AI chatbot: advantages and tips for companies

What is an AI Chatbot?

An AI chatbot is technology that uses natural language processing (NLP) to understand, process and respond to queries in a targeted manner. NLP allows the bot to use commonly understood language in near real time as it interacts with the user.

Machine learning (ML; deep learning) can be used with the bots. This allows them to learn from interactions with users and provide ever better answers. They can provide answers and solve problems without being given specific instructions.

AI chatbots can work with users either through written or voice messaging. Because of this, they make information management fast, intuitive and interaction-based. They also improve the quality and relevance of the content provided.

Chatbots based on artificial intelligence are primarily used in customer service. They are also used in online retail, education and healthcare, for example.

There are many use cases for AI chatbots. A typical use case is to answer frequently asked questions, because the AI access the knowledge base and makes answers quick and easy. This makes digital self-service even more efficient. AI chatbots also handle support requests. They can even schedule appointments, provide technical support or recommend specific products.

Regardless of the use case, the aim is always to have conversations that are as natural as possible and to adapt to the situation at hand. In short: users should feel as if they are communicating with a human being.

It’s Different From a Rule-Based Chatbot

A distinction must be made between AI bots and rule-based chatbots. The latter do not rely on natural language processing and machine learning, but are based on scripts. Rule-based chatbots can only provide predefined answers programmed by developers. This makes it possible to answer simple questions, but it is not sufficient for complex issues.

Such rule-based chatbots can answer a limited number of questions and are something like an interactive knowledge base. A bot without AI enables nothing more than chat-based access to existing texts. In contrast, the AI chatbot is able to recognize intentions and semantics clearly.

Background: Development of Artificial Intelligence

Artificial intelligence has been around for longer than is generally known. It dates back to 1950, when Alan Turing published his article “Computing Machinery and Intelligence” and proposed the so-called Turing test to assess the intelligence of machines. The Dartmouth Conference, on the other hand, is considered the birth of modern artificial intelligence, as it was there that systemic research and development in this field was initiated.

Even though research continued to develop over the following decades, AI only really took off thanks to powerful computers and algorithms. It has only become a household term for people thanks to the spread of generative artificial intelligence (meaning that content, ideas, and more can be created by the AI itself.) In recent years, ChatGPT was most notably launched at the end of 2022.

Chatbots are now a common application of artificial intelligence. Artificial intelligence, however, has many other uses such as image generation and editing, music creation, analysis and prediction, summaries, automation and autonomous systems, or network intelligence and optimization.

How an AI Chatbot Works

We have already seen that AI chatbots can offer users numerous advantages that classic customer service or a simple, non-AI-supported chatbot cannot. One is constant availability. The second is intelligence, which is reflected in contextual awareness, situational connections, personalization and the recognition of intention.

Natural Language Understanding and Machine Learning

It is precisely this intelligence that forms the basis of AI-based chatbots. The following building blocks are crucial for this:

1. Natural language understanding (NLU) and natural language processing (NLP)
2. Machine learning and deep learning

The former allows the AI to recognize needs and intentions. The latter enables progress and differentiation. Ultimately, the chatbot can understand the user’s intentions and answer questions in a targeted manner, constantly improving over time with more and more usage data.

For instance, plenty of people are familiar with the principle of deep learning because of the translation service and AI typing assistant, DeepL. DeepL becomes increasingly nuanced and accurate the more it is used. The result is effective and satisfying communication in natural language.

Use of an AI Chatbot – From Input to Learning

In detail, using an AI-based chatbot consists of the following steps:

1. Capture the input – An initial prompt is entered either via a chat application or a voice assistant.
2. Natural language processing (NLP) – The bot analyzes the input using NLP algorithms.
3. Process the input – The bot processes the request and designs a response according to predefined rules or through machine learning.
4. Contextual awareness – Advanced bots recognize the context and adapt the response accordingly.
5. Response generation – The bot generates a response according to the user’s intention and the extracted information.
6. Output the answer – Depending on the user interface, the bot outputs the answer in writing or spoken language.
7. Learn and improve – The AI bot learns from every interaction and can adapt and improve accordingly.

What Advantages Does an AI Chatbot Offer?

The hype surrounding artificial intelligence and chatbots is huge. For many businesses and private individuals, that is already reason enough to take a closer look at AI chatbots. In other words, the technological development itself is putting pressure on companies and consumers to keep up and stay ahead of the curve.

That said, there are plenty of good reasons to take a closer look at AI-powered chatbots. Used correctly, they enable efficient work and better service.

Below is an overview of the key benefits that companies can reap from AI chatbot technology.

Benefit #1: Greater efficiency

AI-based chatbots increase efficiency in several ways. They enable users to receive satisfactory answers and results more quickly. They have an advantage over human interaction in terms of consistency and constant availability.

On the other hand, employees become relieved from many simple and routine tasks because AI is providing those answers. They can instead focus on more complex and creative tasks. This increases added value and enables companies to more efficiently achieve measurable results such as the fulfillment of KPIs.

Benefit #2: Better user experience

It’s hard for traditional service teams to be available 24/7 and answer all channels. AI chatbots can help with this.

Chatbots reduce friction for users who need to get in touch with companies. Contact no longer has to be made exclusively via phone calls (including the hotline) or emails that quickly disappear into someone’s inbox. And, it’s available anytime.

Users can easily interact with an intelligent chatbot and gain important insights and information. Afterwards, a service employee can still be contacted if the issue is more complex and has not yet been resolved.

In detail, this means the following:

1. Customers get an additional option for contacting the team.
2. Customer service is always available.
3. Inquiries are processed more quickly, which increases customer satisfaction.
4. Chatbots and human contact can go hand in hand.
5. Customers have plenty of opportunities to acquire knowledge, which also makes it easier for support staff to contact them later.

Benefit #3: Cost savings

Companies that use AI bots can save – sometimes a lot – on costs. Companies are already fundamentally redesigning their customer service and relying on AI-supported concepts. (Note: This does not necessarily mean that humans become superfluous: Instead, it simply changes the way in which people work.)

One often-cited concept is to use AI primarily for self-service. It becomes the first point of contact. Later, a human employee takes over the interaction, clarifying details and working out individual solutions with clients. This necessitates fewer first level support personnel.

In principle, the more experienced and better qualified employees are, the more likely they are to prove indispensable for companies – even with effective use of chatbots.

The limits of AI, therefore, lie in the fact that it cannot replace employees in cases where in-depth knowledge is required. However, it can effectively support them, which indirectly saves costs.

Benefit #4: Personalized interactions

Personalization is something we associate most often with human contact – not generally with AI. But in reality, using AI offers the opportunity to act in a much more personalized way than people can.

This is possible because AI chatbots analyze user data and interact accordingly. On this basis, they can, for example, make relevant recommendations or reveal information that matches the interests and behavior of the respective user.

Benefit #5: Scalability

AI chatbots allow companies to make their service and support quickly available to more users. As a company grows, more and more requests are received by support.

In traditional customer service, this would be a problem because new service employees would have to be hired and trained. A bot, however, can easily cope with the increased volume.

AI bots can also expand service by providing an additional point of contact that is available to customers at any time, from any location, without any waiting times.

Overview: AI Chatbots in Different Business Areas

This section provides a brief overview of AI chatbot application areas. While the possibilities are nearly endless for using AI, many have yet to be developed. Still, there are some areas that are AI pioneers.

These are the sectors in which AI bots are now increasingly being used:

• E-commerce
• Education and e-learning
• IT and IT service management
• Tourism and transportation
• Publishing houses
• Energy industry
• Financial industry
• Insurance

Below are three examples of how these sectors are already benefitting from AI bots.

Customer Service – The AI Pioneer

Chatbots are now entrenched in the customer service and support sector. They make customer contact faster, easier, clearer and more informative. As a result, customer concerns are processed more efficiently using AI bots. Customers are more satisfied, because providers can resolve their concerns in an uncomplicated and effective manner.

For companies, a well-functioning chatbot leads to many benefits:

• Recommendations based on positive customer experiences
• Greater efficiency through optimized resource management
• Time savings and lower costs
• A modern brand image
• Acquisition of important customer data

Sales and Marketing – Partially Automated Customer Experiences

More and more companies are also relying on AI-supported chatbots in sales and marketing.

Chatbots offer easy access for interested parties to make initial contact in a pleasant non-binding way. Website visitors are more likely to actually make contact when there isn’t a big commitment to doing so. This means that companies can gain more leads by implementing intelligent bots.

Especially for products and services that require explanation or higher potential investments, it is particularly important that prospective customers get in touch with a sales representative as quickly as possible. Chatbots help to facilitate this.

AI technology can also be used for marketing purposes. For example, they can be used to extract data or integrate online activities, such as a quiz.

AI in ITSM – A Wealth of Possibilities

AI in ITSM is a widespread trend that Gartner highlighted back in 2018. Above all, companies benefit from time and cost savings due to the optimized use of resources. Employees can work more creatively and strategically. Thus, value creation increases.

Artificial intelligence in ITSM promises significantly greater efficiency in the future, with chatbots initially processing simple requests independently. Possible use cases include first-level support, problem management and process optimization. Chatbots could automate routine tasks, improve service delivery and make life easier for everyone involved.

Tips: The Effective Use of Artificial Intelligence in Chat

Implementing an AI chatbot makes a lot of sense and benefits companies in the aforementioned ways. However, the purpose and details of its use should be carefully considered. After all, a bot should meet the specific company requirements in order to achieve the desired effects.

Such a tool is simply an instrument to achieve relevant goals. The following tips serve as guidance to companies so they can make the best possible use of AI technology.

• Define clear goals: The implementation of AI technology is often seen as a solution per se. However, it is not. It must serve clear goals and be effectively implemented in order to become a profitable tool. The tasks should, therefore, be outlined in granular terms and specific use cases should be defined – whether it’s for support, customer advice, sales or marketing.
• Choose the right platform: There are now plenty of platforms and tools for developing or integrating AI chatbots. Of course, these must meet the respective requirements and offer the desired functions. For example, natural language processing, good learning ability, interfaces to other systems (API) or the analysis of user data are important.
• Design an intuitive user interface: We are all quick to abandon things if they are too cumbersome to use. Simplicity of design and intuitive structures are keys to ensuring that users enjoy accessing a bot.
• Constantly train the bot: Just as humans need to train our muscles and brains regularly in order to perform well so to do bots. In the case of AI chatbots, the main factors here are accuracy, responsiveness and contextual awareness. Thinking one step further, a bot also needs input – in the form of helpful user data – in order to adapt to new trends and requirements.
• Maintaining human service: Modern AI chatbots can do an amazing amount in many cases, but they cannot completely replace human contact. It should not be the intention of companies to completely replace interpersonal interactions with bots. Rather, they should achieve a vital symbiosis. In some cases, direct contact with an employee is necessary, such as when an issue in question is too personal or requires new research.
• Ensure performance: A chatbot should be efficient in the long term and continuously provide users with good service. To this end, it can be helpful to collect feedback and analyze interaction data. A bot also needs to be kept up to date so that it can keep pace with changing requirements and trends.

All in all, AI chatbots are a justified trend, but companies should not chase after it without a second thought. Instead, they should specifically analyze how and in which areas they can derive the greatest possible benefits from this technology.

Conclusion: AI Chatbots Offer High Added Value

Artificial intelligence has been around as a concept for quite some time, but has only gained enormous popularity in recent years. AI applications are now an integral part of everyday life and can be found in an increasing number of areas. For example, using AI-supported voice assistants has been part of everyday life for plenty of people for some time now.

AI chatbots are gaining strong momentum and represent a major gain for the corporate world, especially in customer service. They can also lead to high efficiency gains for internal use. Used correctly, they quickly pay off for companies.

An important factor is natural language understanding and, even more so, deep learning. Using these, AI-supported bots not only create intuitive and everyday interactions, but also deliver perfect results and user experiences.

By recognizing intentions, adapting to situations and contexts, and continuously improving with new relevant data, a chatbot creates high added value.

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