How Chatbot Development Has Transformed The Customer Experience?

Updated on :June 14, 2024
By :Dimpy Gulati

A chatbot is an automated messenger that can be integrated with a brand’s web or mobile application as well as social media apps to interact with customers via text and resolve a number of queries without the need of a real person sitting at a support desk.

Boon to the customer service industry, a chatbot is a highly-advanced customer interaction program that can not only answer to the basic queries but can also be customized to execute a whole lot of industry-specific functions like:

  • recommending products and offers
  • processing payments 
  • carrying out surveys
  • collecting data
  • checking in for a flight
  • booking doctor appointments
  • laying out step-by-step product usage instructions, to name a few. 

Also known as ‘Virtual Assistant’, the chatbot is not a new concept. It’s only now that chatbot development companies have started to explore their potential with the rise of automation technologies. It has evolved significantly into a must-have tool for any customer-oriented business of today.

Text phrases that only a real person could understand before, can now be instantaneously addressed by an AI bot - churning out a major portion of the ‘client-interaction’ inventory for various types of customer-facing businesses.

How Does a Chatbot Work?

A simple or ‘declarative’ chatbot is an action-oriented tool that simulates human responses by identifying pre-specified keywords, in order to address the questions with previously formatted resolution text or action. It uses a set of predefined rules to answer most of the user inquires - best suitable for service & support functions with simple tasks.

A smart chatbot using AI & ML analyzes data to engage in predictive conversation with a user. Exercising state-of-the-art Natural Language Processing (NLP) techniques, it is often termed as Data-driven or Predictive Chatbot, i.e., Virtual or Digital Assistant (like Cortana and Alexa) that is not limited to text-based conversations.

A smart chatbot learns by itself, makes use of in-built predictive intelligence and becomes smarter over a period of time to process the inputs and prepare the most accurate responses. It can initiate conversations by itself, make personalized recommendations according to our preferences, automatically suggest actions based on past activities, and perform many other consumer-focused chores.

A data-driven conversational AI chatbot is based on previous interactions. It consists of an NLU Engine that is proficient in Language Detection, Intent Classification, Named Entity Recognition, etc. Tapping into newer technologies like cloud and blockchain, an ML-based chatbot is often programmed once and deployed on multiple channels like web apps, Facebook and WhatsApp.

“Thanks to the advent of Artificial Intelligence in our present ‘high-tech’ age of information technology, chatbots are getting smarter by the day, replacing more and more human beings for ‘customer interaction’ job profiles.”

Where the Chatbots Are Currently Being Used?

Wherever they can save business costs, strengthen the performance, and add to the customer delight! 

Some of the areas are:

Chatbot Utilization

The Revolution of Chatbots

A couple of years ago, when mobile messaging apps started to surpass social media apps in terms of utilization, the customer-centric online businesses were the first ones to notice the weight of the underlying opportunity of text messaging services over the internet - something that would translate the future of superior customer handling.

Now in 2020, out of three contact options (phone, email, chat) on any popular e-commerce website, more and more customers tend to click the ‘chat now’ button for instant resolution. Even a recent GoodFirms survey showed that 86.67% of the people would be interested to use a chatbot if the user experience is right.

It is estimated by market analysts at Gartner that over a quarter of all customer support operations would accommodate AI-enabled chatbots by 2020.

And that’s just a start!

It is because the machines have just started to learn. Within a year from now, if synthetic intelligence would be able to handle nearly 30% of all operations linked to customer experience, then by 2025, the possibilities could be unthinkable.

Concepts like AI and ML exhibit immeasurable potential to learn and process facts within trivial amounts of time. They learn extremely fast, work only with logic, and don’t sleep.

The revolution that chatbots have created is best explained with facts. The data on ‘how the businesses are affected’ and ‘what end consumers feel’ looks very promising.

Increased preference for text messaging apps at a global scale and rapid improvements in NLP+AI+ML systems have propelled the chatbot industry’s growth in the last 3 years alone. Billions of messages are being exchanged between businesses and customers over chatbots every year - resolving high volumes that would otherwise require hundreds of thousands of employees.

Of course, complex queries that NLP systems don’t understand (yet) are always transferred to live agents.

Doing an incredible job in various support functions, chatbots have also started to contribute to the sales by guiding customers through the sales funnel with flying colors. Businesses are witnessing an increase in revenues as customers are in fact willing to spend after interacting with a chatbot that provides a split-second reply, instead of waiting in queue for a real person’s assistance to complete the purchase.

Thus, it is estimated that over 75% of consumer-facing businesses, especially online stores, will implement some form of chatbot automation by 2020. The banking industry, interestingly, loves automation and is already aiming to resolve 95% of customer interactions (plus a lot of transactions!) through automated chatbots in the near future.

Now, the chatbots are about to enter the world of 5G - means ultra-fast data processing and speedy prediction analysis over cloud platforms.

In due course, personal assistants would become ‘fully functional’ for not only the common users but also for context-dependent professional roles. For example - an intelligent chatbot customized for professionals (a part of the digital assistant) that would be able to send text updates as well as recommend actions to the supervisor after examining his or her team’s performance report. Likewise, team members would be able to receive this information and act on it.

Ways in Which a Chatbot Improves Customer Experience:

1. Instant response, reduced time to resolve a concern

A live chat agent always asks a customer to stay online a few times, to pull up the details from his or her computer. Chatbots never do that because they ARE the system. The speed of resolution is perhaps one of the primary reasons why the phrase ‘customer services’ has metamorphosed into ‘customer experience’ these days. Needless to say, delays caused by human errors are also avoided with this tech.

2. Chatbots are always available

They work 24/7 and never make the customers wait. It allows businesses to leave a positive impact on their customers which in turn broadens the scope of expansion. Bots can solve a lot of problems within negligible response times before transferring a conversation to an agent. However, chatbots’ ability to learn and solve complex problems is advancing, thus constantly reducing the dependency on live agents as the days go by.

3. Personalizing the customer experience

Apart from making personalized recommendations & offers, chatbots are also capable of initiating proactive engagements with customers. With greater engagement, customers tend to stick with a platform for longer times and bring more business as a result.

Chatbot making a proactive conversation

4. Affordability

Implementing an innovating chatbot is way too cheaper and faster than bringing on board a thousand employees for a similar role. Organizations have already started to save 30-40% of costs out of customer communication expenses. There are several tops of the line IT organizations in the market that offer ready-to-use, affordable chatbot solutions which can be tweaked to fit in almost every domain. Once installed, minimum to no supervision is needed to operate a self-learning bot that would handle hundreds of customers at once.

5. Integration with other platforms

Chatbots can operate within third-party social media apps and make conversations more interactive and comfortable - leading to increased customer participation and spendings. People are more likely to reply back to a product recommendation from within the social media app they often use, instead of leaving their favorite platform.

To summarize, AI bots continue to process complex functions and match the ability of ‘human touch’ to deliver exceptional services. Even in the nascent stages, the findings of intelligent chatbots are promising enough to tackle complicated tasks in the future not too distant from now. It’s no wonder why many researchers report that chatbot integrations would help organizations save billions in the next 3-5 years.

Dimpy Gulati
Dimpy Gulati

Dimpy Gulati is a versatile writer who is currently serving as Content Editor at Vinsol in New Delhi. Presently focused on the latest tech developments, Dimpy has formerly worked for FIS and BT Group. He loves to explore different places, hiking and follow the developments on outer space research.

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