As the world becomes more and more digitized, so too does the way we communicate with each other and with brands. Chatbots are one of the most exciting ways to communicate with others, and they’re only getting more and more popular globally. But how many different types of chatbots are there? The answer is simple. According to their purpose, functionalities, and place of implementation – there are many types that a business itself decides what to choose to further grow.
There are four main types of chatbots according to their functionalities:
Basic chatbots
Basic chatbots are designed to handle simple, repetitive tasks. They are typically used in customer service environments to respond to specific commands, and they are not capable of carrying on a conversation. Basic chatbots include only predefined information – carousels with cards, images, texts, forms to fill out, and buttons to click on, but cannot answer customer questions.
Although they cannot carry on a conversation, they could be used for giving important information, educational tips, news, showing products and services, and for filling out forms with buttons for a request or contacting the business, etc.
For example, Danexo (a small business, an online car parts store) in Bulgaria, has a chatbot, that helps potential business partners request an account, and individual customers to place an order for a part – mainly forms are used and images with texts, without conversational AI – a pretty basic chatbot with basic functionalities, but the chatbot does its job perfectly for the problem it was assigned to solve – eliminate the phone calls for routine inquiries.
Rule-based chatbots
Rule-based chatbots are more complicated than the basic ones, because they need certain rules to give something to the user. They use flows to guide customers to predefined answers so to direct them to a specific section in the bot. They are good for simple questions such as yes or no, or to book something, make an order or make a request and etc.
The big advantage they have is that they do not need training which makes the process of creation and implementation easy and fast.
The challenges they meet are that these chatbots cannot recognize customer questions or work only based on keywords (provide answers based on a keyword identified in the customer question) which can lead to frustrated customers and a bad experience with the brand. Therefore, they feel more robotic than AI chatbots and the experience is not as natural as people would want it to be.
Chatbots with conversational artificial intelligence
An AI-based chatbot is a chatbot that uses conversational artificial intelligence (AI) to provide its responses. AI chatbots simulate a human conversation by recognizing the message received by a user and providing an appropriate response provided by the business itself.
AI chatbots can perform a variety of tasks from answering frequently asked questions to automating reservations and meetings, product and service inquiries, gathering customer information, questionnaires, and many more. They are often used in customer service environments to handle more complex customer queries, also for marketing and sales, and many other industry-related purposes.
AI chatbot technology is much more advanced and developed now. AI market continues growing and in the next few years it will grow from USD 86.9 billion in 2022 to USD 407.0 billion by 2027, at a Compound Annual Growth Rate (CAGR) of 36.2% during the forecast period. In addition, the chatbot market size is expected to reach USD 8 billion by 2030. The market is expected to expand at a CAGR of 25.7% from 2022 to 2030. That are very big numbers, so chatbots are here to stay!
One great example of a chatbot with artificial intelligence is the hotel AI chatbot of hotel complex Izgreva which with only 10 months of work has communicated with over 12,600 customers with over 71,000 customer interactions in the bot. The hotel AI chatbot guides the guests on how to make a reservation, answers the most frequently asked questions about the hotel services and surroundings, and assists in Bulgarian and English to help guests from different countries. The hotel AI chatbot helps guests from over 13 countries to make their reservations and from the beginning of its implementation, it had over 700 successful customer inquiries for a small family hotel.
Voice AI assistants
Voice AI assistants are intelligent software programs that allow users to interact with a business through voice commands. They operate like virtual assistants or AI chatbots, but with added voice assistance – users can simply ask their questions and hear the answer.
This makes them a powerful tool for businesses, as they can provide customers with an easy, convenient, and effective way to interact with a business through voice. This may be the preferred way to communicate with a business when users want to share the answer with a friend, family or other to hear it, need to talk with the brand when their hands are occupied and cannot text, or simply because there is not enough light to text, as well for customers with vision issues.
Hybrid chatbots
Hybrid chatbots can be a combination of basic, rule-based, AI chatbots and voice assistants. They are programmed to provide specific information accessible through clicking and scrolling, but they can also access a database of information and retrieve answers to specific questions. For example, a hybrid chatbot could be programmed with both rules and AI, making it more flexible and capable than either type of chatbot on its own. They are mostly used by businesses that have bigger goals and more specific needs that require more functionalities and sometimes custom integrations.
There are many types of chatbots according to what they can be used for:
Customer service chatbots
Customer service chatbots are designed to help customers with questions or issues they may have. These chatbots can be used to answer frequently asked questions, provide customer support, upsell products and services and provide relevant information when needed. They are often used to help employees with routine tasks, so they can have more time for the more complex ones. So chatbots can help save time to the business staff and can work as a digital employee on full-time duty 24/7/365.
Chatbots that are used for customer service and support also provide self-service options for users, save their time to actually go to an office or wait for a phone call from a customer service agent, and are good for customer data collection and employees’ motivation.
A perfect example of a customer service chatbot is the one of the international travel company TEZ Tour which organizes trips in Bulgaria and abroad. Their chatbot TEZBot saved an average of 12 minutes per customer in the Marketing Department and in the Reservations Department or over 850 working hours to the staff. TEZBot also took the night shifts with an average of 35% of all inquiries being after 18:00pm with night peak in communication with the chatbot 20:00-23:00. The chatbot also helps during the weekends and holidays which results in many working hours saved to the staff to take over the more complex tasks.
Chatbots for marketing
Marketing chatbots are used to promote and sell products and services. These chatbots can be used to launch marketing campaigns by sending promotional messages, offering discounts and promo codes, for newsletter subscriptions, creating different quizzes and games and etc. Chatbots for marketing of a company could help to attract new leads and prospects, help with the retention of current customers, and help with different promotions of the business products and services.
One example of a chatbot for marketing is the chatbot of Queen’s (part of Tymbark Bulgaria which is part of the Maspex Wadowice Group – one of the largest food and beverage companies in Central and Eastern Europe). CapBot is a purebred marketing chatbot and has another mission: to entertain users, inspire them every day and be 1 click away when they want to have a casual chat with someone. The fans of the brand start their day with a smile with the chatbot – with a good fortune saying from it: “Love like there is no tomorrow!”, “Believe in the impossible!”, “Everything is in your hands”… and also users can easily take a quiz or have a casual chat with the chatbot. For those who want to connect with a real person, it is just one click away – the chatbot will provide a form for contact.
In addition, conversational marketing is a growing trend nowadays. It relies on chatbots and messaging apps to engage with customers on specific topics. Conversational marketing also uses intelligent chatbots to engage with users 24/7/365, empowers customers throughout their journey, and helps companies build strong relationships, pipelines, and revenue through the best user experiences.
Chatbots for sales
Chatbots for sales are used so companies sell their products and services in a more innovative way. They are also used to guide customers throughout their buying journey and help them find what they are looking for to make a conversion.
Conversational commerce (selling through SMS, chatbots, and smart speakers) is one of the fastest-growing and most popular trends along with conversational marketing in marketing and sales globally. It is one of the fastest adoption ways to improve your marketing and sales for your company overall. From 2020 to 2025, a 590% growth is expected with 50% of sales in conversational commerce happening in chatbots. It already changes the way we shop, buy, and interact with brands.
Conversational commerce is also a way for businesses to engage with their customers on social media platforms such as Facebook Messenger, WhatsApp, WeChat, through SMS, smart speakers, or engage them via AI chatbots on the business website. With an AI chatbot on the business website used for conversational commerce, the whole sales funnel can be closed – from the first interaction to the actual order.
Another advantage of conversational commerce is that it can be used anywhere at any time. Customers can message a business through the chatbot widget on their phone or laptop without downloading or installing any additional application and receive a response within seconds. This is especially useful for customers who are in the store and have questions about a product or service but don’t want to interrupt their shopping experience by going up to the cashier, searching for a customer service agent, or waiting in a queue.
One more advantage of conversational commerce is that it can be personalized according to customer preferences. Conversing with customers through AI chatbots allows businesses to learn about what products they like, what they think of the company’s services, what they search for the most, when, and how. These live statistics can be analyzed to understand customers better and to be used for marketing and sales purposes, to provide better products and services, and for the growth of the whole business.
Educational chatbots
Educational chatbots are used to provide educational content to users. These chatbots can be used to provide course materials, answer questions according to different topics, teach a skill, show many tips and tricks and etc. They can also be used for showing the news, scientific events, and materials, guiding users on what to read, and many others. Educational chatbots are used by EdTech companies, universities, schools, libraries, or any other educational institutes to help their users learn what they need or teach them something new, for administrative tasks and terms.
One example is the digital librarian Ellie of the Varna Regional Library which takes care of the requests for re-assignment of borrowed literature and helps with the exponential increase in communication between readers and the library through the AI chatbot. Ellie saves time to at least 2 librarians, and the employees who have performed these activities can be redirected to other tasks that correspond to their qualifications.
Industry related chatbots
Industry-related chatbots mean that they give information or are designed for a specific industry or type of business – healthcare, retail, real estate, financial services, hospitality and tourism, e-commerce, etc.
Healthcare
There are various chatbots being used in healthcare, from providing reminders about appointments and medication to helping patients manage their chronic conditions and giving advice.
Retail and e-commerce
Chatbots are being used in retail and e-commerce to help customers find products and services by providing them with more personalized recommendations, help with answering FAQs, and other tasks.
Banking
There are many chatbots being used in banking, from helping customers manage their accounts to providing them with fraud alerts or checking their financial status.
Tourism
Many chatbots are also being used in tourism, from helping customers find flights and hotels to providing them with trip itineraries, room bookings, sightseeing, answering customer questions about hotel or tour services, and more.
Virtual assistants
These AI assistants reside on digital assistant platforms such as Amazon Alexa, Apple Siri, Google Assistant, IBM Watson, and others. They are generally used for personal tasks such as setting alarms, adding items to to-do lists, playing music, and many other commands. They are much different than AI chatbots because they take care of the personal needs of a user and perform tasks according to the specific commands of the users.
Types of chatbots according to the place of implementation:
Chatbots for websites
These chatbots reside on a company’s website. They are generally used to answer questions about the company, its products/services and upgrade the site, and what the business provides there as information. The website is the most important place of the business’s digital presence, and it is quite essential to be designed well with clear and useful information and an easy-to-navigate interface for the best user experience. In 2020, according to global research, 43% of chatbots are found on business sites, and the trend is going to stretch this percentage at the expense of social media chatbots.
Implementing a chatbot on it could upgrade the website so visitors will not only find out information more easily about the company, its products, and services but also get their questions always answered and find exactly what they are looking for.
One example of a chatbot on the business website is the AI chatbot of the 5-star hotel Casa di Fiore SPA & Medical – Miss Fiore, which assists the guests with information about the hotel services, help them book a room, to take advantage of a special offer, to find an answer to any question about the hotel and its facilities. In 2022, Miss Fiore was in touch with over 83,000 users, with over 540,000 interactions from them. The hotel chatbot had over 4000 customer interactions on its busiest day.
Social media chatbots
Social media chatbots are used to interact with customers on social media platforms. These chatbots can be used to answer questions, provide customer support, or even promote products and services. There are a variety of chatbot platforms that businesses can use to create and deploy chatbots. The most popular chatbot platforms are focused on Facebook Messenger, Slack, Telegram, WhatsApp, Viber, etc.
People used to exchange messages with family, friends, and brands through messenger platforms (they also have many restrictions with regards to the chatbot implementation and usage) and it is easy for the business to direct customers there. However, chatbots on such social media platforms distract customers from the business site, where the actual sales and conversion happen. So, when it comes to business communication with the customers, the company needs to choose one that fits best the company’s main goals and needs.
Chatbots for mobile apps
There are businesses that create their own mobile apps for their products and services and also provide chatbot assistance for customer service and support in their app. However, these are much more expensive solutions and need more time for creation and implementation than a chatbot on the website or in a social media account. Also, users already have many mobile apps on their phones and another one could be much for them, so you must choose wisely if you will succeed in making them download, install, and learn the new app and chat with the chatbot in it.
Which chatbot is right for your business?
It’s impossible to provide a single answer to this question as success depends on the specific goals of the chatbot, as well as the industry, company, and even team developing it. When you’re looking to add a chatbot to your business, it’s important to first understand the different types that exist, then their pros and cons to decide which one would be the most appropriate for your company.
Each chatbot has its own strengths and weaknesses, so it’s important to select the right one for your specific goals and needs. But no matter what type of business you have, there is always a type of chatbot that can help you grow your business at its best!
Sources:
1) Research and Markets – Artificial Intelligence Market by Offering (Hardware, Software, Services), Technology (Machine Learning, Natural Language Processing), Deployment Mode, Organization Size, Business Function (Law, Security), Vertical and Region – Global forecast to 2027 report
2) Research and Markets – Global Chatbot Market Size, Share & Trends Analysis Report by End Use (Large Enterprises, Medium Enterprises), by Application, by Type, by Product Landscape, by Vertical, by Region, and Segment Forecasts, 2022-2030
3) Juniper Research – Conversational Commerce research report 2021-2025
4) Juniper Research whitepaper – Why Chatbots Are Essential to Retail (2020)