Chatbot: What Is A Chatbot? Everything You Need To Know

Neeraj Shukla
By Neeraj Shukla | Last Updated on April 5th, 2024 9:59 am

Chatbots have gained a lot of traction in recent years. They’re on websites, mobile apps, messenger apps, social media, and more, often serving as virtual assistants. But how did they come to be like this? From ELIZA in the past to the contemporary chatbots created through the use of no-code AI development platforms, each stage has brought about a transformative shift in the world of chatbots. These platforms enable individuals with little to no coding experience to create sophisticated chatbots. This blog takes you on a journey through the history of chatbots, explores their current state, envisions their future, and delves into their profound impact on various spheres of activity.

What are Chatbots?

A chatbot is a computer program that simulates human conversation. Chatbots are designed to automatically engage in conversations with human users to answer questions, provide support, or promote a product or service.To do this, chatbots rely on a number of techniques, including natural language processing (NLP) and machine learning (ML). Nowadays, chatbots are among the most visible applications of AI technology.

Chatbots can be integrated into various platforms, such as websites, messaging apps, social media, and virtual assistants. They can engage in conversations with users, answer questions, provide information, perform tasks, and even assist with customer support. Depending on their complexity, chatbots can range from simple rule-based systems to sophisticated AI-powered virtual assistants.

The History of Chatbots – From ELIZA to ChatGPT

The history of chatbots is indeed a fascinating journey that spans several decades of technological advancement. Let's dive deeper into the evolution of chatbots, the key milestones, and the current state of the field:

ELIZA: The Pioneering Chatbot

ELIZA, created by Joseph Weizenbaum in 1966, marked the beginning of chatbot development. Designed to simulate a Rogerian psychotherapist, ELIZA engaged users in text-based conversations by employing pattern matching and simple language rules. While its responses were relatively basic, ELIZA's interactions paved the way for more sophisticated conversational agents.

Parry and Beyond

In 1972, Kenneth Colby's Parry aimed to simulate a person with schizophrenia. This marked an exploration into creating chatbots that could mimic specific personalities and mental states. Subsequent chatbots like Jabberwacky, Dr. Sbaitso, and A.L.I.C.E. continued to build on this foundation, becoming more capable of engaging in diverse conversations.

The Rise of Virtual Assistants

The turn of the 21st century brought about a new wave of chatbot development. SmarterChild, introduced in 2001, was a popular instant messaging chatbot that provided answers to user queries. Apple's Siri, introduced in 2011, marked a significant milestone by integrating a chatbot into a mobile device. Other tech giants, including Google (Google Assistant), Microsoft (Cortana), and Amazon (Alexa), followed suit, integrating chatbots into their respective ecosystems.

Advancements in AI and NLP

With advancements in AI and natural language processing (NLP), chatbots began to show remarkable improvements in their conversational abilities. These advancements allowed chatbots to understand context, infer user intent, and generate more relevant and human-like responses. This marked a shift from rule-based systems to machine learning-driven approaches.

ChatGPT and GPT-3

OpenAI's GPT-3 (Generative Pre-trained Transformer 3) marked a significant leap in chatbot capabilities. GPT-3, launched in 2020, is a massive language model that can generate highly coherent and contextually relevant text. ChatGPT, based on GPT-3, is one of the most advanced chatbots to date, capable of simulating human-like conversations and providing valuable assistance across various domains.

Current Landscape and Chatbots

Today, chatbots have diversified their applications across industries. They offer customer support, automate tasks, provide personalized recommendations, assist in healthcare, enhance educational experiences, and much more. Businesses integrate chatbots into their websites, messaging platforms, and apps to enhance user engagement and streamline operations. The array of available chatbots, such as those offered by Appy Pie, Salesforce, Zendesk, Azure, Intercom, Slack, Twilio, Zoho, and IBM Watson, demonstrates the widespread adoption of this technology.

How Chatbots Have Evolved Over the Decades?

The evolution of chatbots has been nothing short of remarkable, paralleling the rapid advancements in technology. Over the years, chatbots have transcended their humble origins, embracing cutting-edge capabilities and reshaping the way we interact with technology. This evolution has been characterized by several pivotal developments, which have propelled chatbots from simple rule-based responders to sophisticated AI-driven conversational partners.

One of the most notable transformations in chatbot technology has been in the realm of natural language processing (NLP). From the days of basic pattern matching, chatbots now wield highly sophisticated NLP techniques that empower them to not only comprehend user inputs but also decipher nuances such as context, sentiment, and user intent. This nuanced understanding enables chatbots to craft responses that mimic human conversation, creating a more engaging and relatable interaction.


The integration of Artificial Intelligence (AI) and machine learning (ML) has been a game-changer in the evolution of chatbots. Through AI-powered algorithms, chatbots have transcended the realm of pre-programmed responses and have ventured into the realm of learning from interactions. This adaptive learning process empowers chatbots to enhance their accuracy and relevance over time, ensuring that user interactions become increasingly meaningful.Artificial intelligence, with its transformative potential, has emerged as the cornerstone of chatbot evolution. The AI-powered chatbots exhibit a remarkable knack for understanding user queries swiftly and accurately. Not only that, but these chatbots possess the capability to anticipate user needs, offering relevant information proactively in real-time. This responsiveness creates a seamless user experience, akin to having a knowledgeable assistant on hand.

The practical applications of AI-driven chatbots have become increasingly diverse and impactful. They have evolved beyond mere interactions to become integral components of business operations. For instance, these sophisticated chatbots have found their place in customer service, effortlessly handling tasks like routing customers to appropriate departments and delivering personalized support. Their capabilities extend further to executing financial transactions, processing orders, and even educational counselling. Furthermore, the pervasive reach of chatbots has extended across various platforms and devices. From websites to messaging apps, and from social media to voice assistants, chatbots have seamlessly integrated into the digital fabric of our lives. This integration not only enriches user experiences but also contributes to the omnipresence of AI-driven interactions.

The evolution of chatbots is a testament to the remarkable progress of technology. From their humble beginnings as rule-based systems to their current AI-powered prowess, chatbots have undergone a transformative journey. Their ability to understand, engage, and assist users in increasingly complex scenarios underscores their growing significance in our technologically interconnected world. As technology continues its relentless march forward, chatbots are poised to become even more integral, adapting to our needs and shaping the way we interact with the digital landscape.

How Do Chatbots Work?

In the earlier stages of their development, chatbots were primarily text-oriented and operated within the confines of a predetermined set of uncomplicated queries. These queries were met with responses that had been meticulously authored by the chatbot's developers. Functioning akin to interactive Frequently Asked Questions (FAQs), these chatbots demonstrated proficiency in addressing inquiries that aligned with their pre-established question-and-answer pairs. Their effectiveness began to wane when presented with intricate or unforeseen questions, as their capabilities were restricted to the predefined conversational pathways they had been trained on. However, in contrast to their earlier iterations, modern chatbots functioning are based on the following key aspects:
  • Input from User: The conversation begins when a user interacts with the chatbot. This interaction can be in the form of text, voice, or even visual input, depending on the platform and capabilities of the chatbot.
  • Natural Language Understanding (NLU): The chatbot's first task is to understand the user's input. NLU involves processing and interpreting the input to extract meaning. This includes breaking down the input into words or tokens, identifying the language's structure, recognizing entities (like names, dates, locations), and determining the user's intent.
  • Intent Recognition: Based on the input, the chatbot identifies the user's intent. This involves categorizing the user's request or query into a specific intent or action that the chatbot has been programmed to handle. For instance, if the user asks about the weather, the intent is to retrieve weather information.
  • Entity Extraction: In addition to recognizing the intent, the chatbot also identifies any specific entities or parameters that are relevant to the user's request. These could be things like dates, locations, names, or any other piece of information required to fulfill the user's request.
  • Dialog Management: If the conversation is ongoing, the chatbot needs to manage the context and maintain an understanding of the conversation history. This helps the chatbot generate relevant responses and keep the conversation coherent and meaningful.
  • Response Generation: Once the intent and context are understood, the chatbot generates a response. For simple queries, the response might be pre-defined. For more complex interactions, the response could be generated using machine learning models or other AI techniques. The response is tailored to the user's query and the chatbot's capabilities.
  • Natural Language Generation (NLG): In cases where the chatbot generates responses using AI, NLG is used to create human-like text. NLG algorithms take the intent, entities, and context into account to produce a coherent and contextually relevant response.
  • User Output: The chatbot's response is then presented to the user. This can be in the form of text, speech, images, or any other media, depending on the platform and the chatbot's design.
  • Feedback and Learning: Chatbots can learn and improve over time through user interactions. They can analyze user feedback and responses to continuously refine their understanding of intents, improve response accuracy, and adapt to new patterns of communication.
  • Integration with External Systems: In cases where the chatbot performs tasks that involve interacting with external systems (e.g., making a reservation, checking account balance), the chatbot communicates with these systems through APIs or other integration methods.
  • Continuous Improvement: Developers and data scientists monitor the chatbot's performance and gather insights from user interactions. These insights can be used to enhance the chatbot's capabilities, improve intent recognition, refine response generation, and address any limitations or challenges.

What are the Different Types of Chatbots?

The growth in chatbot technology has been a matter of discussion and debate for a long time. With the advent of artificial intelligence and natural language processing, there has been a huge increase in chatbot technology. As chatbots become more advanced, they are also becoming more personalized. Chatbots can now remember things about users, such as their preferences and history, which allows them to provide a more personalized experience. Based on its technology and application, the chabtot is classified into three types.

  1. Rule-based Chatbots
  2. Simple Chatbots

    Rule-based chatbots, also known as scripted chatbots, rely on a predetermined set of rules and responses. These bots work by identifying specific keywords or patterns within user inputs and then selecting pre-programmed answers that correspond to those keywords. Rule-based chatbots are relatively simple to develop and are well-suited for handling straightforward and specific tasks. However, they have limitations in handling complex conversations or understanding context beyond the programmed rules. They are commonly used in scenarios where interactions are highly standardized, such as providing basic customer support, answering frequently asked questions, and automating repetitive tasks.

  3. AI Chatbots
  4. Smart Chatbots

    AI chatbots, powered by artificial intelligence and natural language processing (NLP), offer a more sophisticated and adaptable conversational experience. These chatbots use machine learning algorithms to analyze and understand the context, intent, and sentiment behind user inputs. Unlike rule-based chatbots, AI chatbots can comprehend natural language variations and adjust their responses accordingly. They continuously learn from user interactions, improving their accuracy over time. AI chatbots excel in handling a wide range of topics, providing personalized recommendations, and engaging in more complex and dynamic conversations. They are commonly employed in customer service & sales, and information retrieval applications.

  5. Hybrid chatbots
  6. Hybrid Chatbots

    Hybrid chatbots combine the best of both rule-based and AI chatbot approaches. These bots leverage advanced NLP and machine learning to understand user inputs and provide contextually relevant responses. However, they also integrate chatbot when human intervention is not necessary to ensure a seamless customer experience. Hybrid chatbots offer a balance between automation and human touch, enabling them to handle complex queries that might require personalized attention or emotional understanding. This human-in-the-loop approach allows businesses to maintain a high level of customer satisfaction while still benefiting from the efficiency of automation. Hybrid chatbots are increasingly adopted in scenarios where user interactions are diverse and may involve nuanced, unpredictable conversations.

Top Real-Life Chatbot Use Cases

Chatbots have become increasingly prevalent in various industries, revolutionizing customer interactions, service delivery, and business operations. Here are some top real-life chatbot use cases across different sectors:

  1. Chatbot for Customer Service
  2. Chatbots can be an effective tool for providing customer service, as they can handle a high volume of inquiries and provide quick responses to common questions. Here are a few ways chatbots can be used for customer service:

    • Answering frequently asked questions: Chatbots can be programmed to provide quick and accurate responses to common questions, such as questions about a company's products or services, shipping and returns policies, or account management.
    • Resolving issues: Chatbots can be used to help customers resolve issues, such as troubleshooting technical problems or processing returns or refunds.
    • Providing personalized recommendations: Chatbots can be used to provide personalized recommendations to customers based on their preferences and past purchases.
    • Directing customers to the appropriate resources: Chatbots can be used to help customers find the information or support they need by directing them to relevant resources or connecting them with a human customer service representative if necessary.

    Chatbots are one of the most useful ways to provide customer service, as they can handle a high volume of inquiries and provide quick responses, freeing up human customer service representatives to handle more complex issues.

  3. Chatbot for Sales
  4. If you manage a sales team, you know that keeping track of leads and opportunities can be a full-time job. A chatbot can help by providing a single place for your team to manage their sales pipeline. The chatbot can keep track of who is working on what, and provide updates and alerts when things change. This can help your team stay organized and on top of their sales goals.

    There are several ways in which chatbots can help increase sales:

    • 24/7 availability: Chatbots can provide instant assistance to customers at any time of day, which can lead to increased sales by making it easier for customers to make purchases.
    • Personalization: Chatbots can use customer data to personalize recommendations and offers, which can increase the likelihood of a sale.
    • Streamlined purchasing process: Chatbots can make it easier for customers to browse and purchase products by providing a seamless, interactive shopping experience.
    • Improved customer service: Chatbots can help resolve customer queries and issues quickly, leading to improved customer satisfaction and potentially increased sales.
    • Upselling and cross-selling: Chatbots can use data on customer preferences and past purchases to suggest related or complementary products, which can increase sales.

    Overall, chatbots can help increase sales by providing convenient and personalized assistance to customers, streamlining the purchasing process, and improving the overall customer experience.

  5. Chatbot for Marketing
  6. Chatbot marketing has gained significant popularity in recent years due to its ability to engage with customers in real-time and provide personalized experiences.There are several reasons why chatbot marketing is considered beneficial:

    • Lead generation: Chatbots can be used to collect information from potential customers, such as their names, email address, and interests. This information can be used to create targeted marketing campaigns.
    • Personalized communication: Chatbots can be used to send personalized messages to customer is based on their interests and past interactions with the business. This can help to build customer loyalty and increase sales.
    • Promotions and discounts: Chatbots can be used to send promotional messages and discounts to customers, which can encourage them to make a purchase.
    • Customer service: Chatbots can be used to provide customer service and support, which can help to improve the customer experience and increase customer loyalty.
    • Social media marketing: Chatbots can be used on social media platforms to engage with customers and promote products or services.

    Overall, chatbots can be a useful tool for marketing by helping businesses engage with customers in a personalized and convenient way. When building a chatbot, you can use customer data from your CRM to provide a more personalized user experience.

  7. Chatbot for Social Media
  8. Chatbots can be used for social media in a number of ways. Here are a few examples:

    • Customer service: Chatbots can be used to provide customer support on social media platforms, answering common questions and helping users resolve issues.
    • Content distribution: Chatbots can be used to share updates and news with followers on social media platforms, including links to articles and other content.
    • Lead generation: Chatbots can be used to collect information from users on social media platforms, such as their email address or other contact details, in order to generate leads for a business.
    • Engagement: Chatbots can be used to engage with users on social media platforms, by asking questions, running polls, or hosting quizzes and games.
    • Personalization: Chatbots can be used to personalize the user experience on social media platforms, by offering personalized recommendations or tailored content based on a user's interests and preferences.

    In general, chatbots can be an effective tool for businesses to communicate with and engage their audience on social media platforms, while also helping to streamline customer service and lead generation efforts.

  9. Chatbot for Messaging Apps
  10. Chatbots can be used in messaging apps to provide a variety of services and functionality. Here are a few examples of how chatbots can be used in messaging apps:

    • Personal assistants: Chatbots can be used as personal assistants within messaging apps, helping users to manage their schedules, make reservations, or find information.
    • E-commerce: Chatbots can be used to facilitate e-commerce transactions within messaging apps, allowing users to browse and purchase products without leaving the app.
    • Social media management: Chatbots can be used to manage social media accounts within messaging apps, allowing users to schedule posts, track analytics, and engage with followers.
    • Content distribution: Chatbots can be used to share updates and news with users within messaging apps, including links to articles and other content.

    In short, chatbots can be a useful tool for businesses to communicate with and engage their customers through messaging apps, while also assisting in the automation of customer service and e-commerce efforts.

  11. Chatbots for Human Resources
  12. Chatbots can be used in human resources (HR) to automate and streamline various HR processes. Here are a few examples of how chatbots can be used in HR:

    • Recruiting: Chatbots can be used to screen job applicants, by asking pre-set questions and evaluating responses. Chatbots can also be used to schedule interviews and provide information about the company and the role to candidates.
    • Onboarding: Chatbots can be used to guide new hires through the onboarding process, providing information about the company, its culture, and policies. Chatbots can also be used to collect and process necessary paperwork and documents.
    • Employee benefits: You can use a chatbot to provide information about employee benefits, such as health insurance, plans, and vacation policies.
    • Performance evaluations: Chatbots can be used to facilitate the performance evaluation process, by collecting feedback from employees and managers and generating reports.
    • Time and attendance: Chatbots can be used to track and manage employee attendance, including recording time off requests and tracking overtime.

    To sum up, chatbots can be an effective tool for HR departments to automate and streamline various HR processes, freeing up time and resources for more strategic tasks.

  13. Chatbot for User Retention
  14. A chatbot for user retention is designed to engage and communicate with users in order to keep them interested in a product or service and prevent them from churning. Chatbots can be used in a variety of ways to improve user retention, such as by answering questions, providing customer support, and offering personalized recommendations or incentives to encourage continued use of the product or service.

    There are a few key strategies you can use to effectively incorporate a chatbot into your user retention efforts:

    • Offer personalized support: Chatbots can be programmed to provide personalized support to users based on their past interactions and behavior. This can help to build a more personal connection with users and make them feel valued.
    • Provide timely and accurate responses: Chatbots can be used to provide timely and accurate responses to user questions and concerns, which can help to improve the overall user experience and reduce the risk of churn.
    • Offer incentives and rewards: You can use the chatbot to offer incentives and rewards to users in order to encourage continued use of the product or service. This could include things like special discounts or exclusive access to certain features.
  15. Chatbot for Internal Help Desk Support
  16. Chatbots provide benefits to both customers and agents. They can also be effectively used to offer internal help desk support within a call center environment through automated responses. This strategy can result in significant time and resource savings by supplying employees with solutions to their inquiries, negating the need to reach out to a human help desk agent. The implementation of chatbots for internal help desk support within a call center brings about various advantages, including:

    • 24/7 availability: Chatbots can be available to employees 24/7, which means that employees can get help with their questions and issues at any time. This can be especially useful for employees working in different time zones or for those who may need assistance outside of normal business hours.
    • Quick resolution of common issues: Chatbots can be programmed to handle common issues and provide quick resolution, freeing up human support staff to focus on more complex issues.
    • Consistent responses: Chatbots can provide consistent responses to employee questions, which can help improve the overall quality of support.
  17. Chatbot for Placing Online Orders
  18. A chatbot can help in placing online orders by providing a convenient and efficient way for customers to browse and purchase products or services through a messaging platform or website. Here are a few ways that chatbots can assist with online orders:

    • Customer service: Chatbots can provide assistance with placing orders, tracking orders, and addressing any questions or concerns that customers may have.
    • Product recommendations: Chatbots can recommend products based on a customer's previous purchases or browsing history, helping them discover new products that they may be interested in.
    • Order placement: Chatbots can guide customers through the process of placing an order, including selecting products, entering payment and shipping information, and completing the purchase.
  19. Chatbot for Refund Processing
  20. Chatbots can help streamline the refund processing process by providing a convenient and automated way for customers to request refunds and for businesses to manage and track those requests. Here are a few ways that chatbots can assist with refund processing:

    • Automated refund requests: Customers can use a chatbot to initiate a refund request by providing their order number and the reason for the request. The chatbot can then automatically route the request to the appropriate team or individual for review and processing.
    • Quick resolution of issues: Chatbots can help resolve common issues that may arise during the refund process, such as providing information about the status of a refund or helping customers to identify the best course of action if their refund request is denied.
    • Improved efficiency: Chatbots can handle multiple refund requests at once, freeing up staff to focus on more complex issues and improving overall efficiency.
    • Enhanced customer experience: Chatbots can provide a fast and convenient way for customers to request refunds, helping to improve the overall customer experience.
  21. Chatbot for Balance Notifications and Bill Reminders
  22. A chatbot can be used to send balance notifications and bill reminders to customers. Here are a few ways that a chatbot could be used for this purpose:

    • Balance notifications: A chatbot can send notifications to customers when their account balance reaches a certain threshold or when a payment is due. This can help customers to stay on top of their finances and avoid late fees or other issues.
    • Bill reminders: A chatbot can send reminders to customers about upcoming bills or payments that are due. This can help customers to stay organized and avoid missing payments.
    • Automatic payment processing: A chatbot can also be programmed to automatically process payments when they are due, eliminating the need for customers to manually make payments each month.

Chatbot Benefits for Business

Chatbots are completely changing the way businesses communicate with their existing and prospective customers. In recent years, there has been a rapid increase in on-demand messaging, which has changed the way consumers communicate with brands. Chatbots are being integrated into more and more businesses' processes in order to provide better customer service.

Chatbots are the next big thing in customer service with the ability to help customers 24/7. Chatbots are becoming increasingly popular among users in business-to-consumer (B2C) and business settings. These assistants are used to complete simple tasks, and the implementation of chatbot assistants, coupled with robust chatbot analytics, results in a decrease in overhead costs, more efficient use of the time of support staff, and the ability for businesses to provide customer service outside of regular business hours.

Here are some of the most important advantages of using a chatbot to improve business efficiency:

    Benefits for Businesses
  1. Increase Customer Satisfaction
  2. Your customers are the ones who will determine the success or failure of your business, so it only makes sense to try and keep them happy. While it may seem obvious that you should do this, it is often overlooked. If a customer is not satisfied with your product, chances are that they will not buy from you again. This is especially true if your product does not meet their expectations. In order to keep your customers happy, you need to provide them with quality products and services.

    Chatbots can assist businesses in increasing customer satisfaction by providing personalized responses to customers in real-time. Customers no longer have to wait on hold or in line to speak to customer service representatives. Instead, they can simply send a message to a chatbot and receive a response back in a matter of seconds. They streamline customer service by helping businesses to take care of frequently asked questions, or FAQs. Chatbots can also provide human interactions that improve customer satisfaction.

  3. Improve Lead Generation
  4. Chatbots can be an effective tool for improving lead generation. They can be programmed to provide information, answer frequently asked questions, or guide users through a process, such as filling out a form or making a purchase.

    One way that chatbots can improve lead generation is by providing quick and convenient access to information. For example, a chatbot on a company's website can help visitors learn more about the company's products or services, or assist them in finding the information they need. This can help to build trust and credibility with potential leads, making them more likely to become customers.

    Another way that chatbots can improve lead generation is by automating the process of collecting and storing leads. Chatbots can be programmed to ask users for their contact information and other relevant details, such as their interests or needs, and then store this information in a database for future use. This can help businesses to more efficiently capture and follow up on leads, increasing the chances of converting them into paying customers.

    Overall, chatbots can be a useful addition to a company's lead generation strategy by providing quick and convenient access to information, automating lead capture and follow-up, and helping to build trust and credibility with potential customers.

  5. Monitor Consumer Data to Gain Insights
  6. Chatbots can be used to monitor consumer data and gain insights into customer behavior, preferences, and needs. This can be done through the use of analytics and reporting tools that track and analyze the interactions between chatbots and users.

    For example, a chatbot on a company's website or mobile app can track the questions that users ask, the information they request, and the actions they take. This data can be used to understand what consumers are interested in, what they need help with, and where they may be struggling. This information can then be used to improve the chatbot's functionality and effectiveness, as well as to inform other aspects of the company's marketing and customer service strategies.

    In addition to tracking user interactions with chatbots, companies can also use chatbots to gather information directly from consumers through surveys or other forms of feedback. This can help businesses to better understand their customers' needs and preferences and to identify areas for improvement or opportunities for innovation.

  7. Help Businesses Build a Conversational Marketing Strategy
  8. Conversational marketing can be an effective way to engage with customers, as it allows businesses to provide personalized recommendations, support, and information in real-time, through channels such as messaging apps, social media platforms, or chatbots on websites or mobile apps.

    To devise a conversational marketing strategy using chatbots, businesses can start by identifying the goals and objectives of the strategy, such as increasing brand awareness, generating leads, or improving customer satisfaction. They can then design chatbot conversations and interactions with chatbot maker.

    For example, a chatbot could be used to provide personalized recommendations to customers based on their previous purchases or interests or to offer support and assistance with product questions or issues. A chatbot could also be used to gather customer feedback or to collect information about customer preferences and needs.

    By devising a conversational marketing strategy that leverages chatbots, businesses can build stronger relationships with their customers, improve customer satisfaction, and drive business results.

  9. Scale Customer Support Team
  10. Chatbots can achieve scalability of support by being able to handle a large volume of customer inquiries or requests simultaneously. This is particularly useful for businesses that receive a high volume of customer inquiries, as it allows them to provide prompt and efficient service without having to hire additional customer service representatives.

    Most chatbots are designed to handle a wide range of tasks, including answering common customer questions, assisting with account management and troubleshooting, and routing more complex inquiries to a human customer service representative. They can also be integrated with various communication channels, such as messaging apps, websites, and social media platforms, to make it easy for customers to reach out for support.

    Overall, chatbots can be an effective way to achieve scalability of support and improve the customer experience.

  11. Streamline Customer On-Boarding Process
  12. Chatbots can streamline your customer onboarding process by automating certain tasks and providing a convenient and efficient way for customers to get the information and support they need. For example, chatbots can provide personalized onboarding experiences by using information from customer profiles to tailor the onboarding process to individual needs and preferences. They can also answer common questions about the product or service, guide customers through the onboarding process, and connect customers with human support if needed.

    To sum up, chatbots can improve the customer onboarding experience by providing quick and convenient access to information and support, helping customers get up and running with the product or service more efficiently.

  13. Save A Great Deal Of Time
  14. Chatbots help businesses a great deal of time save time by managing basic customer interactions. Chatbots can assist in the automation of a wide range of business processes from a wide range of departments within your organization. Only the complex queries that need human input are directed to the executives on the support team.

    In customer service, chatbots can be used to handle simple inquiries and provide information to customers, freeing up staff to focus on more complex or urgent issues. In sales, chatbots can be used to provide personalized product recommendations, assist with the purchase process, and follow up with customers after a sale. In marketing, chatbots can be used to collect customer feedback, gather market research, or provide personalized content or recommendations to customers. This allows your staff to focus on more complex or urgent inquiries that require human intervention.

  15. Make Customer Journey Smoother
  16. Chatbots can be a useful tool for businesses to improve the customer experience and reduce customer effort. They can provide quick and convenient access to information, handle simple tasks and inquiries, and route customers to the appropriate resources or support channels.

    One of the main advantages of chatbots is that they can be available to customers 24/7, which can be especially helpful for businesses that have a global customer base or operate in multiple time zones. This allows customers to get the help they need at any time of day, without having to wait for a human representative to become available.

    In addition to providing quick and convenient access to information and support, chatbots can also be programmed to provide personalized experiences to customers. For example, a chatbot could greet a returning customer by name, or provide personalized recommendations based on the customer's past purchases or preferences.

  17. Reduce Customer Service Costs
  18. If you’re looking for a way to reduce customer service costs, chatbots may be the answer. Chatbots can provide quick and accurate answers to customer questions and they can be available 24/7. This means that businesses can reduce the number of customer service representatives they need to hire, which can lead to significant cost savings.

    According to a study published in Chatbots Magazine, bots can help reduce customer service expenses in companies by up to 30%. The study found that bots can help resolve customer inquiries faster and more efficiently than human customer service representatives.

    However, it's important to consider the upfront costs of implementing chatbot or other automation technologies. While these tools can ultimately lead to cost savings, there may be initial investments in development and implementation that need to be taken into account. No-code bot builder like Appy Pie Chatbot can help you create a chatbot for free.

  19. Support Agents During Peak Volumes
  20. Introducing a chatbot can provide unlimited additional capacity when chat volumes increase. This is one of the key advantages of chatbots in customer service for any industry. Chatbots can handle an unlimited number of chats at the same time, so they can provide support to a large number of customers simultaneously. This can be especially helpful during times of high chat volume, as it allows human customer service agents to focus on more complex or urgent inquiries.

    Chatbots can be integrated into various channels, such as websites, social media, or messaging apps, and can handle a wide range of inquiries, from simple FAQs to more complex issues. By using chatbots, businesses can improve the efficiency of their customer service operations and provide a better overall experience for their customers.

Chatbot Benefits for Customers

Benefits for Customers
  1. Available for customers 24/7
  2. According to a study, more than 50% of customers expect a business to be open 24 hours a day, seven days a week. Waiting for the next available operator for minutes is not a solved problem, but chatbots are the most likely candidates to solve it. Maintaining a 24-hour response system ensures that the seller and the customer are in constant communication, which is the key to any successful business relationship.

  3. Multilingual support
  4. Another advantage of chatbots for customers is that they are available in a variety of languages. So, regardless of which language your customer prefers, they can receive appropriate assistance.

    The bots can be programmed in as many languages as the vendor provides. Assume you have an international clientele. You can meet the expectations of customers from all over the world by assisting them in their native language. This allows the client to better explain their problems and receive useful assistance.

  5. Better personalization
  6. When comparing live chat vs chatbots, it becomes evident that chatbots offer superior personalization. This is primarily due to their remarkable ability to rapidly process and interpret extensive amounts of data, which in turn enables them to provide highly because they are able to quickly process and interpret large amounts of data in order to deliver personalized experiences. Bots can remember user preferences, such as language settings, location, and favorite products and services, which allows them to tailor experiences accordingly.

    In addition, chatbots can intelligently anticipate a user’s needs based on their past interactions and provide them with the most relevant information or offers. This type of personalization helps build trust with users and encourages them to keep coming back for more.

  7. Faster response time
  8. The response time taken by chatbots is almost instant, unlike humans who take some time to respond to customers. This makes it easier for business like real-estate to interact with customers without losing their interest. It is simple for them to get back to work when they feel like their query has been answered instantly. The speed at which chatbots work also has another advantage – it saves your customer service team’s time, which can be invested elsewhere in providing better customer service.

  9. Delivers omnichannel support
  10. Omnichannel support refers to the ability to provide customer support across a variety of channels, including email, phone, chat, social media, and more. By integrating conversational AI chatbots into multiple channels, businesses can use them to handle a high volume of inquiries and provide assistance to customers in real-time.

    Make sure you are thinking through all available channels before choosing which one(s) you want your chatbot to handle. Some channels may be better suited for certain tasks than others, depending on how often you expect customers to use them and how much control you want to maintain over them.

  11. Easy checkout
  12. Visitors to online stores frequently become lost in the maze of millions of products. Such customers can use chatbots to find the precise item they need in a sizable catalog, or find out about current sales. Chatbots can assist customers and enable them to make quick purchases by responding to specific customer questions with information or advice.

    In addition, chatbots can provide customers with information about current sales and promotions, helping them to make informed purchasing decisions. Overall, chatbots can be a useful tool for improving the customer experience on e-commerce websites and helping to drive sales.

  13. Know When to Refer a Customer Support Agent
  14. AI chatbots are designed to assist with tasks and provide information, but they are not always able to handle every customer inquiry or situation. In cases where a customer has a complex or nuanced question, or if they are dissatisfied and need assistance from a human, it is often best to transfer the customer to a human customer service agent who can better assist them. This can help improve the customer's experience and ensure that their needs are met.

Chatbot Market Size and Adoption Rate

A Fortune Business Insights report project that the chatbot market will reach $721 million in 2022. This number is currently growing at a compound annual growth rate (CAGR) of about 22%, and by the end of this decade, we can anticipate it to reach $3 billion. With this rapid growth, businesses become more competitive and customers become more demanding when it comes to customer service. Chatbots are more than just a customer service option; they are becoming an essential asset for any business.

Currently, chatbots are widely adopted by smaller and medium-sized businesses across the globe. That’s because they often have fewer resources and need to find more efficient ways to connect with their customers.. On the other hand, larger businesses tend to take a more strategic approach. This forces them to tailor their in-house chatbot that cater thier customer support needs more efficiently. There are many bot builders that offer pre-built templates to make chatbot development easier.

Geographical & Demographic Adoption

USA, India, Germany, the UK, and Brazil are the top 5 chatbot-using countries.



Key Chatbot Statistics

Here are some key chatbot statistics that highlight the growing significance and impact of chatbot technology across industries:

Customer Perspective

  • 54% of customers report companies to need to transform how they engage with them. (Salesforce)
  • 40% of shoppers don’t care if they’re helped by an AI tool or a human, as long as their question gets answered. (HubSpot)
  • 35% of consumers want to see more companies using chatbots. (Opus Research)
  • Almost 9/10 customers had at least one conversation with a chatbot in 2021. (Tidio)
  • 60% of millennials say they have used chatbots. 70% of them say they had a positive experience. (Forbes)
  • 69% of consumers prefer to use chatbots because they provide instant responses. (Salesforce)
  • 55% of consumers are willing to interact with a business via messaging apps to solve a problem. (HubSpot)
  • 35% of people use chatbots to resolve a problem, or for getting detailed answers. (Drift)
  • 80% of consumers who have engaged with a chatbot report it as a positive customer experience. (Uberall)
  • 40% of millennials engage with bots on a daily basis. (Mobile Marketer)
  • 67% of US millennial internet users would purchase a product/service from brands using a chatbot. (eMarketer)
  • 70% of millennials report positive chatbot experiences. (Forbes)

Business Perspective

  • Virtual customer assistants help organizations reduce call, chat, and email inquiries by 70%. (Gartner)
  • 57% of executives said that chatbots bring significant ROI with minimal effort. (Accenture)
  • 58% of websites that use chatbot software are for B2B companies. (Boomtown)
  • 58% of businesses invested in conversational marketing tools to respond to Covid-19 customer support challenges. (Drift)
  • 625% of travel and hospitality companies worldwide use chatbots to enable users to make general inquiries or complete bookings. (Statista)
  • Business leaders claim chatbots have increased sales by 67% on average. (Forbes)
  • 64% of businesses believe that chatbots will allow them to deliver a more customized customer support experience. (Statista)
  • Chatbot automation can lead to $23 billion in savings from annual salaries. (Business Insider)
  • Chatbots are projected to save $0.70 per customer interaction. (CNBC)
  • 34% of retail customers would be comfortable speaking with customer service through an AI chatbot. (Statista)
  • Over 70% of chatbot conversations will be with retail chatbots by 2023. (Juniper Research)

The Future of Chatbots

The future of chatbots looks more promising, as they are increasingly being used in a variety of industries and applications. According to Statista, by 2025, the market for Conversational AI is estimated to reach USD$1.3 billion, with a CAGR of 24%.Here are a few trends and developments to watch for:

  • Continued growth and adoption: Chatbots are expected to continue to grow in popularity and adoption, as more businesses discover the benefits they can offer.
  • Increased personalization: Chatbots will become more personalized, using machine learning and artificial intelligence to better understand and anticipate the needs of individual users.
  • Greater integration with other technologies: Chatbots will become more integrated with other technologies such as voice assistants, smart home devices, and wearable technology.
  • Expanded use in customer service: Chatbots will continue to be used extensively for customer service, handling routine inquiries and freeing up human agents to handle more complex issues.
  • Greater use in other industries: Chatbots will also be used in a wider variety of industries, such as healthcare, finance, and education, to streamline processes and improve efficiency.
  • Technology advancement: As artificial intelligence and machine learning continue to advance, chatbots are becoming more and more sophisticated and are able to handle a wider range of tasks. This means that they are able to provide a better user experience and can be used in more diverse contexts.

Overall, the future of Chatbots is very bright. With the advancement of artificial intelligence, Chatbots are getting smarter and more realistic. They are able to understand human emotions and respond accordingly. This makes them more efficient and effective in providing customer service. Additionally, Chatbots are becoming more widespread with the rise of messaging platforms such as Facebook Messenger, WhatsApp, and Slack.

Why Do you Need Chatbots?

Today, consumers want instant access to all the information they need to make a buying decision. And they want it all in one place. Unfortunately, not all companies have made the leap to a new, customer-centric way of doing business. Many still operate with an archaic model of customer support. Creating a chatbot can add more value to your customer support service and business process. Some examples of situations where a chatbot is highly valuable to a business are:

  • Providing customer support: A chatbot can handle frequently asked questions and other simple inquiries, freeing up human customer service representatives to handle more complex issues.
  • Processing orders: A chatbot can assist customers with placing orders, providing product recommendations, and tracking delivery status.
  • Employee onboarding: A chatbot can provide new employees with information and assistance during the onboarding process.
  • Gathering feedback: A chatbot can be used to survey customers or employees and gather valuable feedback.
  • Providing personalized content: A chatbot can recommend content or products based on a user's interests or previous interactions.
  • Data collection: Chatbots can gather valuable data about customer preferences, behaviors, and needs.
  • Increased accessibility: Chatbots can be available 24/7, allowing customers to get assistance at any time.

If your business has a need for any of these types of tasks, a chatbot can be a useful addition to your operation. However, it's important to carefully consider your goals and the capabilities of chatbot technology before deciding to implement one.

What Makes a Chatbot Successful?

There is no one-size-fits-all answer to this question, as the success of a chatbot depends on a number of factors, including the chatbot's purpose, the platform it is built on, the chatbot's design, and the user's needs and expectations. However, some common factors that contribute to chatbot success include:

  • Clearly defined goals: The chatbot should have specific goals that it is trying to achieve, such as answering customer questions or helping users complete a task.
  • Natural language processing (NLP) capabilities: The chatbot should be able to understand and respond to user input in a natural, conversational way.
  • Accurate responses: The chatbot should be able to provide accurate and helpful responses to user queries.
  • Efficient operation: The chatbot should be able to handle a high volume of requests and respond to users in a timely manner.
  • User-friendly interface: The chatbot should have a user-friendly interface that is easy for users to interact with.
  • Customization options: The chatbot should be customizable to suit the needs of different users and industries.
  • Continuous improvement: The chatbot should be continually updated and improved based on user feedback and usage data.

How Much Does It Cost to Build Chatbot?

The cost of building a chatbot can vary greatly depending on a number of factors, such as:

  • The intended use of the chatbot: Chatbots that are used for simple tasks such as answering FAQs or providing basic information may be relatively inexpensive to build, while chatbots that are used for more complex tasks such as booking appointments or making recommendations may be more expensive to build.
  • The complexity of the chatbot: Chatbots that are required to handle a wide range of tasks and respond to a wide range of user inputs will be more expensive to build than chatbots that are designed to handle a narrow range of tasks.
  • The resources required to build the chatbot: Building a chatbot may require a range of resources, including data, infrastructure, and development resources. The cost of these resources can vary significantly depending on the specific needs of the chatbot.
  • The development process: The cost of building a chatbot may also depend on the development process used to build it. For example, chatbots that are built using agile development methodologies may be more expensive to build than chatbots that are built using more traditional development approaches.

Overall, the cost of building a chatbot can range from a few hundred dollars to several hundred thousand dollars or more, depending on the complexity of the chatbot and the resources required to build it.

Create Your Own Chatbot without Coding

Thankfully, there are platforms like Appy Pie Chatbot, a no-code chatbot builder that allows you to create a chatbot for FREE while significantly increasing chatbot engagement. This chatbot builder can be used to create a chatbot for various purposes such as customer support, lead generation, data collection, order processing, shipping, etc. Appy Pie Chatbot has a wide range of templates for different industries and use cases. Many enterprise companies choose Appy Pie Chatbot to efficiently build conversational apps. Creating a chatbot with Appy Pie is easy and does not require any coding skills whatsoever. You can easily design conversational flow create a highly functional answer bot from scratch by following these simple steps:

  1. Log into your Appy Pie Chatbot account, or create one if you haven’t already
  2. Enter your chatbot name
  3. Give your chatbot a personality
  4. Train your chatbot by manually adding questions and answers
  5. Customize the flow of the answer chatbot
  6. Now your chatbot is Ready! Add the answer chatbot widget to your website


Now, you understand what a chatbot is and how important bot technology is for your business. You will certainly agree that bots have drastically changed the way businesses interact with their customers. They can be used to handle a wide range of tasks, such as answering frequently asked questions, providing customer support, making recommendations, and much more. Chatbots are particularly useful for businesses because they can handle a large volume of interactions simultaneously, freeing up human customer service agents to handle more complex tasks. Overall, chatbot technology has the potential to significantly improve the customer experience and increase efficiency for businesses.

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Neeraj Shukla

Content Manager at Appy Pie