The Ultimate Guide to Chatbots in Business

Chatbots started out as a trend, but unlike tiny flip phones and Myspace, they’re here to stay.

Adaptability is a primary appeal of these digital assistants. A well-designed chatbot can be customized to serve your company’s particular needs, such as reducing service costs and working as an efficient member of your support team.

As more and more services switch to digital, namely customer support, chatbots are at their side. Advancements in artificial intelligence and natural language processing make this possible.

This means chatbots aren’t just a time waster anymore; they’re employees. With a clear vision and careful planning, you can create a chatbot that effortlessly assists your agents and customers across channels.

This guide will cover everything you need to know to get started.

  1. What are chatbots?
  2. What are the benefits of chatbots?
  3. How do chatbots work?
  4. Can chatbots replace humans?
  5. Do you need a chatbot?
  6. How to create a chatbot
  7. Build your chatbot with Userlike

What are chatbots?

Chatbot illustration.

Short for chat robot, a chatbot is a computer program that simulates human conversations. It interacts with users through instant messaging, artificially replicating the pattern of human communication.

Chatbots have been around since the 1960s. Conversational ELIZA was the first chatbot created by MIT professor Joseph Weizenbaum. In recent years, chatbots are taking on a more professional role as digital assistants for a variety of industries.

What are the benefits of chatbots?

If you’re on the fence about the value of chatbots or need a little more clarity, then here are the top benefits you can likely expect from using your own chatbot.

For businesses

  1. Boosts customer engagement: Your website has 20 seconds max to keep a visitor’s attention. Just like an in-store assistant, a proactive chatbot can immediately reach out to your customers and guide them through your sales funnel.
  2. Automates simple tasks: Chatbots can alleviate your service agents from performing repetitive tasks like scheduling appointments, sending reminders or collecting customer feedback. It can also help qualify leads and forward them to your agents for follow-up.
  3. Cuts down service costs: Chatbots can’t replace agents, but they can help cut down your business’ service costs by up to 30%. They respond quickly to simple customer support inquiries, freeing up time for your human agents.
  4. Pairs well with live chat: Using a chatbot connected to your live chat solution makes handovers quick and easy. Agents can also monitor the chatbot’s performance and chats from the message center.
  5. Userlike chatbot on language school website
    Language center Berlitz uses a Userlike chatbot to greet customers and offer help, or forward them to the right support team.
  6. Available 24/7: Chatbots can provide instant, real-time assistance whenever. If your customers are active after business hours, chatbots can assist by answering simple questions and recommending product pages, blog posts and tutorials.
  7. Gives your company a voice: When face-to-face contact isn’t possible, chatbots can help shape customers’ perception of your company. You have full creative control over your chatbot so you can edit its voice, appearance and tone to fit your brand image.
  8. Easy to maintain: Once you get past the initial setup, you can easily monitor your chatbot’s conversations and improve its performance based on new insights.

For customers

  1. Quick responses: Chatbots respond almost instantly, which means customers don’t need to wait in a queue just to ask a simple question.
  2. Easily accessible: A chatbot can be available on every page of your website or via messaging apps, making it easy for customers to access when they get stuck. If the request is too complex, a chatbot can connect the visitor to an agent immediately.
  3. Group of cartoon chatbots
  4. 24/7 availability: This benefit goes both ways. For late night shoppers or customers with tight schedules, chatbots become portable digital helpers. Customers can start conversations at any time and respond when it’s convenient for them.
  5. Relaxed conversation: For many customers, speaking to a chatbot may be easier than with a service rep because there’s no pressure to be conversationally engaged. Customers can skip the niceties and be blunt with their questions, which keeps the conversation quick.
  6. Direct and personal: Chatbots can’t pick up on nuances in conversation, but they can be trained to address customers by name and make personalized recommendations.

To learn more about chatbot consumer perceptions, watch our video:

Relevant articles:

How do chatbots work?

There are three main types of chatbots: rule-based, keyword recognition-based and contextual. Each has the same goal of figuring out what the customer needs and helping them to the best of its ability, but with different approaches.

A rule-based chatbot is preprogrammed to follow a flow map in response to the user’s request. These maps can be either simple or complex depending on the platform and what the company designs. This type of chatbot often uses a menu or buttons to converse with the user.

A keyword recognition-based chatbot works similarly to rule-based chatbots, but is programmed to also recognize certain keywords. From there, the chatbot makes decisions and gives answers based on its internal knowledge of that keyword.

A contextual chatbot can have free-flowing conversations. It “understands” and remembers context so you can jump from topic to topic and it will often be able to keep up. They can also follow mapped conversation flows, but they are often looser and open for topic deviation.

Graph showing the increase in user experience dependent on chatbot quality.

Advanced artificial intelligence helps a chatbot make informed decisions and learn from conversations, and natural language processing helps a chatbot understand intent and context. This is why some chatbots are seemingly “more intelligent” than others. It all depends on the chatbot’s model, internal knowledge base and programming.

Some chatbots, especially in business, are AI hybrids that understand natural language but use button options and keyword recognition to guide the customer conversation.

The ultimate chatbot guide for businesses

Learn how chatbots work, what they can do for you, how to create one - and if bots will steal our jobs.

Download for free

Can chatbots replace humans?

A chatbot is only as successful and helpful as a business or provider makes it to be. If you spend more time (and likely money) on its development, then you get more out of it.

But it’s important to understand that every type of chatbot has limitations and cannot replace human agents.

Chatbots make great assistants however, and have made a positive impact on businesses and customers alike. For example:

  1. Capital One created the chatbot “Eno” to improve its relationship with its banking customers. Eno alerts customers about suspicious transactions, duplicate charges and unusually high spending. The contextual chatbot even helped identify almost $2 billion in tax-deductible charitable donations from customers’ accounts.
  2. Woebot is a self-care chatbot that was created to make mental health more accessible. In collaboration with Stanford University, clinical psychologists created the companion, which was proven to help reduce depression symptoms in just two weeks.
  3. BRUce assists people traveling through Brussels Airport. It’s available on multiple channels, such as WhatsApp and Messenger, so travelers don’t have to be on the website to chat. Bruce can tell you which shops and restaurants are near your gate, help you book a parking pass and give real-time updates on your flight.

Relevant articles:

Do you need a chatbot?

There are mixed messages online about the necessity of chatbots. Some articles say they improve customer service, others say they kill it.

To get some clarity, we created a survey to ask consumers how they truly feel about chatbots. They’re the ones using them after all. We learned that people enjoy how quickly a chatbot responds, and are even interested in talking to a chatbot first instead of waiting for an agent.

Many respondents even said that they trust chatbots with basic requests, such as paying a bill or checking their order status. However, respondents also reported that some issues and questions were misunderstood by a chatbot and needed to be forwarded to an agent.

Creating a chatbot can also be an expensive and lengthy process. Considering all the latest advancements in AI, you may want a chatbot that speaks like a human and effortlessly completes tasks. But as Margaret Mayer, VP of Software Engineering at Capital One said, “the easiest-to-use technologies are the hardest to build.”

Here are some things to consider before creating a chatbot:

  1. Assess your company’s needs: Does your team need help with answering simple questions, qualifying leads, engaging customers on your website, promoting products or scheduling calls? If a chatbot took these types of tasks over, would it fit your brand persona and customer base?
  2. Determine if you have enough data: If you’re a newer company, you may not have enough site visitors or website activity for a chatbot. If you want to improve your online presence but have never used chatting as a contact channel, live chat may be the better option.
  3. See if it fits into your budget: Do you have champagne taste but a beer budget? Cost-friendly, rule-based chatbots work well for many businesses, but lack in service features and natural language processing. Find out if you can afford what you’re looking for.
  4. Ask if your team can help manage it: Chatbots work independently, but they still need to be monitored. Can you or your agents spare time to oversee your chatbot’s performance?

Relevant articles:

  1. 8 Ways to Know if You Need a Chatbot For Your Business
  2. 10 Must-Try Chatbot Providers for Every Budget
  3. 4-Step Formula for Calculating Your Chatbot ROI
  4. 5 Realistic Customer Service Trends for 2021
  5. AI-Powered Customer Service — Hopes, Doubts and Applications

How to create a chatbot

Creating a chatbot gives you a lot of creative freedom, which can be exciting or intimidating (or both) depending on your team. We broke down the most important steps for getting started:

First, start by looking at examples of the current best chatbots. You likely have an idea of what you’d like your chatbot to take over, but looking at successful chatbots in business may spark new ideas. It’s important to know what features you need — and what would be nice to have — before looking for a provider.

Next, choose your provider or platform. Take advantage of free trials and demos to find the right chatbot provider. Read reviews about your top choices and ask their representatives for examples of companies successfully using their platform.

During the creative process, figure out your chatbot’s persona. Create a profile for your chatbot complete with its job duties, personality traits, likes and dislikes and an image.

Once it has a persona, start writing your chatbot’s script. Giving your chatbot a personality will help guide the writing process. Determine different conversation paths, write a variety of responses and ask other members of your team to chat with your bot and provide feedback.

Lastly, choose a catchy name. This step doesn’t have to come last, but it may be easier to name your chatbot once you have it. Chatbot names range from human to cutesy, so pick one that best represents your brand.

Once it’s created, test it out. After all your fine tuning is done, integrate your chatbot into your website and anywhere else you'd like to help or target customers. Once it’s live, be sure to regularly monitor its performance and make changes where necessary.

These steps will vary depending on the provider you choose. Some solutions, like our AI Automation Hub, let you get started without writing a script, creating a persona or asking a developer to set it up on your website. Intrigued? Keep reading to learn more.

Relevant articles:

Build your chatbot with Userlike

At Userlike, we have over 10 years of experience helping businesses set up their chatbots within our messaging solution. We know what to do — and what not to do — when creating and implementing your chatbot.

That’s why we built our own solution directly into our software. The AI Automation Hub uses a centralized knowledge base as a “hub” to power three customer support modules: an AI chatbot, Smart FAQ and Contact Form Suggestions.

Our AI chatbot can be used as a proactive first contact for customers, as backup for your agents or to answer requests received outside of your service hours.

The AI chatbot picks up conversations where customers left off — a perk not every chatbot platform provides. Most chatbots “reset” once you leave the website, but with the AI chatbot, customers can see their previous conversation and decide to continue it or start a new one.

Within the chat, you can use interactive features such as button options and carousels for quick navigation or to showcase your products. In-chat media also makes it easier to send important documents, such as applications and invoices.

AI chatbot talking to customers on popular messaging channels
Use the AI chatbot to talk to your customers on their favorite contact channels, like WhatsApp.

You’ll lose fewer customers by proactively approaching them with an AI chatbot that’s not only easy for customers to use, but simple for your company to implement.

In addition to our AI chatbot, we offer a Smart FAQ and Contact Form Suggestions, which pull answers from the central knowledge base full of your business data.

Both features use auto-completion to answer customer questions as they’re typing them, saving time and effort — and reducing tickets for your team.

And the best part - the AI Automation Hub doesn’t require a developer or IT experience to set it up.

Are you ready to use one powerful platform for customer messaging and automation? Sign up for a free Userlike trial to get started on setting up your new solution. We can help you get your chatbot up and running and even test it once it’s live. Just start a chat with our support team on our website after signing up or send us an email at We look forward to hearing from you! 🤖

Start your free trial.

All Userlike articles on chatbots