What is a Chatbot? | Chatbots simply explained

Chatbots - General definition

In general, a chatbot is a program that simulates human communication. It can communicate in real time by text input in chat form or by voice. A chatbot accepts text or voice information and automatically provides a response without human intervention. Some chatbots can also initiate actions or perform tasks.

In this article, we’ll go over these different areas of chatbots:

Areas of application for chatbots

The areas of application for chatbots are diverse and depend on which functions the bot fulfills. Whether in the entertainment industry, marketing, customer service and consulting - automated chats can be everywhere. Virtual voice assistants (e.g. Siri, Alexa) have also become commonplace.

Here you can find chatbots or automated assistants among others:

• Customer service: customer questions are answered quickly and efficiently
• Marketing: Personalized advertising messages and current offers can be forwarded to customers
• E-commerce: Product research and selection is simplified, orders can be accepted
• Healthcare: Information about therapy options and premiums, e.g. from health insurance companies, can be easily distributed
• Human resources: Answering employee questions
• Finance: Answering and assisting customers with questions about finances
• Education: Provide educational materials and assist in answering questions

Advantages of chatbots

Chatbots offer many different advantages for both customers and companies:

• Round-the-clock availability: Chatbots can operate 24 hours a day, seven days a week, enabling customers to get support at any time.
• Scalability: Chatbots can interact with many customers simultaneously without the need to hire additional staff.
• Cost-efficiency: The use of chatbots can lead to a reduction in operating costs, as they are a cost-effective alternative to hiring additional staff.
• Fast response times: Chatbots can respond quickly to customer inquiries, which can lead to higher customer satisfaction.
• Personalized experiences: Chatbots can interact with customers on an individual basis and provide personalized experiences.

Chatbots thus improve the customer experience and lead to increased customer satisfaction. In the company, efficiency is increased while time and costs are saved.

Use of chatbots in customer service

Chatbots in customer service are often connected directly via the company’s website or are operated via SMS and instant messaging channels (e.g. WhatsApp, Facebook Messenger, Telegram). A chatbot is not intended to replace the classic communication channels such as telephone, e-mail, contact form and help page (FAQ), but exists as an additional offering. Both customers and employees in customer service appreciate chatbots for mainly two reasons: Customers have a more pleasant customer experience and customer service is more efficient.

Pleasant customer experience

With a chatbot, customers save their valuable time. Questions can be asked immediately on the website or in Messenger, without having to search for phone numbers or being put on hold. A chatbot answers immediately and at any time, because it knows no service times and is therefore available around the clock and throughout the year.

Of course, customers should not be forced to communicate with a chatbot. They can therefore resort to another communication channel. However, if customers choose to use the chatbot but it is unable to answer their questions, they will be connected to customer service by phone or live chat with human service agents. This happens in rare cases when customers express themselves too unclearly or have very individual concerns.

Increased customer service productivity

The use of a chatbot reduces manual work, as a large proportion of customer queries are answered automatically via chat. As a result, service agents have more time to deal with complex customer issues and can provide customers with comprehensive advice - which also contributes to a pleasant customer experience. With the help of a chatbot, service agents can handle a larger workload in the same amount of time.

Not only the company, but also the employees themselves benefit from the chatbot: Since the majority of customers ask similar questions over and over again, service agents have to deal less with recurring questions, which can be very exhausting in the course of an 8-hour shift. The reduction in manual work contributes to agent satisfaction, making them more motivated and efficient.

Types of chatbots

There are different types of chatbots depending on their function. These have features that are ideally suited to their areas of application.

1. Rule-based chatbots: These chatbots are based on a predefined set of rules and responses. They are easier to create, but require a lot of manual work and can’t be as flexible.

2. AI-powered chatbots: These chatbots use artificial intelligence and machine learning to deliver natural and personalized responses. They are more complex to create, but can improve and adapt over time.

3. Virtual assistants: These chatbots can perform tasks such as scheduling, ordering, or customer support. They can also integrate with other systems such as email or calendar.

AI-powered chatbots: what’s behind them

AI-powered chatbots are based on Natural Language Processing (NLP). This is a technology that enables the chatbot to understand and respond to multiple languages. Without NLP, chatbots would not be able to understand and respond appropriately to complex questions and requests from customers.

A chatbot equipped with NLP uses algorithms and machine learning models to break down language into its constituent parts and analyze them. This allows the chatbot to understand the meaning behind a statement or question and provide an appropriate response.

NLP also helps chatbots interpret human speech in different forms and styles, including slang, abbreviations, and colloquial expressions. A chatbot using NLP can also interpret context and intent to better understand customer:s needs and respond more accurately. Overall, NLP enables chatbots to interact naturally and effectively with customers and meet their needs and requirements.

Chatbots and ChatGPT / GPT-4

ChatGPT is a chat-specialized form of OpenAI’s GPT language model, designed to respond naturally to questions and instructions. It is based on machine learning and neural networks similar to the human nervous system.

In this regard, GPT-4 is the most advanced multimodal language model. Currently, the model is only usable with ChatGPT Plus. ChatGPT-4 is able to explain facts and to compose texts of any kind (e.g. poems, news, stories, …). In addition, with some modifications, we have developed a prototype ChatGPT-4 level chatbot optimized for customer service and using the GPT4 engine.

Challenges of chatbots

Above all, it is important that chatbots have a great understanding of language, and in the best case understand and speak dialects, slang and colloquialisms, but also different languages. Both language understanding and multilingual support are therefore very important, but also require advanced NLP algorithms.

Contextual understanding must also be present. If customers suddenly refer in the chat to a message they sent to support some time ago, the chatbot must be able to recognize this and deal with it.

Other challenges are that chatbots should be able to adapt to the individual needs of customers and also be able to integrate with different systems. Integration with different systems can then be used for this so that, for example, bookings or changes can be handled directly by the bot.

Data protection is also an important task. Users must be able to trust that chatbots are safe and reliable and will not compromise their personal data.

In addition, chatbots are becoming increasingly popular and must be able to handle the increased demand. Often, a large number of requests need to be answered at the same time. So scaling is also a very important factor and a challenge.

Future prospects of chatbots

Chatbots, which continue to evolve, bring not only progress but also further challenges that need to be considered. For example, increasingly intelligent systems should also be better at recognizing emotions and respond appropriately to users. AI ethics is also an important issue that must not be neglected. As machines become more complex and autonomous, they may have to make decisions and perform actions that require ethical considerations. Chatbot developers :inside must ensure that their algorithms are ethical and that they are used responsibly.

The future prospects of chatbots are promising and offer companies the opportunity to improve interactions with their customers and make them more efficient. By leveraging advanced algorithms and machine learning technologies, chatbots can offer personalized customer interactions and provide customized solutions based on each customer’s needs.

By integrating chatbots with AI systems, companies can leverage advanced features such as speech recognition, image recognition, and emotion recognition to provide better and richer interactions with their customers. Chatbots are increasingly being used in various industries, including retail, healthcare, banking, and insurance. Here, they can help automate customer interactions, improve customer service, and save time and resources.

The OMQ Chatbot

The OMQ Chatbot optimizes communication in customer service. Customers can submit their queries via chat and receive an answer within seconds. The chatbot is already used by many companies from different industries.

OMQ has also developed a beta chatbot based on GPT-4. This now interacts even more fluidly and quickly, as our article about it shows.

Among others, the e-commerce company EMP uses the OMQ chatbot and thus answers over ⅓ of customer inquiries automatically.

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