Chatbots have become an integral part of business communication. From lead capture and qualification to providing personalized product recommendations and customer support, they serve a wide variety of purposes across different industries.
This blog will delve into the world of chatbots to define the term, list the types of chatbots, and finally, explain how to choose and create one for your business.
What is a chatbot?
A chatbot is a software application used to simulate real-time human interactions through text or voice as a way to lighten the load on customer-facing teams. A chatbot can be integrated with websites, mobile apps, and instant messaging applications to interact with website visitors, app users, or customers 24/7 to provide real-time assistance through live chat.
What are the different types of chatbots?
To make the best use of chatbots for your business, it's important to know the different types of chatbots, how they work, and the pros and cons of each. Here's a comprehensive breakdown of the types of chatbots available on the market now.
Menu-based chatbots
This is the most basic type of chatbot. Menu-based chatbots help users find what they need through a set of predefined menus. Each menu selection leads to a set of more menus and information, creating a linear bot flow. Menu-based chatbots are similar to IVR phone support with a number menu.
While menu-based chatbots aren't as detailed as other chatbots, they're a great way to give customers access to quick information like account balances, business hours, and similar information that can be automated and disseminated instantly, and are straightforward and easy to design and implement.
Rule-based chatbots
Rule-based chatbots are a further development of menu-based chatbots and are conversational chatbots that work using an if/then decision tree. They follow a predetermined set of responses to user inputs.
This type of chatbot works best for providing basic customer support and automating simple tasks when you can predict the questions customers may ask you. Since they operate on a fixed set of commands and can only respond to inquiries that match their programmed logic, they can fall short when faced with complex customer questions.
Businesses with complex requirements may need to go for more robust types of chatbots.
AI-powered chatbots
While the first two chatbot types are restricted in the range of customer inquiries they can handle, AI-powered chatbots utilize machine learning (ML), deep learning (DL), and natural language processing (NLP) to understand a wider range of inquiries, regardless of how they're phrased, and respond to them more naturally and contextually. They learn from customer interactions over time, making conversations better as time passes.
AI-powered chatbots are rapidly gaining traction in various sectors due to their ability to provide sophisticated, context-aware interactions that feel more human-like. Their capacity to adapt based on user feedback to create a more personal experience makes them an invaluable asset for businesses looking to create more meaningful customer relationships.
Types of AI chatbots
Based on how they work and their use cases, there are two types of AI chatbots: knowledge base chatbots and generative AI chatbots.
Knowledge base chatbots/FAQ chatbots
AI-powered knowledge base chatbots, also called FAQ chatbots, are designed to respond to frequently asked questions with answers sourced from your knowledge base. They use natural language understanding (NLU) to understand the intent of the customer's inquiry and are able to understand questions regardless of how they're phrased.
FAQ chatbots are dependent on your knowledge base for responding to questions and can't formulate responses on their own.
Generative AI chatbots
Generative AI chatbots understand customer inquiries and respond to them in natural language using natural language generation (NLG). This type of AI bot stands out in their unique ability to respond to customers in matching their style of conversation, making the conversation feel human. While all AI chatbot conversations feel human-like, the distinguishing factor about generative AI chatbots and others is their ability to create new, contextual content as outputs.
Hybrid chatbots
A hybrid chatbot combines the capabilities of rule-based chatbots and AI chatbots to leverage the strengths of both types of chatbots and minimize their drawbacks. They can follow a predetermined decision tree logic for straightforward questions that were accounted for while building the bot, and use AI for more complex questions. This allows them to respond to a wider range of inquiries than rule-based and AI chatbots.
Voice chatbots
Voice chatbots utilize voice recognition technology and NLP to interpret and respond to spoken commands. They can assist users while providing a hands-free experience, making them popular in virtual assistants in smart devices.
How do chatbots help in customer engagement?
Chatbots play a vital role in enhancing customer engagement by providing immediate responses to inquiries, guiding users through complex processes, and offering personalized recommendations by analyzing customer data and trends. They can be added to various communication channels like websites, mobile apps, instant messaging apps like WhatsApp, Facebook Messenger, Instagram, and the like, and can provide around-the-clock assistance to customers, allowing them to engage with the brand at their convenience.
Chatbots can also initiate conversations with customers based on specific triggers, such as a prolonged period of inactivity on a website or a user adding items to a cart without completing the purchase, to nudge them into action.
By providing consistent, reliable, and personalized interactions, chatbots can help customers feel valued, foster a strong affinity for the brand, and ultimately drive loyalty and growth. This, in turn, helps businesses reach their goals faster by retaining customers and increasing their profits.
Common use cases for chatbots
Chatbots have found a wide array of uses across industries. Here are some popular chatbot use cases.
eCommerce: Chatbots can assist customers in finding the products they're looking for, tracking orders, and can even offer personalized product recommendations based on their history. They can also remind customers about abandoned carts or inform them when a product on their wish list is available at a discount.
Travel: Chatbots can help customers plan trips, create itineraries, book tickets and accommodations, reschedule, or even cancel their bookings.
Healthcare: Chatbots can help patients book doctor appointments, schedule procedures, and help get answers to FAQs like how to prepare for a test or a procedure, after-care, insurance coverage on procedures, and more.
Education: Educational institutions can use chatbots to answer student inquiries, help students with course registration, track attendance, and even facilitating one-on-one tutoring .
Financial services: In companies offering financial services, chatbots can be used to help customers find interest rates, get more information on various financial products, track loan application statuses, basic analysis of different schemes, and even schedule appointments with financial advisors for further help.
Check out our detailed article for more chatbot use cases and for a deeper dive into specific chatbot use cases mentioned above and how they can help your business.
How to choose the best type of chatbot for your business
When selecting a chatbot for your business, consider the following factors.
Purpose: Determine what you want the chatbot to achieve, whether it’s customer support, lead generation, or providing information.
Complexity of inquiries: Assess the complexity of customer inquiries your chatbot needs to handle. For straightforward questions that can be predicted, go for rule-based chatbots, and for more complex needs, opt for AI-powered or hybrid chatbots.
User experience: Consider how your users would like to interact with the bot.
Long-term view: Consider a chatbot type that would suit your business as it grows.
Budget and resources: Assess both the upfront investment to set up the bot and the long-term maintenance and scaling costs.
How to create a chatbot with Zoho SalesIQ
Zoho SalesIQ offers a powerful chatbot builder—Zobot—that enables businesses to create customized chatbots tailored to their specific needs. Whether you’re a developer looking for more control or a non-technical user seeking an easy setup, SalesIQ has you covered. There are two ways you can build menu-based and rule-based chatbots with SalesIQ.
No-code chatbot builder: This user-friendly interface is designed for those without technical expertise. It allows you to create no-code chatbots using prebuilt chatbot elements in a drag-and-drop interface—think of it like a building block set for chatbot building.
Scripted chatbot builder: For those with coding experience, the scripted chatbot builder allows for greater flexibility and customization. This option is ideal for developers looking to create more sophisticated bots.
Check out this help article to learn how to create a chatbot using Zobot.
Zoho SalesIQ also features Answer Bot, a prebuilt, AI-powered knowledge base chatbot that understands and responds to frequently asked questions using your knowledge base. It can also be integrated with a rule-based chatbot built using the no-code or scripted builder to make it a hybrid chatbot.
SalesIQ's chatbots can be deployed across messaging channels like websites, mobile apps, WhatsApp, Instagram, Facebook, LINE, and WeChat; we also support 30 languages letting you build multilingual chatbots that can detect the language of incoming messages and respond in the customer's language.
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