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Chatbots enable humans to have conversations with computers to get fast answers to common questions or to complete routine tasks. They’re particularly valuable for reducing costs and increasing customer satisfaction in service-intensive industries.

Chatbots are used to automate repetitive customer service requests and business processes that would otherwise involve a short conversation, helping customers get faster support and increasing employee productivity.

What is it?

Chatbots are programs that enable people to interact with computers through a conversation.

What’s in it for you?

Chatbots can help reduce the cost of delivering customer service at scale, and can also increase customer and employee satisfaction.

What are the trade-offs?

Effective chatbots can be expensive to build, and chatbots aren’t suited to use cases involving sensitive information or emotional topics.

How is it being used?

Many companies in service-intensive industries use chatbots to give customers fast answers to common inquiries, and to streamline onboarding to new systems or job roles.

What are chatbots?


Chatbots are computer programs that can hold a conversation with a human using text, speech, visuals, or a combination of all three. They enable people to interact with computers in a simple, natural way, and have increased in popularity as consumers have become accustomed to having conversations with their smart devices.


Some chatbots can only answer a limited set of questions, while others can learn from their conversations with people to answer more questions and improve their responses. The most sophisticated chatbots can understand what people are trying to accomplish and provide accurate responses and relevant recommendations in a way that feels like a human conversation.


Chatbots can help provide responsive and effective customer service on a large scale, and to help new employees accelerate their own onboarding. 

What’s in it for you?


Chatbots never sleep; they’re available to answer customer questions all day, every day — and they can answer much faster than a human. Using chatbots to automate routine customer service inquiries can significantly reduce costs in enterprises with high levels of service interactions, and free human agents to focus on complex cases and high-value customers.


But chatbots can do much more than save you money through automation. Many companies see a clear increase in customer satisfaction and conversion rates, as customers get faster answers to service inquiries and on-the-spot guidance while making a purchase. Internally, chatbots can increase employee satisfaction by simplifying onboarding for new systems or job roles.


Chatbots also retain information from every conversation, helping provide valuable customer insights you can use to inform product portfolio decisions or shape your business strategy.

What are the trade-offs of using chatbots?


Creating a chatbot can be expensive, so it’s best to start with a pilot project, based on a hypothesis you want to test and measurable criteria for success. You’ll also need to invest in customer experience expertise for your chatbot team to ensure you’re tackling the right problems in the right ways.


Also, it must be obvious to people interacting with your chatbot that it’s not human. People have high expectations of conversational interactions, so you need to manage those expectations to avoid disappointing or frustrating them.


Chatbots are great at providing information about products and support for buying decisions, but they’re not customers’ preferred way to make a purchase, when people want control over their payment information. In fact, it’s best not to use chatbots for processes where customer authentication is necessary, such as making a bank transfer, as many people have concerns about chatbots handling their private information.


There are also other situations where people may prefer to speak with a human. For example, if the subject matter is sensitive or the conversation is likely to be emotional, human empathy will be required.

How are chatbots being used?


Chatbots are used in service-intensive industries such as retail, financial services, and telecommunications to quickly answer common customer queries, reducing the cost of providing customer service at scale. Routine customer service processes that require a conversation to complete are often automated with chatbots.


Similarly, organizations use chatbots to automate repetitive business processes and streamline onboarding, helping employees become more productive and get up to speed faster. For example, rather than having to navigate through multiple documents, new hires can simply ask a chatbot questions and instantly get the information they need.

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