What Is a Chatbot and How Does It Work?

August 19, 2024

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Imagine you’re shopping online and this situation comes up: you need some more information about the item but no one is there to ask, or the Facebook page’s admin doesn’t reply to you fast enough. This truly annoys you. However, this unfortunately happens all the time! That’s why chatbot technologies have come and rescued us from this irritating situation! But what is a chatbot and how does this thing work? Let’s read on to find out!

What is a Chatbot?

Long story short, the word “chatbot” was a combination of “chat” and “bot”. And it literally means a bot that can chat.

And the long story… long, chatbots are computer software. They pretend to be real people and their task is to answer human users’ messages via apps or websites without the help of real people. This means that developers have to make this application run by themselves. Besides, chatbots may appear as a voice or text.

According to Grand View Research, chatbots worldwide will increase significantly at a CAGR of 23.3% during the forecast period (2023-2030). This growth is fueled by a growing demand for improved customer service, payment processing, and others.

How Does a Chatbot Work?

Chatbots work by understanding and responding to user inputs in text or voice form, depending on how they’re designed. Here’s a simple breakdown of how they work:

The process starts when you interact with the bot by typing a message or speaking a command. This input can be a request, a question, or a simple greeting.

The bot then uses different tech for input processing. For example, it can leverage Natural Language Processing (NLP) to understand your input, Key Recognition to detect specific keywords within your input, or Intent Recognition to identify your intent behind the message.

The bot then determines the suitable response based on predefined rules, decision trees, or advanced algorithms.

Next, the bot generates a response in natural language. It could be a direct answer, a follow-up question, or a series of steps to guide you through a process. Beyond text answers, some bots can perform actions, like booking a service.

The bot then sends the response back to you through interface (text, voice, or both). If the conversation requires more input, the bot may continue to interact until the task is completed or you’re satisfied.

AI-powered chatbots can collect data from interactions and use this data to train their underlying models. This allows them to better understand user behavior and improve accuracy.

Example

When we ask ChatGPT about the weather in Minneapolis today (on August 19th, 2024), here’s its response:

FURTHER READING:

1. 8 Best AI Chatbot Smartest AI Chatbot

2. 5 Best AI Chatbot Platforms to Use

3. 9 Open Source Chatbot Frameworks to Use

4. Create Chat App in Meteor in 40 Minutes

3 Types of Chatbots

Once you’ve understood what a chatbot means and how it works, you now may feel curious about what types of chatbots are available now. Let’s discover this section to answer the question:

1. Simple Chatbots

Scripted chatbots, also known as basic chatbots, are those that cannot learn from their experience and update their database automatically. In this case, developers will formulate several predetermined rules to help them generate responses to users. For this reason, this type doesn’t have the high level of ability but it’s more than enough to help your business run smoothly.

There are three main subcategories in this type.

Menu or Button-Based Chatbots: These are the simplest. They guide users through a series of options instead of free-form conversations to reach expected information. These assistants are easy to build and maintain, yet only effective for simple tasks and FAQs.

Keyword-Based Chatbots: These functions when they meet a certain keyword. They’re cost-effective for FAQs that handle high-volume, repetitive queries. However, they’re limited in understanding natural language. So, inputs must be match predefined keywords.
Rule-Based Chatbots: These work on a predefined set of rules and responses. For example, if a user says “order status,” they’ll offer a tracking link.

You may often meet these chatbots when accessing an online store, an m-health app, etc. For example, Flo, a menstruation tracking app, integrated a button-based free chatbot to assist women with their health conditions. Or you can try Song Nhi, a virtual financial advisor developed by Designveloper using such tech as Meteor, JavaScript, and React Native. This is a menu-based chatbot which allows you to choose available options like Transaction Report, Transaction History, or Add Income to track your money in and out.

2. AI Chatbots

AI chatbots or virtual/digital assistants are what we’re talking about here. Sometimes, people may refer to them as chat-bot that can learn and acquire knowledge.

And just like humans, they will become better and smarter as time passes thanks to neutral networks.

Different from the first type, an AI chatbot can understand complex conversations without the presence of keywords. Furthermore, these smart chatbots can connect the dot and be aware of a certain context then reply to users based on that context.

For example, when you give a scripted chatbot a set of questions like:

Where is that company located?
How is the weather there?

It can understand the first query, however, since you did not define the location, it is not able to respond to the second one.

But when it comes to an AI chatbot, they will answer those two questions without hesitation.

Replika is a free chatbot that can learn you might want to try.

3. Hybrid Chatbots

These are a combination of rule-based and AI-powered chatbots. They use the strengths of both approaches to build a more robust and versatile conversational agent.

Accordingly, their rule-based components will process simple, repetitive tasks by following predefined scripts. Meanwhile, their AI-powered features can understand complex queries, learn from interactions, and offer more human-like responses.

With this combination, these hybrid bots can answer FAQs while understanding and responding to complex inquiries using AI. This helps improve accuracy, enhance user experience, increase efficiency, and ensure scalability.

Why Should Your Business Use Chatbots?

Even though most chatbots can only answer and respond to certain scenarios, if developed well, they’ll help your business:

Reduce waiting time as they’re always available.
Increase payment gateway transaction success rate when chatbots are able to remind or urge customers to make payments.
Cut down on customer service costs.
Collect data more effectively.

But of course, they cannot replace the occupancy of human touches. This happens since there are many tasks that simple chatbots cannot solve by themselves and at the same time, AI chatbots are too expensive to invest in.

We hope that this article has given you a closer look at chatbots and how they work. And if you are planning to build the best chatbot to increase your business’s productivity and effectiveness, contact us now! People at Designveloper can make your plan come true at an affordable cost.

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