Chatbot Apps: The Future of Customer Service

The article was updated on August 11, 2021.

Customer service must be robust, personalized, and proactive. It’s particularly true in 2021, when the world of commerce still weathers the effects of the COVID-19 pandemic and disruptive mass digitization of operations. Although many businesses are yet to adopt new technologies, consumer demand for better, faster, and more personalized interaction doesn’t wait.

This pressing need to improve customer service while also optimizing internal operations is where chatbot apps take the spotlight. With a global market size of $525.7 million and a CAGR of 24.9%, chatbots are quickly and surely taking over customer support, automation, and marketing as a means to boost customer satisfaction across all your service delivery platforms.

Learning how to build a chatbot for customer service is the first step towards injecting this technology into your business.

Read on if you want to discover more about what chatbots are used for, how this technology works, and why you shouldn’t wait to give it a try.

A brief guide to chatbot apps: The what, the how, and the why

What is a chatbot?

A chatbot is a tool, frequently supplemented with machine learning and AI capabilities, designed to process and simulate written or spoken human language. By learning on large datasets, chatbots become capable of understanding context and meaning and holding entire conversations that feel like an interaction with a human.

Some chatbots are less advanced: their main purpose may be answering simple pre-programmed questions or performing basic tasks (e.g., Windows’ automated troubleshooting chat assistance).

Early ELIZA and PARRY chatbots in the 1960s could only mimic human conversation, while now, depending on their purpose, bots are capable of searching databases for information, handling transactions, managing connected devices, learning from past conversations, and delivering incredibly personalized services.

What is the purpose of a chatbot?

Let’s say, you want to go hiking this weekend. First of all, you need to check the weather forecast. Instead of searching for the information online, you simply type in the question “Will it rain this weekend?”

Once you allow access to your location information, a service like Poncho will instantly show you the forecast for the upcoming weekend in your area. It will also do it in a fun and conversational manner, bringing more humanity to this brief interaction than a Google search would.

This might seem somewhat simplistic, yet it perfectly illustrates the main purpose of a chatbot for customer service: making your customers’ lives more convenient and easy, providing relevant information or services in a personalized way, and unloading your human employees.

How do chatbots work?

Chatbots function by processing user input with various techniques and using this information to give the best possible responses. Although the general purpose is similar for all chatbot apps, the methods used categorize them into declarative (rule-based) and predictive (data-drive) solutions.

how-chatbots-work

Declarative chatbots

This kind of software uses rule-based approaches to data processing. It means that a declarative chatbot has a pre-programmed set of rules that dictate how the solution will behave. Although these apps use natural language processing (NLP) like their “smart” counterparts, it’s applied to enable a machine to understand users’ queries without generating original responses.

Such chatbots for business are useful for troubleshooting tasks, faster question processing, and handling common, frequent, and simple questions.

Predictive chatbots

AI chatbots that use machine learning and advanced language processing (and synthesizing) technologies to create original, not programmed responses still constitute the minority of all chatbot solutions that businesses use.

These apps consider users’ previous activity, profile information, and the context of each query when providing services. This is why an AI customer service chatbot can be regarded as a “virtual assistant.”

Predictive chatbots act like active helpers and sales agents rather than robotic FAQs, providing personalized guidance to each customer. They can maintain or start conversations, all without being explicitly programmed what to say.

Why are chatbots so popular?

The boom in chatbot popularity is attributed to the fortuitous combination of customer interest and rapid technological advances in AI and language processing. Users, in fact, have been enjoying the potential of efficient robotic assistants for years: Business Insider reports that in 2019, consumers spent around $2.8 billion on purchases made through a chatbot.

In 2021, the processing power and empathetic capabilities of chatbots have already surpassed many milestones, and they are still increasing. By 2024, the figure above is expected to transform into $142 billion—a mindblowing 5100% increase over five years.

In addition to being perfect for product promotion and assistance, chatbots also appeal to customers as the means to solve any problem swiftly and without involving a human employee. On the one hand, personal interaction is a plus when it comes to customer service, but, at the same time, many clients may feel insecure contacting support for minor issues, especially if the same problem arises multiple times.

Besides, automated support solutions cover operations gaps experienced by many companies due to COVID-19. As many as 88% of businesses reveal having encountered disruptions and uncovered weak spots in their customer service delivery caused by the pandemic. Chatbots work to smooth these bumps across many industries.

chatbot-banking

Industries with high chatbot adoption rates

Retail

AI-powered chatbots truly flourish in the marketing and sales areas. They can help users find what they’re looking for quickly while promoting associated products naturally and non-intrusively. Chatbots in retail also streamline the purchasing process for customers, enabling faster check-out and reducing the risk of cart abandonment.

Travel

In the travel industry, chatbots take care of the most tedious part of any journey: they help customers book flights, keep an eye on the best prices, find hotels, and make reservations quickly and without hassle.

Companies in this industry can enjoy the automation that chatbots bring. For instance, a Canadian airline WestJet was hit with a 45-fold increase in user queries during the 2020 COVID-19 crisis, and the company managed to uphold impeccable service quality by using a custom-made chatbot.

Finance

Fintech and banking apps typically generate a large volume of customer support requests, and chatbots can greatly assist in answering typical but important questions about banks’ operations, documentation, and so on. Considering how the pandemic has already contributed to a 20-50% increase in mobile adoption in the fintech industry, a chatbot is a natural—and necessary—technology to include in your service.

Also, by being proactive and offering additional information about personalized offers, such bots can be promotional to an organization.

Healthcare

A customer service chatbot in healthcare can be instrumental in collecting patient information, performing symptoms analysis, and helping users schedule appointments quickly. Business Insider also indicates that as much as 73% of non-specialized administrative tasks in the healthcare industry can be automated with chatbots.

Customer service

Personal assistants like Alexa and Siri have been growing in popularity since the beginning of the pandemic, and users’ interest in chatbots for customer service, as well as conversational AI technology in general, is not about to extinguish any time soon.

Google Assistant, for instance, scores about a billion users and helps schedule appointments, conduct easy searches, shop online, and optimize daily and professional activities.

Benefits of chatbots in customer service

Let’s take a look at the key benefits of chatbots that help companies better serve their clients and improve business processes.

chatbots-benefits-in-customer-service

  • Enhanced customer experience. In addition to being practically useful, customer service chatbots appeal to your clients’ emotions. They make the entire communication process between the company and users more pleasant and personalized and thus improve user retention and build loyalty.
  • Easier support for multiple languages. Providing services in several languages requires you to recruit and hire additional talent, which is time-demanding and expensive. Meanwhile, chatbot support enables businesses to use the technology that can be quickly trained on datasets in different languages to provide multilingual services.
  • Non-intrusive customer profiling. Chatbots also allow you to source direct insights from users without disturbing them with surveys and feedback requests. They are perfect for implicit customer profiling, where the data about each user’s shopping/browsing history, preferences, past purchases, and certain personal information is collected continuously and automatically.
  • Advanced personalization. One of the direct benefits of profiling is advanced personalization from the first seconds of interaction between a user and a live chatbot. Unlike humans, chatbots can fetch information about customers within moments, instantly tailoring the content, dialog, and recommendations to each user.
  • Round-the-clock support. One major disadvantage of human support is the necessity to always have an employee on the shift. Combined with uneven schedules and long working hours during peak sales periods can decrease the quality of service. AI chatbots solve this problem by providing 24/7 automated support.
  • Improved brand recognition. Besides being a useful helper, a chatbot can serve as a perfect impersonator for a company or product. Give it a unique voice, make the assistant multi-channel, and potential customers will start associating the brand with your chatbot.
  • New revenue channels. Virtual shopping assistants can apply service fees, enable in-chat payment options, or inject affiliate marketing, expanding the range of your revenue channels.
  • Automation of processes. Chatbots also help businesses allocate resources better, decrease the amount of human expertise needed for simple tasks, and improve staff efficiency.

Best examples of chatbots for customer service

Now that you know how to create a chatbot, let’s take a look at the top solutions on the market and what makes them successful.

  • Heek

Heek is a customer service chatbot example that helps users build a website on the spot by typing in their industry, site purpose, desired sections, and other preferences. No manual interaction with the site’s elements is required.

Although, in most cases, a bot-generated page would need significant customizations and functionality programming, Heek accomplishes the vital goal of quickly attracting users. Many feel frustrated trying website editors for the first time, especially if they don’t have design skills. Heek eliminates the pressure and provides continuous feedback, encouraging users to further explore the platform.

  • WestJet’s Juliet

Juliet belongs to a Canadian airline company WestJet and serves to answer passengers’ questions about flight status, gate info, documentation, traveling with pets, and so on. The bot currently handles 87% of all incoming support tickets, automating the most time-consuming and repetitive part of the support department’s job.

  • Hipmunk

Hipmunk is a travel chatbot that interacts with clients through Facebook Messenger. It helps book the best flights, find hotels, make reservations, and keep an eye on various discounts and offers. Essentially, Hipmunk helps users stay excited about their journey instead of feeling burdened by sorting through countless browser tabs and searching for perfect arrangements.

 

hipmunk-chatbot

  • Eno

Eno is Capital One’s chatbot that helps users manage their finances. Capital One’s customers can schedule regular payments easily through the chat instead of a manual search, and the bot provides insights into each person’s spending, transactions, and purchases. Clients can also use Eno to quickly investigate suspicious account activity or resolve duplicate charges.

  • Duolingo

Duolingo, a well-known language-learning platform, offers an incredibly authentic chatbot interaction experience: the company’s bot quite literally applies its conversational skills to talk with people. By enabling users to try and use the language they’re learning with a chatbot, Duo provides an invaluable experience that boosts the level of customer service beyond what many other apps in this sector offer.

Things to consider before implementing a chatbot

The development process for a chatbot app is rather straightforward; the key to success is a thoughtful and comprehensive integration of this technology.

You need to define the purposes and KPIs for your new software, as well as build an appropriate infrastructure and redesign operations to truly benefit from adding a chatbot to your business.

Here are the critical points to consider before you launch onto this journey.

chatbot-app-development

1. The type and goals of your chatbot

Before researching how to make a chatbot, you need to understand why you need to build it. Customer service bots can be roughly divided into services that

  • answer predefined users’ questions about your company, product, or site’s functioning;
  • act as technical support interface without involving human employees;
  • improve internal communication and processes; and 
  • assist in generating or converting leads.

Depending on your business goals, you may need a simple support bot, an advanced customer-oriented solution like Alexa, or a system of several types of services.

2. The scope of application

Once you settle on the type of solution, dive deeper into the details and determine what kinds of interactions your chatbot should cover. These may include common search queries from customers, conversation topics, technical assistance areas, and other subjects specific to your business. Be as extensive as you can.

3. The distribution channels

Some chatbots operate solely on websites, others may be embedded into mobile apps, email communications, or Facebook/WhatsApp Messenger. Consider how customers interact with your business and choose your target platforms and deployment media.

4. The overall strategy

When you have a clear vision of the software you want to develop, it’s time to put everything together and draw up a complete strategy—from the design stage to implementation.

Make sure to think about the integration and marketing of your chatbot, as well as what infrastructural changes and employee training will be necessary, and how you’re planning to maintain the bot.

5. The technology stack

Learning how to develop a chatbot is necessary at this stage to get an idea of the tech stack you’re looking for. To build a chatbot from scratch, developers typically use

  • NLP platforms like API.AI, Wit.ai, Recast.ai, and IBM Watson;
  • NLP libraries like spaCy, NLTK, PyNLPl, and ChatterBot;
  • databases like MongoDB and MySQL;
  • programming languages, including Python, JavaScript, Ruby, Java, and Lisp.

Also, consider team coordination and strive to involve the sales, IT, operations, and customer service departments in the development process.

6. The conversation flow and bot training

Dialog flow is responsible for providing a continuous and smooth conversation experience. Your chatbot may need to repeat the same thing multiple times, and robotic answers don’t promote user assimilation of this technology.

To make your chatbot effective and witty in interaction, it’s necessary to use your knowledge base for training the model. The knowledge base includes records of real communications with users, support tickets, and other processed datasets that reflect the intent, context, and sentiment of customers’ messages.

7. QA and user feedback

Testing is paramount when it comes to building a chatbot service. Laggy chatbots frustrate users more than the complete lack of this technology, so it’s vital to ensure you provide a bug-free solution from the start and consider your clients’ reactions.

Chatbots tread the tentative territory of unmoderated communication, and analyzing users’ feedback is the best thing you can do to discover how to adjust the app for the best experience.

8. Continuous maintenance and innovation

The final point to consider is deployment and moving forward. Make sure you are prepared to meet the maintenance requirements of your chatbot and design a strategy for monitoring the emerging trends in this area and subsequent renovations of the software.

Looking to build a chatbot for customer service?

We at Eastern Peak can help you create an AI customer service chatbot that meets your business goals and tackles customers’ needs.

Contact us

Why say “yes” to customer service chatbots?

Customer service chatbot solutions help make the customer journey more pleasant and productive. In the short minutes of interaction, they deliver support, guidance, or entertainment, leaving users satisfied with a conversation that was evidently tailored to their specific preferences.

Predictive personalization is one of the major chatbot benefits that enables quality service—in many instances better than a human employee can offer, due to the technology’s extensive processing capabilities and access to user data.

Overall, an AI chatbot for customer service can boost not only lead generation but customer retention and sales, as well as cut your expenses and staffing demands by automating routine tasks and handling support queries.

So, if you are planning to build a chatbot for your business, make sure to find a reliable technology partner. We at Eastern Peak can build solutions that perfectly meet your needs, business goals, and budget.

Contact us now to book a free consultation with our experts on chatbot apps development.

Frequently Asked Questions

What is a chatbot and how does it work?

A chatbot app is a program that uses natural language processing and either machine learning or a rule-based approach to process and synthesize human language.

Modern chatbots can distinguish the meaning, context, and sentiment behind a user’s arbitrary written or spoken statements. Likewise, they can generate appropriate responses and perform the requested actions without an employee’s intervention.

What are the advantages of chatbots?

AI chatbots bring benefits both to businesses and customers. These include

  • advanced personalization;
  • improved communication due to large volumes of accumulated user data;
  • robust 24/7 support;
  • faster resolution of issues;
  • relevant marketing and personalized recommendations/subscription plans;
  • support in numerous languages;
  • automation of processes; and 
  • higher conversion and retention rates.
How can chatbots improve customer service?

An AI chatbot for customer service can be invaluable in performing the following:

  • delivering instant support;
  • providing a guilt-free experience when a customer needs to resolve a simple issue or repeats the same query multiple times;
  • understanding what items can be associated with a user’s query and suggesting them proactively; and 
  • guiding customers through a site or purchasing process, assisting on every step, and performing actions (for instance, conducting transactions) when asked for it via the chat.
How to build a chatbot from scratch?
  1. Define your business goals and choose the type of chatbot;
  2. Choose distribution channels and platforms;
  3. Determine the technology stack;
  4. Design the dialog flow and compile a knowledge base that the chatbot can use to train and improve;
  5. Train your bot on real instances of conversations with customers and employees;
  6. Test extensively;
  7. Deploy the chatbot; and 
  8. Gather user feedback and improve.

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