What is a Chatbot?

The current digital transformation era has brought a lot of technological innovation. Still, it’s hard to forecast what technology will be capable of in the years to come. Not too long ago, the world was without electric cars, social media, and 5G network but today we can’t live without them. This is exactly what is happening with chatbots.

A chatbot is essentially a computer program that simulates and holds conversations with humans through several input methods like text, voice, gesture, and touch. At a high level, all chatbots are supposed to perform a similar function: provide a similar user experience that someone would have if engaging with a human.

Chatbots have come a long way. Most chatbots of today possess varying degrees of sophistication and intelligence that provide them with easy adaptability to different challenges and situations. This versatility has also allowed them to be integrated seamlessly across all systems. When Siri was born a decade ago, the chatbot was a nuisance. Not only were use cases limited to well-worded queries, but users were unaccustomed to texting with an automated helper. However, chatbot builders and artificial intelligence have significantly improved, resulting in various helpful and effective assistants across many industries and applications.

There is no single answer to the question “What is the best chatbot” as every company may need to build a chatbot that performs a specific function. Before creating a chatbot, the user needs to discover what type of chatbot technology will best fit their application.

Different Types of Chatbots

A chatbot used in answering FAQs which makes up a larger percentage of support queries will be quite different from the one used in ordering food. In the same way humans are different in their profession and appearance, chatbots are also different in structure and function.

Focusing on the different types of chatbots will help you understand the different classifications of chatbots and the type that will be ideal for your business.

The following are the types of chatbots:

Button-Based (Menu-Based) Chatbots

The most basic is the button-based bot. It’s just a menu where FAQs can be remedied. Similar to how an automated phone menu is interacted with, the chatbot provides the user with different options in real-time to choose from through a decision tree hierarchy. Eventually, a solution should be discovered after enough selections have been made.

While these chatbots may be useful in making selections from a predefined menu or list, they cannot function efficiently in advanced cases where there are many variables at play. Also, this type of chatbot is the slowest.

Rules-Based (Linguistic-Based) Chatbots

The second type is the rules-based chatbots and they’re a bit more complex than the menu-based ones. This chatbot uses if-then logic to pull topic areas from user queries. A programmer might code a rules-based bot to understand if the user mentions the word “size chart” or any synonyms, then offer the corresponding image. These bots can be slow to program and are not particularly human-like. Though users often expect clearly robotic responses to arbitrary questions.

Keyword Recognition-Based (Natural Language Processing) Chatbots

The third is the keyword recognition chatbot, and it’s a shockingly realistic modeling technique that uses customizable keywords integrated with an Artificial Intelligence application – Natural Language Processing (NLP). As a result of this integration, the keyword recognition bots can infer meaning from relevant vocabulary and respond freely.

Its ability to provide users with appropriate responses makes it a very powerful tool in business. It’s reported that the Royal Bank of Scotland (RBS) is using this chatbot to enhance customer experience.

Machine Learning Chatbots

The fourth and final variation is the machine learning chatbot. Machine learning is more powerful than the others because of its uncanny ability to remember previous conversations with users. This memory permits tailored responses for repeat users. Also, it’s predictive, data-driven, and more conversational.

Not every business needs a bot that will pass the Turing Test. Still, considering the drastic innovations in computing recently, the brightest bots of today will pale in comparison to tomorrow’s tech.

Create a Chatbot

Chatbot Applications

We’ve mentioned the different types of chatbots available. In this section, we will focus on the variety of consumer and business applications that these chatbots can be used for.

Customer Service Chatbots

This is the most commonly known type of chatbot. The role of a support chatbot is to perform similar tasks a customer support agent or a live agent would provide in-person or over the phone. The main benefits of using one include 24/7 availability, quick responses, and cost-efficiency. Not to mention, customer engagement is better. A company might want to deploy a customer service chatbot if they wanted to relieve their support department from incoming support requests or calls.

This chatbot helps to enhance communication between customers and businesses. It is also able to gather feedback for the company, and this allows them to appraise and also improve their service delivery.

eCommerce Chatbots

eCommerce, retail, and booking chatbots help the user complete a transaction when a shopping assistant or support agent would normally assist a customer. A chatbot can be very helpful for customer transactions because it can help the user find what they are looking for instead of navigating a large website or complicated ordering process. For example, if a customer wants to buy a new television but doesn’t know which one would fit their family room, they could interact with a chatbot to help them find the right product.

Skills Chatbots

These chatbots are also known as virtual assistants and work the same way Amazon’s Alexa and Apple’s Siri work. The user makes a command, and the chatbot acts. “Siri, turn on my lights.” These chatbots are “single-turn-type,” meaning they do not require contextual awareness.

Booking Chatbots

This type of chatbot helps customers either book appointments or travel arrangements and are commonly used by service businesses (e.g., spas, doctors, auto repairs, etc.) and airline companies.

These bots, also known as appointment bots, are normally connected to Google calendar. This allows the customer to receive the booked appointment in their calendar as an event. In this case, both the business representative and the customers will receive reminders concerning the booking. This bot is also a handy tool for your HR team to schedule appointments

Appointment bots are often linked to Google calendar. When a customer books an appointment with you, it automatically gets stored in the calendar, creates an event, and sends reminders to both the customer and the business representative. The HR team also uses HR chatbots to schedule interviews for recruitment purposes.

different type of chatbots

Chatbot Trends

Chatbots, known by many other names like AI assistant, AI chatbot, conversational AI bot, conversational agent, conversational interface, intelligent virtual assistant, digital assistant, virtual agent, virtual customer assistant and more, are increasingly being widely adopted across all types of professions and companies, and this is just the start of the story.

Why the Rising Popularity?

In recent years, the Internet of things (IoT), smartphones, and wearables have completely changed the technology landscape. As digital devices become smaller in size, their computing power becomes greater.

Heavy-duty activities and mobile apps are not compatible with businesses in this digital age. How can businesses propose to provide customers with fast and seamless user experience when they are being made to wade through complicated menus?

Also, consumers want the freedom to interface with technology across a wide range of channels rather than being limited to the communication methods selected by an organization.

Chatbots solve these issues by creating a situation where customers can simply ask for whatever they need across many channels, wherever they are, and at any time. This convenience, speed, and intuitiveness have led to increased number of chatbot use cases. This was why 74% of consumers in 2020 say they used conversational assistants to research or buy products and services. (Capgemini)

Below are stats to demonstrate that business and chatbots are a match made in heaven.

Chatbot Usage and Adoption Statistics

  • 27% of consumers today are interested in AI (artificial intelligence) support tools. (Tidio)
  • 4 billion people are using chatbots. (Acquire)
  • Chatbots can answer 80% of standard questions. (IBM)
  • Nearly 65% of business respondents say that chatbots made it possible to provide customers with a more personalized service experience in 2019. (Statista)
  • By 2022, 70% of white-collar workers will interact with conversational platforms daily. (Gartner)
  • Almost two-thirds of people say 24-hour service is the best feature of chatbots. (Drift)

Chatbot Implementation Statistics

Chatbots had come a long way from when the first machine capable of speech, ELIZA, was developed in 1966 by an MIT computer scientist Joseph Weizenbaum. 6 years later, using the principles behind ELIZA, a more advanced PARRY was developed by a psychiatrist.

Today, developers are building more advanced and improved versions with the capacity to help businesses strengthen their digital presence and improve efficiencies and customer experience.

Below are examples of chatbots’ increasing global adoption.

  • The global Chatbot market valued at $1.17 Billion in 2018 is projected to climb to $10.08 Billion by 2026, at a CAGR of 30.9%. (Globe News Wire)
  • In terms of chatbot use, the top 5 countries are the USA (36%), India (11%), Germany (4%), the UK (3%), and Brazil (2%). (Giva)
  • It’s estimated that by the end of 2019, nearly 25% of the world’s population will be using chatbots. (Chatbots Magazine).

Adoption and Statistics Across Industries

In the health sector, health management platforms are increasingly using digital assistants and mobile apps to provide personalized recommendations to patients. Fitness brands and gyms are also using it to provide people with virtual classes, nutritional information, and personalized workouts.

According to Juniper Research, global cost savings from using chatbots in the banking sector will rise to $7.3 billion by 2023 from $209 million in 2019. The global pandemic may have expedited the need for financial houses to provide customers with new digital solutions but they are now able to offer a superior user experience through the use of advanced conversational AI.

The telecommunication industry has turned to AI and machine learning to make their practices more customer-centric. They use conversational AI to resolve technical issues, increase workforce productivity, and prevent fraudulent activities. As a result of chatbots’ ability to learn about customers, telecoms are better able to tailor their future interactions and so provide better-personalized services.

The insurance industry will also be saving as much as $1.3 billion in 2023 as against just $300 million 3 years ago. Just like the banking sector, insurance firms, retail and e-commerce industry, with their diverse sectors, are increasingly relying on chatbots to handle their huge data volume, act as back-up for human agents, guide customers going through self-service, and assist in resolving repetitive processes.

It’s clear from the above statistics that chatbots are not only here to stay but are the future of improved customer experience, cost savings, and better ROI for serious businesses. No wonder 57% of businesses believe chatbots deliver large ROI with minimal effort. (Accenture Digital).

Future Chatbot Predictions

  • It is projected that by 2025, AI will power 95% of all customer interactions, including online conversations and live telephone to the point that customers will not be able to tell it’s a bot. (Finance Digest)
  • $8 billion is projected as business cost savings through chatbot use by 2022. (Juniper Research)
  • Chatbots can reduce the eCommerce $1.3 trillion operational costs by up to 30%. (Chatbots Life).
  • Up to 90% of banks’ customer interactions will be automated using chatbots by 2022. (Chatbots Magazine)
  • By the end of 2023, companies, through the use of chatbots, will save 2.5 billion customer service hours. (Juniper Research)

Trend Conclusion

Smart bots are the way forward, and when combined with the growing popularity of machine learning, artificial intelligence, and natural language processing, it can have benefits beyond belief.

If businesses or establishments want to keep up in this technologically evolving environment and improve brand experience, raise customer engagement, and deliver actionable insight, they must adapt to using chatbots.

Chatbot Conversational AI

Popular Messenger Apps Voicify Can Integrate Your Chatbot With

Cisco Spark

Cisco Spark is a complete collaboration suite for business. Its API for chatbots provides several opportunities for efficient customer relations. Adding a bot to Cisco Spark lends to a holistic digital strategy.

Facebook Messenger

Developing a conversational bot for Facebook is a great investment on the most popular networking platform. Combine the bot with Facebook Ads and improve marketing alongside customer engagement.


Twilo replaces legacy networks with simpler software solutions. The platform allows businesses to reach customers in myriad ways. A chatbot for Twilio can connect with users through email, text, and more.


Direct messaging on Twitter is a portal to spectacular customer engagement. Implementing a chatbot on Twitter means connecting with followers on a platform already known for democratizing customer interaction.


The Skype platform offers a bot API for users to receive information and interact with businesses with clarity and efficiency. While Skype is predominantly a video platform, a well-placed chatbot on Skype can save businesses time and money.


Kik is an invaluable avenue to reach young audiences. Develop a chatbot for the Kik platform to send users immediate answers to queries, create or change appointments, or build your company’s brand.


Telegram is known for unparalleled security and can be used to reach cybersecurity-focused audiences. The encrypted messaging service allows for powerful chatbot tools that bridge the customer service experience with reliable responses and actionable links.


Add a chatbot to the social messaging app Line for the ultimate buyer-seller relationship. Building bots for smaller apps helps to round out a complete customer service strategy.


Create a chatbot for Viber, the global messaging service delivered by Rakuten. Viber boasts 200 million users in 193 countries. Chatbots on Viber offer a vast suite of possible applications. The bot can respond to inquiries and gather valuable knowledge of client needs.


Chatbots for Slack can handle many of the marketing functions which make the app a destination for business. Making appointments, searching sites, and solving user issues can remedy repetitive service tasks.

User Endpoint SMS text through Voicify CMS

Implementing Chatbots with Voicify

Implementing chatbots isn’t just a way to improve customer experience and service; it’s a cost-cutting mechanism for any business with a customer service operation. AI assistants have saved businesses up to 30% of the budget set aside for servicing customer requests. That is a paradigm shift for a technology that has only been seriously implemented for half a decade.

For those employees who respond to customer questions, their jobs are becoming more dynamic. Instead of answering repetitive FAQs, they leave robotic responses to the robots while serving as their organizations’ authentic face. IBM found that chatbots could eliminate 80% of these tedious lines of inquiry. The chatbot market has many players eager to fill this crucial gap for businesses. Voicify offers a complete suite of tools for the chatbot process, from bot creation to user analysis. AI created with Voicify provides automated services for the major communication platforms. Facebook Messenger, Slack, Twitter, and Skype are just a few of the sites we can build bots around.

As we march toward the era when we are more shocked that a chatbot cannot answer our questions than when they respond flawlessly, we must admit these machines have room to improve. But that is no reason to put off implementing customer service AI until next year. Business Insider projects that consumer spending via chatbot will increase from just $2.8 billion in 2019 to an astounding $142 billion in 2024.  It will be much more fun to ride this roller coaster if you’ve already bought a ticket and taken your seat.

Chatbot Conditions Voicify