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How can chatbots improve customer service?

5 minute read
user interacting with chatbot via mobile device

Chatbots can help you construct a seamless customer experience, saving you time and money. Their use is also increasing in popularity.


By 2023, chatbots are expected to generate over $100billion in e-commerce transactions.


More consumers are now open to interacting with chatbots, especially if their query is handled swiftly. Here, we’ll look at what a chatbot is, the different types available and how they can improve customer service.



What is a chatbot?

A chatbot is a computer program simulating human conversation, allowing customers to interact as if they were speaking to a real person. There are different chatbot levels, from those that answer basic queries to digital assistants, which can learn and evolve as they process information over time.

You’ve probably interacted with a chatbot before. For example, if you’ve ever typed anything into the helpful pop-up that appears on a website or ordered a pizza through Facebook Messenger.


How do chatbots work?

How a specific chatbot works depends on the reason it’s been designed. There are two main chatbot types — one that follows rules and one that uses artificial intelligence.


Rule-based chatbots

Rule-based bots are simple chatbots programmed with limited choices that they can comprehend. Rule-based chatbots are simpler to build than other, more complex bots, as predefined rules determine the course of a conversation.

AI chatbots

AI-based chatbots use artificial intelligence to understand open-ended queries. By utilising machine learning (ML), it can comprehend orders and understand language. Over time, the bot can learn from its experiences to better understand similar future queries. The more interactions it has, the better it identifies context and language.

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Using chatbots to enhance customer service

There are several advantages to using chatbots when excelling in customer service. Utilising them can vastly improve the experience customers have with your company, saving you time and money in the process.


Around-the-clock customer service

One of the main advantages of utilising chatbots is offering your customers 24/7 support without needing human customer service agents. 

Chatbots offer an around-the-clock support system for your consumers and can provide instant responses whenever needed.

Plus, deploying them can ease operational costs by reducing the number of required human agents.


Time and money savings

With the ability to deal with simple customer queries, chatbots can alleviate the pressure on human customer service agents. Employees can use their time to help customers in more complex areas by cutting down on the questions a human agent requires.

Chatbots reduce the wait times for customers with more complex issues by dealing with simple customer requests, thus improving people's experience with your brand. 


This, in turn, saves your company money. A study from Juniper Research states that chatbots are estimated to save businesses $8 billion in 2022.



Lead generation

The modern consumer has greatly impacted the popularity of chatbots — with customers now preferring to interact with brands via text services. There's an excellent opportunity to generate leads for your business.

Storing the information users provide to your chatbots, whether that be their likes, dislikes or preferences, opens up a window to personalise their future experiences with your brand. Bots can use this information to segment contacts and nurture leads in place of a lead form.


Data collection

As previously mentioned, chatbots can gather information on your consumers that your business can take advantage of. Data collection is vital in modern business and helps you better understand how your audience perceives your brand.

You can’t expect your human agents to process every piece of information they hear while interacting with customers and accurately feed it back. Chatbots store all information from every conversation, creating a bank of data from which you can learn.

You can use this data to track customer preferences, bridging the gap between what your business wants to promote and the experience your consumers want to have.



Personalisation is a simple way to vastly enhance your customer experience (CX) — 64% of businesses trust chatbots to provide better personalised customer service than human agents.

Modern chatbots can offer highly personalised experiences to consumers. Chatbots that cater to audience preferences feel more ‘human’ to interact with and improve your CX further.


Calculating ROI from chatbots

Chatbots can help you save time and money for your business — but how do you calculate ROI?

Here’s a model you can adopt to figure out the ROI for your chatbots:

  • Identify capable queries — Examine the queries your company currently receives over live chat and identify which requests a chatbot could deal with
  • Calculate the percentage of queries a chatbot could deal with — Calculate how many of your chats consist of simple queries a bot could deal with compared to complex queries an agent would be required for
  • Calculate agent time on simple queries — Calculate the estimated handle time for simple queries
  • Estimate the annual cost of handling simple queries — Multiply the hourly pay of your human agents by the hours spent on simple queries per month and multiply this by 12 for an annual number
  • Now compare — Compare your annual cost total with your quoted chatbot cost to see how much you can save

You can learn more about chatbots' impact on customer experience at our Future of Customer Contact Conference.


Sign up for our Future of Customer Contact Conference

Looking to equip yourself with exclusive insights from world-renowned brands that are reaping the rewards of modern customer experience methods?

Our Future of Customer Contact Conference — taking place on Thursday, 9th February 2023, at The Brewery, London — is a one-day event consisting of 30 exclusive, insightful presentations on the future of customer contact.

Book your place now to ensure you don’t miss out on the latest industry insights.


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