What are CHATBOTS? Find out along with 7 reasons why your business needs them

“The eternal bond between man and machine”.

I’m sure you’ve heard this line before.

The “machine” here referred to automobiles, aircrafts etc.

Never has the “bond” been so close with a computer.

Years ago, man started using machines to do his work.

Over time, the usage of machines increased.

Today, machines are a part of every business domain.

From Agriculture to Artificial Intelligence.

Machines evolved to the extent that they can now have a CHAT with humans.

And these are known as CHATBOTS.

Chatbot examples:

Facebook messenger

Facebook messenger logo

Apple Siri

Apple siri logo


Whatsapp logo


Slack logo

These are all Chatbots each with a different set of abilities.

You are also aware of Google Bot, the site crawler.

This is also, as the name says, a bot.

But with the goal of crawling sites, not chatting.

Say, you come across a site and have a query.

There is a chat option at the bottom right corner.

You click on it and the customer service person will solve your query.

But chances are, that, that is not a person at all, but a bot!

And you wouldn’t even know it.

How come?

Depends on how the bot is responding.

Advanced bots chat like humans.

If you like reading, I recommend “Origin” by Dan Brown.

There is an excellent display of chatbot in it.

What exactly is a Chatbot?

Simply put,

A chatbot is a computer program (artificial intelligence) that simulates human conversation.


Believe me, that IS the simple definition.

Let’s take a deeper dive shall we? I’ll explain in detail.

Why do you choose a chatbot? What are they good for?

To say just ”conversation” would be too brief.

And easy.

Chatbots are much more complex and useful than that.

Chatbot interacts using instant messaging.

It replicates the patterns of human interactions.

And LEARNS from it.

This helps it to answer more accurately.

By doing so, it gets more information.

And continues to learn from it.

And the cycle repeats.

This will make it gradually grow in scope and gain relevance.

If the conversation introduces a concept it is not programmed to understand, it will either deflect the conversation or potentially pass the communication to a human operator.

Chatbots are designed to simplify the interaction between humans and computers.

Chatbot human connection

How are Chatbots created?

Using Machine Learning.

Yes, it is a relatively complex process.

Machine Learning allows computers to learn by themselves.

A “Supervised Machine Learning” approach is generally recommended.

Where the response data is fed manually.

It also involves Natural Language Processing – a  computers ability to understand human speech and text.

How does a chatbot work?

Chatbot basically has 2 tasks.

1. Analyse user request

2. Return the response

The first step is very important.

The Chatbot should understand the intent of the user.

As its response is dependent on it.

If the Chatbot is not able to grasp what a human is communicating, then it cannot give the relevant answer.

The conversation will end unsatisfactorily.

Once the user request is processed and understood, the chatbot must provide the most appropriate answer.

How does a chatbot learn once it is live?

The complexity of a chatbot is determined by the sophistication of its software and the data it can access.

So the ability of a chatbot is dependent on how complex it is designed.

A bot is considered truly intelligent only when it is able to learn on its own.

As a learning process, a concept of Smart feedback loops can be implemented.

During the conversation when customers ask a question, chatbot smartly gives them a couple of answers.

Like “Did you mean a,b or c?”.

That way customers themselves match the questions with actual possible intents.

And that information can be used to retrain the machine learning model, hence improving the chatbots’ accuracy.

Below are the types of Chatbots used:

Retrieval based

Here the responses of the bot are already entered manually.

Example: Is your store open on Sundays?

Answer: No.

These are the most common types of chatbots used today.

Generative chatbots

The other chatbot type is where they are fed with a huge logs of previous conversation.

The responses will be GENERATED based on these.

The conversational bots that we come across are usually these.

A bot can be allowed to learn by itself.

The Microsoft Tay Bot was allowed to do this.

But since there were no filters added to the data received, the responses started getting affected.

With hate speech, grammatical errors etc.

Micorsoft Tay bot

They had to shut it down.

It has to be kept in mind that, the goal of a chatbot is to first please humans.

By satisfying their query.

Within guidelines.

How are Chatbots trained?

There is a general worry that the bot can’t understand the intent of the customer.

Hence, the bots are first trained with the actual data.

As I mentioned before, by feeding a lot of conversation logs.

The data fed could be,

– Queries,

– Personal knowledge

– Call logs, emails

– Open source data

From these, the chatbot can understand what type of question needs, what kind of answers.

Natural Language Processing (NLP) in Chatbots finds a way to convert the user’s speech or text into structured data.

Why should you use chatbots?

1. They reduce the cost of customer service.

2. They provide instant answers.

3. Endless pateince.

4. 24/7 availablity (except during maintenance).

5. They provide new opportunities for better customer engagement.

6. They work seamlessly on a mobile paltform.

7. They develop natural form of communication…

Based on the knowledge database available to it at that point in time.

8. It learns with every conversation, hence it will only get better.

9. Last but not least , they tend to bridge the gap between man and a machine.

Chatbots can also be used as an SEO tool where keywords can be extracted from the call logs.

Currently, many e-commerce companies are looking at various ways to use chatbots to improve their customer experiences.

Whether for shopping, booking tickets or simply for customer service. 

So, most organizations have a chatbot that maintains logs of discussions.

AI in chatbots

AI in chatbots

All chatbots need AI.

But it is always better to involve a human in the loop.


Two reasons:

1. A chatbot will always be limited in its resource.

2. A user will always discover cases it cannot handle – and leave.

Having a human support will change the experience for the user.

At the stage where the chatbot cannot handle the query or conversion, it can pass on the issue-at-hand to the human.

Like the bot, the  human response should also be real time.

This will enhance the customer experience.

With the human in loop, the entire process, including the human interaction, can be recorded.

And the bot will learn from it.

And learn to interact seamlessly.

Text or voice? Which chatbot is better?

Google Home

As you would know, there are text bots and voice bots (Google Home, Amazon Echo).

Amazon Alexa

Difference between the two?

The interface they use.

And the way we interact with them.

A text-based chatbot can exist on various platforms and devices.

We interact with them using button presses.

A voice-based chatbot works differently as it uses pre-defined answers.

A text or voice chatbot is better depending on your business needs.

If a voice-bot is expected to iterate a list of say, food items to order, it would be inappropriate.

It would be too hectic or almost impossible to take an order.

A text-based chatbot would be better suited  here.

As it can just display the menu to choose the food item from.

You can decide on which one to go for by answering the following:

1.What is your business objective?

2. Who are your target customers?

3. What is the goal of those customers?

Voice-based chatbots are expensive.

Hence, you should opt for it only,

If you have high or unlimited budget.

If your target customers are wealthy, have access to a speaker.

How do you choose the right Chatbot technology?

There are many chatbot platforms.

Each with different Machine Learning abilities.

1. So, first of all, identify your requirements.

Will you need an advanced chatbot or just a predefined one?

Is it for your website, mobile or another platform?

Go with the one that suits your business needs and not the best one in the market.

2. Define your budget

Once you know what type you want, check for the ones that fit in your financial capacity.

Implementing costly bots could hamper your ROI.

If you don’t have the technical understanding, then it is better to partner with an agency.

Some of the chatbot platforms available are:




Chatbot performance

Chatbot analytics

How can you track the performance of a chatbot?

Using the below metrics:

– Total users

– New users

– Bot messages (to determine the conversation length)

– Retention rate (users that return to chatbot interaction)

– Number of human interactions

– Number of successful interactions

– Percentage of misunderstood statements

– List of misunderstood user intent

– Number of repeat users

– Number of logins

– Goal completetion

Of course, these are not all, but important ones.

These can be viewed with specific periods.

What are the issues with chatbots?

Chatbots have cons as well.

1. Bad design

A poorly developed chatbot can drive customers away by causing frustration.

2. Not Artificial Intelligence savvy

AI is a very tricky platform.

You should know what you are dealing with.

The AI should be properly constructed so as to not allow unwanted speech or data.

3. Wrong platform

There are chatbots with different abilities.

If you are using a vender that uses an older technology, you could fall behind the market.

And not capture the right data.

4. ROI

As I mentioned before, always check for ROI before using chatbots.

There are times that you find out that the chatbot platform used is not delivering the expected returns.

5. Not building the bot incrementally

Do not directly start using a bot for a lot of activities.

Start with a single one first.

Check the performance.

And then check for more.


Are Chatbots the future?

Apparently so.

When it comes to chatbots, we would be talking about augmented reality and/or virtual reality.

Which are poised to be the game changer in the upcoming years.

Machine Learning has already taken over the world on almost every business domain.

Chatbots can also be used in cars and other Internet Of Things (IoT) devices.

Currently there are limitations, of course, on chatbot usability.

They are not THE prefect assisstants.

But, time and again, it has proved that AI is definitely a huge part of our future.

The same goes for Chatbots as well.

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