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AI Chatbot

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A chatbot is a computer program or application that simulates and processes human conversation (either through text or voice), enables the user/human to interact with digital entities as if they were communicating with a real human.

Chatbots are in two major categories.

  • AI chatbot

An AI chatbot is an artificial intelligence (AI) program that can simulate a conversation (or a text communication) with a human or user in common language through any messaging systems, websites, mobile apps, or through the phone via Interactive voice responses (IVR).AI chatbots will automatically learn after an initial training period by a bot developer.

  • Rules-Based Chatbots 

Rule-based chatbots are also referred to as decision-tree bots. As the name suggests it follows pre-designed rules, often built using a graphical user interface where a chatbot builder will design paths using a decision tree.

Why is AI chatbots important? 

A chatbot increases user/customer experience as it is available 24/7 on your website / Application. It saves a lot of time, effort, money, and gives better user satisfaction. It uses natural language processing (NLP) and machine learning to provide near human-like conversational experience. An AI chatbot application streamlines interaction between people and services by enhancing customer experience. They allow companies to easily resolve many types of customer queries and issues while reducing the need for human interaction. At the same time, they offer new opportunities for companies to improve customer interaction or engagement process and operational efficiency by reducing the typical cost of customer service.

Using chatbots, a business can scale, personalize, and be proactive all at the same time. For example, when depending on human power, a business can serve only a limited number of people at a time. To remain cost-effective, human-powered businesses are forced to focus on standardized models and are bound in their proactive and customized/personalized outreach abilities.

On the other hand, chatbots enable businesses to manage with an unlimited number of customers in a personal way and can be scaled up or down according to the business needs. By using chatbots, a business can provide humanlike, personalized, proactive service to an unlimited number of people at the same time.

Consumer research shows that messaging applications are increasingly becoming the most preferred method for connecting with businesses for certain types of interactions. Distributed through messaging / communication applications, chatbots enable a level of service and convenience that in many situations exceeds what humans can provide. For example, chatbots in the banking sector save an average of 3-4 minutes per inquiry compared to traditional phone calls or with call centers. These capabilities can help businesses achieve greater efficiency and cost-effectiveness. It also gives the best experience to the customers.

AI Chatbot Types

There are three main types of AI chatbots;

The first one is to create a Pattern-Matching chatbot. Pattern-matching chatbots classify text and produce a response based on the keywords they identify. A standard way for these patterns is using AIML (Artificial Intelligence Mark-up Language). In pattern-matching, the chatbot only knows answers to questions that exist in the knowledge base or models. The chatbot cannot go beyond the patterns which have already been implemented into its system.

Another option for chatbots is to use Algorithms. For each type of query, a unique pattern needs to be present in the database for the chatbot to provide the correct response. With different combinations of current trends, we can build a hierarchical structure. Algorithms are how developers reduce the classifiers and make the structure more manageable. In short, the chatbot uses the message and context of the conversation for selecting the appropriate response from a predefined list of prepared messages. While the highest point only provides relativity and does not guarantee a suitable match, these chatbots provide more predictable results compared to rule-based bots.

The third main methodology for chatbots is with Artificial Neural Networks. An artificial neural network is a computing system that consists of several simple but highly intercommunicating entities or nodes, called ‘neurons’, which are arranged in layers. This further processes information using dynamic state responses to external inputs. With the help of artificial neural networks, each sentence provided to a chatbot is broken down into different words, and each word is given as an input for the neural network. Over time, the neural network becomes stronger and more advanced, helping the chatbot to create a more accurate set of responses to common customer’s questions.

How does an AI chatbot work?

There are two main tasks at the core of a chatbot:

  1. User request analysis

In this, we analyze the user’s query to identify the user’s intention and extract relevant entities. The ability to identify the user’s intent and extract data and relevant entities contained in the user’s request is the main condition and the most important step at the hearts of a chatbot: If we are not able to correctly understand the user’s request, we may not be able to provide the optimal answer.

  1. Returning the proper response

Once the user’s intention is identified successfully, the chatbot should provide the most suitable response for the user’s query. The answer can be:

  • a general and predefined message
  • a message retrieved from a knowledge base(database) that contains different answers
  • a piece of information connected with the context based on data that the user has provided
  • data stored in any other systems
  • the outcome of an action that the chatbot performed by querying with one or more backend application
  • a question that enabled the chatbot to correctly identify the user’s request

Chatbots elucidate the text given to them by the user (a process known as “parsing”), before responding according to a complex series of algorithms that interprets and identifies what the user said, infers what they mean and/or want, and decide a sequence of appropriate responses based on this information.

Why Does Your Business Need AI Chatbots?

Though chatbots have been around for some time, they have improved significantly. From instruction based chatbots that could answer a less number of questions and required manual help for difficult ones, to AI chatbots that became intelligent with time through machine learning (ML), chatbots have undergone a great change. Today, many businesses are getting great value out of them. Marriott 5-star hotel chain and Coca-Cola are among the best examples. A study conducted by a software giant says that nearly 80% of businesses are on the way to having a chatbot by 2020 and the business benefits of AI chatbots are unpredictable.

Checkout the 10 ways chatbots can be used in your business.

  1. Chatbots can do Specialized Tasks

Activities like hiring a taxi, ordering food online, or even checking the weather condition can be easily accomplished via chatbots. Similarly, businesses can utilize AI chatbots to manage inventory and purchase orders

  1. Chatbots offer advanced quality service in mobile devices

There is no doubt that the future of browsing are mobile devices; already the number of mobile users is higher than normal PC users. Using chatbots in mobile applications leads to the creation of more streamlined user interfaces. It allows users to browse, identify, buy, and get support from a single interface.

  1. You can automatically scale up your operations:

Human beings have their limitations; a customer service agent may be able to handle a maximum of three customers at a time, whereas an AI chatbot has no such limits. Implementing your workforce with chatbots, you can interact with more customers, and will help you increase your customer base and even enter new markets.

  1. Makes sures human resources are assigned to core tasks

By deploying AI chatbots you can ensure your precious human resources to more important tasks. chatbots allow your human resources to handle customer queries only if they are complicated, and human intervention becomes extremely necessary. In fact, you can set your chatbots to screen calls, so that easy questions or issues are resolved by the bot. Over time, the chatbot can become intelligent through ML (machine learning), and may hand off fewer queries to human resources.

  1. Intelligent messaging delivers more value to customers

Your chatbot can be used to provide intelligent messages to your customers – combining with big data, machine learning and personalization. This is very useful in financial sectors. Let’s suppose there is a credit card transaction in Amsterdam for a customer whose address is Delhi, India. The chatbot can pop up and ask – We noticed a big transaction made to your card this morning in Amsterdam. Is that you? If it’s not made by the user, they can instantly inform the card provider. Like this, the chatbot can inform the user about OD (overdraft) fee, or overdue payment etc. It makes it easier for them to make the payments as they are already on that site.

  1. Assist users in for the right choice

If you are selling services and commodities that are almost substitute for each other or selling high-quality goods or electronic gadgets then a chatbot can ensure great service. Selecting can become very difficult when the choices are very similar, or the customer has to shell out big amounts. chatbots can easily guide the user and help them get the apt product or service.

  1. Upselling and recouping carts:

Chatbots can interact with customers and leverage the opportunity of upselling to them very effectively.

  1. Increased personalization

Chatbots allow you to classify your audience and provide different persons with a personalized experience. Chatbots can recommend products to you based on your interest history. This is very useful when the product is something the customer would need to buy periodically.

  1. Tap into the millennials segment

The Younger generation prefers to chat rather than voice calls. They also like to ask around and compare multiple products before they make a purchase decision. A chatbot can do this job effectively.

  1. Leverage the benefits of interactive marketing

Chatbots represent an active user experience, unlike websites and applications, which are passive. You can also communicate your ads to a larger audience; in fact, a group of people simultaneously. It also simplifies several jobs for you when you use online platforms like your social media networks to interact with customers.

The Future of AI Chatbots

Chatbot evolution?  Where is it headed?

Chatbots, like other AI mechanisms, will be used for improving human capabilities and free humans to be more creative, productive and innovative, spending more of their time on strategic rather than tactical activities.

In the near future, when artificial intelligence (AI) is fused with the development of 5G technology, businesses, employees, and consumers are likely to get upgraded chatbot features such as faster recommendations or predictions, and easy access to high-definition video conferencing from within a conversation. The possibilities of AI chatbots are still in the investigative stages and will evolve quickly with internet connectivity, AI, NLP, and Machine learning (ML) advancements. Eventually, every person can have a totally functional personal assistant right in their hand, making our world a more efficient and connected place to live and work.

For more information on the topic go to Innovature’s AI page.


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