Customer Service Chatbots: A Complete Guide for 2025

The article was updated on September 11, 2025.

Nowadays, customer service chatbots are no longer a futuristic concept – they are a necessity. These chatbots have become an essential tool for businesses striving to meet the constantly growing demands of consumers. While some companies still lag in adopting automation, customer expectations for instant, personalized service continue to rise.

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 $7.7 billion and projected to grow at a 23.3% CAGR from 2025 to 2030, 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 to bringing this technology into your business.

Read on if you want to discover more about what chatbots are used for, how they work, and why now is the right time to put them into action.

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.

In short: A chatbot is a digital assistant that can scale human-like conversations, helping companies automate repetitive tasks while keeping interactions engaging and accessible.

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 chatbot will instantly show you the forecast for the upcoming weekend in your area. The service will also present the forecast in a fun and conversational manner, adding more humanity to this brief interaction compared to a Google search.

This scenario 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.

Ultimately, the role of a chatbot is twofold: to enhance the customer journey with speed and personalization and to reduce operational strain by automating repetitive inquiries.

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-driven) solutions.

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.

Conversational AI chatbots

These AI-powered chatbots use machine learning and advanced natural language processing to generate dynamic, not pre-scripted, responses. They still make up a minority of business chatbot solutions, but adoption is growing quickly.

These chatbots 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.”

AI chatbots act like active helpers and sales agents rather than robotic FAQs, providing personalized guidance to each customer. They can maintain or initiate conversations, all without being explicitly programmed for every scenario.

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.

AI customer service chatbots are equally popular among businesses and customers. In 2024, 92% of companies planned to invest in AI-powered software, noting its convenience, efficiency, and personalization. Some business owners believe that, rather soon, artificial intelligence will play a role in 100% of customer interactions.

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.

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 checkout 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, the 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 symptom 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, 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.

Real Estate

Real estate has always been about timing. A buyer scrolling through listings late at night doesn’t want to wait until the next day for someone to get back to them. That’s where chatbots make a difference. They can jump in with quick answers about square footage, neighborhood details, or even set up a viewing on the spot.

It feels less like filling out a form and more like having a quick chat with an assistant who’s always available. For agents, it means fewer missed leads. For buyers, it means the process moves at the pace they expect.

Education

In education, the story is similar. Instead of waiting for office hours or sending another email, a learner can get an instant reply, even if it’s midnight.

And on many EdTech platforms, chatbots are designed to feel more like a study partner than a piece of software. They remind you about practice tasks, walk you through FAQs, and keep motivation from slipping. Teachers benefit too, since a lot of routine questions never make it to their inbox.

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.

• 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 in 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, this 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.

• 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.

• Klarna

Klarna, a Swedish online payment provider, has recently introduced a cutting-edge AI chatbot for customer service. It helps customers with transactions, orders, and other payment-related questions. Klarna is trained to make personalized recommendations for budget management and conscious spending. Klarna’s AI assistant solves over 300,000 issues every week, speaks any language, and is available 24/7 through the live chat.

By streamlining common queries and providing immediate assistance, Klarna’s chatbot significantly reduces the workload on live agents and boosts customer satisfaction.

• Erica

Erica is Bank of America’s customer service chatbot designed to simplify banking for 69 million customers and small businesses in the US. Available exclusively through the Mobile Banking app, this financial assistant offers such features as bill reminders, transaction searches, credit score monitoring, budgeting, and more.

• 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.

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.

Key features of effective chatbot apps

So, what are the key features to look for in a customer service chatbot? What functions should you implement to build a chatbot? Our experts highlight the following:

• Natural language processing allows an AI customer service chatbot to understand and respond to everyday language. NLP makes conversations more natural and simpler for comprehension. 
• Integration with CRM and other tools lets chatbots connect to databases and other software. Being one of the most useful chatbot features, it provides comprehensive data, improves workflows, and ensures consistency.
• Personalization capabilities for human-like and engaging conversations. Personalization is achieved by altering answers and suggestions based on customers’ preferences, browsing patterns, and responses. 
• Multilingual support allows communication with a broader audience and improves accessibility across the world.
• Multichannel support. Modern AI chatbots for customer service are optimized for a wide range of platforms to let users choose the most comfortable one. For example, social media, websites, or applications.
• Handover to human agents. When questions get too difficult, chatbots can refer customers to live agents to make sure they get the help they need.

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 it.

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.

Furthermore, consider team coordination and strive to involve the sales, IT, operations, and customer service departments in the development process. From our experience at Eastern Peak, the most successful chatbot projects are the ones where business and tech teams work hand in hand.

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.

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 also 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 app development.

Frequently Asked Questions

Read also:

• Top Chatbot Apps: Winning Strategies and Lessons to Learn
• Chatbots in Fintech: Benefits and Best Use Cases for 2024
• Benefits of Chatbots in Healthcare and Their Applications
• How to Develop AI-Powered Concierge App: Best Practices and Examples