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A chatbot is a solution developed to automatically formulate responses to questions from a live person with a simulation of natural speech. It can be an excellent tool for automatically replying to customers' requests and transferring the call to a manager for complicated questions. Advanced versions of the original chatbot include Apple's Siri, Google Assistant, Amazon's Alexa, and Microsoft's Cortana. No matter the industry, companies tend to actively utilize chatbots to enhance the efficiency of operations, automate customer support service and eliminate errors, and save money and time.

In terms of how they work, there are two types of chatbots: rule-based and AI-based chatbots. Rule-based or scripted chatbots work based on a predetermined scenario and offer ready-made answers. AI-based can prompt clarifying questions to determine the purpose of the search and suggest products depending on customer feedback. They can also store unique search requests from different users and improve themselves by answering more and more accurately.

Rule-based Chatbot

A rule-based chatbot or a decision tree bot is fairly straightforward. In fact, it's the most widespread bot and a lot of us have probably interacted with it through live chat, e-commerce sites, or social media. These chatbots are incapable of comprehending context or intention. Logical next steps and explicit call-to-action buttons are used to create rule-based discussions with chatbots.
In a conversation, the bot uses predetermined rules to follow. Rule-based chatbots are easier to create because they rely on a baseline "true-false" algorithm to figure out the user's questions and answer them appropriately.

Rule-based chatbot

AI-based Chatbot

AI-based or conversational chatbots analyze the context of a subject and its structure using combined machine learning, artificial intelligence, and natural language processing. They are script-driven chatbots that use naturally occurring language responses to create personalized solutions to increasingly complex topics. The more these robots are leveraged and trained, the more they are able to learn and effectively engage with the user. These chatbots are capable of jumping from one point in a dialogue scenario to another if necessary and responding to a random request from the user at any moment.

AI-based chatbot

How Do Chatbots Work

The chatbot's initial responsibility comes from assessing the user's request. To do so, it must first determine the user's purpose before extracting the information and relevant entities from the request.  It is a crucial phase since it decides whether or not the response is right.

After determining the user's goal, the chatbot must produce the most suitable response to the user's request. The response can be general and predetermined language, text taken from a database with many responses, a fragment of contextual information based on user data, or for example a data held in business systems. Furthermore, the outcome of a chatbot action when engaging with one or more backend apps. A reply can also be a clarifying inquiry that helps the chatbot accurately understand a customer's demand.

Why Do Businesses Need a Chatbot?

There are numerous reasons why a chatbot can be beneficial to your company. In general, it's a brilliant way to save company costs, save time, increase conversions and sales, and provide a fantastic customer experience. Now let's take a closer look at the following motives.

#1 Chatbots automatically qualify potential customers, which helps reduce transaction costs. Chatbots can automatically filter potential customers into groups by simply asking questions in a natural, conversational manner. For instance, they can screen out which potential customers are a good fit for your services. Also, they can highlight people who seem to be more willing to buy your products than others. In addition, the chatbot can increase the profitability of ads since it can recommend products in your store, answer questions about shipping at all stages of the sales funnel. As a consequence, it will boost conversions and provide better ROI.  

#2  A chatbot is a great solution for serving and supporting your customers.  Up to 80% of regular questions may be answered by a Messenger chatbot. This is a smart way to minimize the cost of customer service. 

#3 Chatbots help personalize the experience. You have to agree that it's nice when someone you've met before remembers details about you. It shows you that they actually listened to what you had to say.  Your bot can use data from the user's profile as well as data from past conversations. Personalization makes users feel noticed and special, which builds brand trust and increases the likelihood of a purchase.  And adding GIFs and emojis, videos, quizzes, and trivia questions helps make the conversation fun and engaging.  

How to Develop a Chatbot from Scratch in 2022: Tips, Tricks and Pitfalls

There are two approaches to chatbot development: in-house development or outsourcing. Note, the choice, in this case, should be based on a deep understanding of the potential and demands of your business. Our article can help you to choose the best approach for your business.

Gather a Team

Forming a team is a fairly essential step on the way towards creating a chatbot from scratch. With the right team of experts in different fields, you can positively contribute to the success of the initial testing, configuration, and support phases of your bot and troubleshooting its bugs.  To design and train a chatbot, you'll need data scientists, as well as expert architects and software engineers to handle back-end and third-party system connectivity. The team assists you in creating a highly intelligent multi-functional chatbot. They can assist you with developing a chatbot with a variety of features such as numerous integrations, languages, and functionality. While the business and marketing team will help you identify the purpose of the chatbot.  

Define and Set the Goals

Before you start developing a chatbot it is necessary to determine what exactly the company wants to achieve with the help of a chatbot. Concretely define all the necessary functions

and decide on the tasks for implementation. For this purpose, it is worth highlighting what services and solutions already exist, and which of them are the most and least popular. Ask yourself a question. As a company that has solutions for virtual interaction with people what these solutions are missing as well as what exactly the chatbot would facilitate. Determine a modest goal that fits your customer service philosophy. 

In addition to your goals, it is also important to understand the goals of your customers, what they want or expect from you. What platforms do your customers use to interact with you, what actions do they take, how do they reach your sales channel? Surveying your customers can help you answer all these questions. By doing this upfront, you can choose the type of chatbot that suits you best and develop a robust chatbot that can ideally handle most of the topics your contact center manages today.  

Make Sure Your Chatbot Doesn’t Sound Robotic

If you truly wish to improve your interactions with customers, it is important for the chatbot not to seem like a mechanical cold person. It is necessary to use natural language processing and voice interface to make it human-like and easy to understand. This gives the conversation a natural flow, makes it feel natural and similar to a human. An outstanding solution is to give your chatbot a name and define its tone of voice. For this, you need to create a persona for the chatbot that reflects your tone of voice and has the qualities of your character and identity in it. You will be able to assign a personality that you think would be perfect for the customer support specialist. Don't make your chatbot too tense or abstruse. Try to use plain English avoiding jargon and complicated words.  

Define the Technology Stack

Building a profitable and user-friendly chatbot requires you to know the frameworks and tools for developing bots. With frameworks, you can develop a complex chatbot that meets the expectations of your users and ensures that you remain profitable and prosperous. However, by choosing the second option, you risk getting a bot with limited functionality. 
With code-based frameworks like, Microsoft Bot, BotKit, and Pandorabots you will require an expert chatbot developer with a grasp of programming languages, machine learning, and AI. Such a chatbot can solve sophisticated problems and service clients. It includes a database for storing data, as well as for analytics and AI.  
With chatbot builder platforms like Flow XO, Chatfuel, Motion AI, Botsify, etc, you can build basic chatbot conversations and upload them to the cloud platform for basic purposes. These platforms include drag-and-drop templates for building chatbots. Take into account that using these platforms you cannot create a chatbot capable of working with unstructured information with AI or NLP support. 

Define the Functionalities

What types of queries will the chatbot elicit? What are the various options from which consumers will have to choose? What are some of the most commonly asked questions by users? These are issues the whole team, from marketing to software design and development, should work on. Any possible human and machine response must be considered. Almost every chatbot project starts with establishing the bot's transitions and edge states, as well as all of the user's options for utilizing the bot. This one also entails defining the use cases and objectives, as well as creating suitable conversation flows and connecting to APIs (Application Programming Interface).

Development and Testing

After all of the research and analysis stages when all the relevant information has been gathered the software design and development team starts building software and programming the conversational application. At this quite important stage of work on the chatbot, the development team is in charge of the valid use of artificial intelligence, scripting, and integration of the business logic on all virtual platforms and operating devices of the company. While developing chatbot scripts it is necessary to be based on a deep understanding of the business process to be clear, consistent, and concise. The setting of user-bot statistics is another key step in the chatbot development stage. The data is used to compare the bot's performance to the predicted outcomes and assess if it is performing at its best. One may also view a breakdown of visitors' interactions with each bot activity using such analytics. To ensure that it is bug-free and simple to use you should thoroughly test the newly developed bot before deploying it. Сhatbot ought to satisfy the clients' expectations and requirements at this point. Even when your chatbot is up and running, you must continue to enhance it by monitoring and adjusting the talks.  Get feedback from clients, examine your bot, and modify it. Once you think it's ready, scale it up and put it online.

Analysis, Training, and Update

As soon as you launch a chatbot, you have to properly evaluate how it works. To function smoothly the bot should be updated regularly. This includes updating the conversation and response streams using periodic data analysis. Analyzing the total number of users, the overall amount of interactions with users, and the interactions that led to the provision of services is equally important. For training your chatbot you need to define the use cases for your chatbot and make certain your goals are distinct, your entities serve a purpose. Keep in mind that a good chatbot requires a constant update.

How Much Does it Cost to Make a Chatbot?

The entire cost of building a chatbot is determined by a number of factors, including the type of chatbot, the technology stack used, and the number of capabilities requested with data analysis algorithms. 
A rule-based chatbot is less expensive, but it has fewer features. The cost will be around $30,000 if you opt to build it from the ground up and utilize third-party services to enhance it.
A chatbot powered by AI will need significantly more resources. Because the tools will be more complex, the team should have prior familiarity with neural networks and artificial intelligence. This type of cutting-edge solution can cost $50,000 or more.

Wrapping Up

A chatbot is a perfect solution that changes the way of communication between customers and companies. With chatbots, site interactions are quicker, customers feel more involved and likely to establish brand loyalty. Chatbots speak our language and manage hundreds of inquiries at once, making the customer experience more customized  while yet being faster and more automated. Chatbots have heralded a new era in which every company has its own distinct voice. Customer-brand relationships are tighter and stronger than ever before because of this cutting-edge technology. Isn't now the ideal moment to build a chatbot for your business?
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