up the conversation.

They are perfect for marketing activities since they can collect contact information, flag the leads, and use that information later to send notifications about new products or promotions. 

Selzy’s chatbot builder is super-intuitive, allowing drag-and-drop elements with different functionalities to create multiple scenarios within one chatbot.

Selzy’s chatbot builder. In two clicks, the notification block is selected, dragged over to the working space, and connected to the data collection block.

ManyChat

Best for: driving sales and conversations on messaging apps

Pricing starts at: $15/month, but a free plan with limited options is also available

Manychat allows you to build simple task-focused chatbots. The drag-and-drop editor (no coding required!) and a set of predefined templates make it a quick experience.

The chatbots support integrations with ESPs and SMS but the main focus is messengers: Facebook Messenger, Instagram DMs, and WhatsApp.

Create automated conversations in order to drive sales and get more leads through ManyChat’s chatbots. You can also accept payments thanks to the integrations with PayPal and Stripe.

ManyChat’s pet store bot lets users browse products by category, view product cards, and make purchases
Source: ManyChat

Chatfuel

Best for: e-commerce businesses who aim to boost their revenue on WhatsApp

Pricing for WhatsApp chatbots starts at: $34.29/month, but they have other plans going as low as $11.99/month

Chatfuel can be a good alternative to Manychat as they also build chatbots for Instagram and Facebook. However, their main focus is WhatsApp.

Thanks to Chatfuel API, businesses can integrate data from their store, CRM, or CDP.

Chatfuel offers both ready-made and custom solutions while inviting businesses to supercharge their communication with ChatGPT.

The drag-and-drop editor is intuitive and the developers added 60 templates across 16 industries for the most popular scenarios.

Creating a flow for the FAQ bot that also collects customers’ email addresses in Chatfuel’s bot builder

SendPulse

Best for: accepting payments worldwide

Pricing starts at: $8/month when paid annually, but a free plan with limited options is also available

With SendPulse, you can create chatbots for all popular messengers —  Facebook, WhatsApp, Telegram, Instagram DMs, Viber — and a website.

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

Sendpulse is also ChatGPT ready, meaning your chatbots can help your customers with simple tasks like searching for SEO keywords or generating slogans in addition to providing scripted responses.

The SendPulse developers also created a mobile app to manage chatbots created for different messengers in one place. Use it to communicate with your customers, manage chats, work with subscriber data and check chatbots statistics.

Probably, the best thing about SendPulse is the variety of payment service providers that they integrate with to enable closing sales right in a chatbot. In addition to PayPal and Stripe, they also support Mercado Pago and Flutterwave.

Visualization of the payment process in a SendPulse’s bot for Facebook Messenger
Source: SendPulse

SnatchBot

Best for: building omnichannel and hybrid chatbots

Pricing starts at: $79/month when paid annually, but a free plan with limited options is also available

SnatchBot is a bot builder platform for businesses and developers, boasting a large variety of integrations, their own bot store, large library of templates, and text-to-speech capabilities available in over sixty languages.

One disadvantage is the bot builder itself. While SnatchBot assures their website visitors that no coding or technical skills are required to build a bot, their builder isn’t exactly beginner-friendly with a seemingly umpteen number of features and settings.

A screenshot of SnatchBot’s bot builder. Builder has a tree-like structure spread across three panels: the main menu, the bot’s content, and the working space, where the user, among other things, configures conditional connections for each flow
Click to enlarge. Source: SnatchBot

Summary

  • Chatbots are powerful sales tools. They help brands generate leads and drive engagement while helping customers find the right info quickly and complete purchases on spot.
  • Chatbots are great for customer service. They are available 24/7 and can handle many customers at the same time. They also allow businesses to cut costs on human support team.
  • Even basic chatbots check most boxes for digital marketers. Task-focused chatbots are good at routine tasks, like collecting contact info, sending personalized offers, and reminding to complete the purchase to combat cart abandonment.
  • Chatbots are easy to set up. The majority of solutions available on the market don’t require coding or other technical skills.

This article was originally published in April 2022 and has been updated in November 2023 to include the latest industry developments and new data.

04 November, 2023
Article by
Eugene Vasilev
Content writer on all things email marketing at Selzy. Writing, editing and illustrating over the last 5 or so years. I create simple texts with examples to inform or entertain readers. In love with the semicolon. Boring language merchant. Egg came first. My favorite bands will never come to my city. Let's play beach volleyball.
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