What is a chatbot for? Different Types of Chatbots and Their Uses

Last Updated on November 4, 2020 by Sean B

What is a Chatbot?

Before we get into the different types of chatbots and their uses, let’s talk about what they are and take a brief look at their history. Those of you who are already familiar with chatbots should feel free to skip these two sections.

A chatbot is a software that is designed to stimulate conversation with humans. A chatbot can communicate with us through text and audio. In fact, you’ve probably already communicated with chatbots various times.

Remember all those customer support guys who will welcome you to the website and ask you whether you need anything as soon as you open the website.

Yup, every one of them was likely a chatbot.

Don’t get me wrong, there are live chat services, but for most businesses, it makes sense to save the money and use a chatbot that can answer their customer’s answers 24/7 and deal with multiple customers at the same time.

This is just one example of a chatbot. If you really open your eyes, you’ll start seeing them all over the place.

Chatbots are also known as chat bots, chatterbots, bots, talkbots, IMbots, artificial conversation entities, virtual agents, and interactive agents.

The history of chatbots goes back to ELIZA, which was created in 1966. But the concept goes back even further.

Some chatbot History

The first chatbot was invented in 1966 by a computer scientist named Joseph Weizenbaum.

The name of the bot was Eliza. Joseph made a series of pranks on people in which he tricked them into thinking they were talking with a human being (they were talking to Eliza).

Learn more about the History of chatbots.

What is a Chatbot for?

The quick and easy answer is that chatbots are for interacting with your customers and providing them answers quickly and 24/7.

The real answer is that chatbots are available for a variety of uses and industries, and your use for them will vary depending on your needs.

The most basic of chatbots are typically used to help guide people to specific resources on your website. More advanced chatbots for specific industries can do things that many of you might find hard to believe. Some of these uses for chatbots are described below.

Different Types of Chatbots

There are several different types of chatbots, and they can be classified a number of different ways. I’ll discuss some of the most common types below.

1. Rules Based Chatbots

These simple chatbots follow a set of simple scripts and are limited to answering questions with preprogrammed responses. Rules Based Chatbots are also called Button Bots since acceptable inquiries are often presented as a series of clickable buttons. As you might have guessed, Rules Based Chatbots don’t require Artificial Intelligence (AI) or Natural Language Processing (NLP) in order to function, but their uses are fairly limited.

2. Skills Chatbots

As the name suggests, these bots need to perform a skill. Meaning, they need to take action in the most efficient manner.

Skill chatbots don’t need a personality, contextual awareness, or the ability to solve complicated problems. They just need to make people’s life easier, by taking prompt action on the command given by their owner

For example, when the owner says, “Turn on the AC in the guestroom.” The AC should be turned on instantly.

As you might have guessed by reading the example above, speech recognition is the essential feature in these bots. This feature saves people time, because instead of finding the remote and pressing the button, they can speak their command.

While most Skill chatbots are not designed to be aware of the context, some bots are. The users don’t have to tell the exact location to these bots.

For example, if the user is sitting in the dining room they just have to say, “bring the temperature to 70 degrees” and the chatbot, in this case a virtual assistant like Alexa, will bring the temperature of the dining room to 70°.

They don’t have to tell what room they are in or whether to reduce or increase the temperature, the contextual aware bot takes care of it all.

Contextually aware chatbots are expensive compared to the standard skill chatbots. So typically only people who are completely fascinated by the technology opt to buy the more advanced chatbots.

Transactional Chatbots are particularly good at assisting users find specific items in a large database or store.

3. Transactional Chatbots

A Transactional bot can be thought of as an assistant bot. It performs various actions on behalf of humans. The purpose of these bots is to automate and simplify various transactions.

Transaction chatbots help save both customers and companies some time and energy. Companies need not hire someone for solving transaction problems, and customers don’t need to spend hours on websites finding the answer.

These chatbots use Natural Language Processing and Symbolic AI to find and give the right response from multiple responses. Transactional bots can be used in various sectors, including e-commerce, banking, and insurance.

Here is one good example of the use of a transactional bot by Domino’s.

Domino’s uses emojis of Pizza to help the customers choose their favorite flavor. This helps customers save some time. Instead of taking multiple steps to place the order, customers just choose an emoji.

a friendly robot

4. Customer Support Chatbots

Customer Support chatbots can be Skills or Transactional in nature, but they are supposed to be knowledgeable in only one specific area.

For simplicity, a support chatbot should either take orders or provide customer support, it shouldn’t be expected to do both.

These chatbots are designed to have a personality, and an understanding of the context of the nature of support they offer. They are great for solving insignificant problems, like answering FAQs or directing users to a specific page or product.

Most support chatbots use natural language processing and deep learning to perform action. Some of them use speech recognition, which can make them more efficient, but they don’t really need it.

Support chatbots are used in all industries, but they’re more common in human resources, digital marketing, retail, and healthcare.

Although, these bots can cost more than hiring an employee in the short-term their need will increase a ton in the future.

That’s because they are cheaper than hiring an employee in the long-term. They can handle multiple transactions at a time and work 24/7, and have a much higher customer satisfaction rate.

Finally, support chatbots are primarily used for four purposes.

  1. Taking orders (especially food)
  2. Answering FAQs
  3. Providing customer service
  4. Providing recommendation to users in E-commerce.

5. Informational Chatbots

Informational bots are like Transactional bots, but they can assist users with much more tasks. Where transaction bots in general are specialized in 4-6 processes, Informational bots can help users with 100 different processes. Like most of the other chatbots on this list, Informational Chatbots use AI and NLP

Information gathering bots are very popular in the Digital Marketing, Corporate Training, and Education sectors.

An Amazon Alexa Virtual Assistant.

6. Assistant bots or Virtual Assistants

An Assistant bot can be thought of as a middle sibling of a Skill bot and a Support bot.

Unlike a Support bot, it’s not an expert in any field, and unlike a Skill bot it needs knowledge and awareness to higher degree. Assistant bots work best when they know a bit about a variety of topics.

Many engineers believe these bots are most likely to become navigators in the future. Meaning, these bots are most likely to pay bills, set meetings, and more.

Assistant bots are very conversational and entertaining. Siri, Alexa, and Google Assistant are good examples of Virtual Assistant chatbots. They can help with a variety of tasks and give amusing responses.

Assistant bots can help people with a number of different things, so people will have tons of questions to ask these bots. Since these chatbots learn from every interaction, they continue to expand their knowledge.

This learning process is important because the world is constantly changing, so Virtual Assistants, and their corporate cousins Virtual Agents need to keep up.

7. Virtual Agents

As mentioned above, Virtual Agents are the corporate cousins of Virtual Assistants. These advanced chatbots often add Machine Learning to their learning processes so that their knowledge grows with every interaction. They are programmed to help users with a wide variety of concerns and can often answer questions well beyond what the areas the company works in.

Chatbots are great sales tools, they are useful tools for connecting users with the right products based on their needs.

Examples of chatbots in Different Industries

To help you better understand the uses of chatbots in the field. We’ve compiled some examples from various fields. While this list isn’t comprehensive, it should provide a good understanding about how chatbots are being used.

Customer Service

A chatbot makes a great customer support agent. It can retrieve the right response for customer questions from an enormous amount of data within nanoseconds, which makes it a great candidate for repetitive jobs.

Customer Service chatbots are also available 24/7, so they can reduce the customer service operations cost by 30%, and increase the customer satisfaction rate by a ton.

Marketing is one of the areas where chatbots truly excel.

Marketing

Chatbots are known for taking marketing (especially digital) to the next level. That’s why big brands like National Geographic, Facebook, and Starbucks are using them.

Chatbots can help create a powerful presence on social media. They help companies interact with users and get the essential information without hiring an additional employee.

Chatbots also help companies with content marketing. How do they do it? Simple, by getting the information from the users. As they chat with users, they ask simple questions and record the answers.

Once companies know their user’s desires and pain points, they know what type of content to create.


Learn more about Using Chatbots for Marketing.


Chatbots can be used for a variety of important tasks during Manmade or Natural Disasters.

Disaster Management

AI chatbots can respond in an emergency (like Earthquakes, Tornados, Floods, etc.) much faster than humans. We’re seeing a huge increase of chatbots by governmental organizations right now due to the Coronavirus Pandemic.

This is because they can be deployed quickly, and can handle hundreds of calls, texts, or other kinds of chats at a time. This means they can help save a lot of human and animal life as well as saving the agency that deployed them money.

But not all chatbots have this capacity. Only AI chatbots with solid Natural Language Processing can get this job done.

Here are some key benefits of Disaster Management bots:

  • Avoid information and communication gaps because of their speed.
  • Alert Government and Response Teams in a transparent manner.
  • Increase the responsive efficiency by bringing the management data together.
  • Help track the number of people being saved and their health status.
  • Focus time 100% and 24/7 availability.

Learn more about Using Chatbots for Communicating During a Disaster.

Financial Services Chatbots are able to assist users with a variety of needs like managing their investment accounts.

Financial Services

Chatbots can do wonders in Financial Services. According to a Juniper Study, by 2023 chatbots will save up to $7.3 billion annually only in the banking sector. Time wise, chatbots can save the banking sector, 862 million hours or nearly half million years of work.

Chatbots will help businesses achieve the above results by doing the following tasks.

Financial Advice

Chatbots will keep track of users’ accounts, their spending habits, recommend saving plans or budget and more.

Manage Staff

Because chatbots will take care of the repetitive tasks such as training new staff members and managing internal documentation, employees will be able to use their energy on more important tasks.

Like tasks that require focus and creativity, such as accounting.

Prevent Fraud

The security of a bank can make or break the bank’s reputation.

Chatbots can be deployed to monitor for signs of fraudulent activity . They’re much better at it than humans, and they can immediately report any problems they find to both the bank staff and the customers involved.

Promotion and Cross-Selling

Because chatbots know a lot about the client they are dealing with and can retrieve data so fast, they can find the right products or services to offer each customer instantly.

For example, if the customer regularly transfers money from their regular account to savings accounts, the chatbot will automatically ask them something like this “Saving for something special?” If the client is saving for something special, the clients will be interested in listening to the bots offer, and the chances of the client getting a loan or insurance will increase significantly.

Learn More about Using Chatbots for Financial Services.

https://yakbots.com/what-is-the-history-of-chatbots/

Healthcare

Chatbots can perform a variety of important tasks in the healthcare industry. They help set and respond to questions about appointments, help patients track their symptoms, and even triage patients and help them choose the proper treatment.

Below are 5 major benefits of using chatbots in the healthcare industry.

Scheduling Appointments

Chatbots allow patients to schedule an appointment in less than a minute. Users can select the name of the specific doctor they want to meet, tell their symptoms so the doctor knows why they’re visiting, and the bot will tell them the time they should visit.

The chatbot will also remind the patient when the appointment is getting close, and even this can be done to the patient’s preferences.

This means that Hospitals and Medical Practices don’t have to hire an employee for scheduling appointments, and regardless of the number of appointments the staff members won’t be bothered.

Frequently Asked Questions

Instead of calling the clinic and waiting until someone is available to answer your questions or finding your answer on the web by going through an enormous pile of information, it’s much more convenient to talk to a Chatbot.

A chatbot can quickly answer questions related to insurance, business hours, treatment plans, and much more.

Hiring and Training

Hiring someone and onboarding them can be a time-consuming process. There is a lot of paperwork to fill out and credentials that are needed to be double-checked. Chatbots can help take care of both processes.

As for training, chatbots can automate most of that area as well. They can inform new employees of the rules and regulations, remind them to fill out required forms, and even provide access to training videos and other support materials on request.

They can also help with other Human Resources tasks including assisting employees with vacation, maternity leave, and other time-off requests, and help them with questions about the policies of the organization.

They can even act as a staff search agent to help pull the appropriate records or images from patient files.

Symptom Checking

Talking to a chatbot can make the diagnosis and treatment of less complicated illnesses and injuries much easier. Patients can get a check-up from the comfort of their couch and sabe some money. This also reduces the stress on staff by keeping simple questions about illnesses and injuries that aren’t life-threatening from reaching them and taking them away from other work.

A medical chatbot can provide advice about how to proceed based on the standard guidelines and the patient’s own treatment plan. Whether or not to make an appointment or see a specialist instead of listening to the chatbot is ultimately up to the patient though.

But if the chatbot thinks there is something more to be concerned about, it will tell you to consult with a specialist in the end.

The use of medical chatbots for these sort of simple triage chats can also benefit the doctors and nurses, because the chatbot can handle some of the visits that they would have otherwise had to deal with. This means that appointment can be taken by someone in more need of care, and in the long run fewer wasted or missed appointments.

Health Tracking

Chatbots are also a great option for people who want to track their health. A chatbot can take users through a simple form that lets them enter numerical values for things like their pain level, heart rate, blood pressure, and weight. It can also let users enter text answers of various fields and use NLP to detect anything unusual in their responses.

After the symptom tracking script is done, the chatbot could even let the patient know whether they are improving or if they need to make an appointment for followup.

Because the chatbots have access to the patient’s complete record, it can even change the script as a patient adds new medications or is diagnosed with a new illness.

Tracking preventative care is also a possibility. Simply by asking patients if they have had any exercise, then what sort of exercise and for how long, a medical chatbot can create a profile that tells it if a patient is inactive, or if they have an active and healthier lifestyle. The same can be done by asking about habits like smoking, drinking, or even diet.

Learn more about the use of chatbots in Healthcare.

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Real Estate

If you are in the real estate industry, Investing in a quality chatbot is an investment worth making. This is true whether you are an independent real estate agent or part of a larger firm.

Chatbots are known for increasing leads, building and maintaining relationships, buying, selling, and renting properties, and much more. While there are a ton of reasons chatbots help businesses succeed in the real estate industry, we’ve only included the top 4 in this section.

Prompt Responses

Unlike human beings, bots are fast and can deal with many more people at the same time. Therefore, when a potential client will ask any question related to a specific property, they won’t have to wait for 10-15 minutes for an employee to become available. Imagine how many more clients you would have if you were able to respond directly to their needs in less than a second instead.

24×7 Availability

Chatbots can also handle requests at any time of day or night. With the internet becoming a larger part of the real estate sales and leasing process, this is incredibly important.

Employees will never be available 24/7 to answer client’s queries, even having a call service won’t solve this. People have to eat lunch, use the restroom, take a slight break every now and then, and people get sick. Sometimes they can just be lazy, but we can’t really blame them, can we? Everyone has an off day every now and then.

No matter what you do, employees can’t be available 24/7. Even if you hire a different staff for the second shift, there are still plenty of reasons why employees can’t provide 24/7 support. If you managed to have three shifts set up just to man your phones, the third shift is still going to take place in the middle of the night when people are usually asleep. So the chances of mistakes during the second and third shift will be greater than that of your primary staff.

Chatbots on the other hand are a different story. They don’t need rest, they can’t be lazy, and they don’t need to eat lunch or use a restroom. They can even work after midnight when the office is closed. Plus they’ll do this without ever asking for a day off.

User Specific

As with everything else in life, different people like different types of land, homes, and apartments. And let’s not even go into the various kinds of commercial real estate, or you’ll spend the next ten minutes reading the single most boring list ever created.

But back to the original thought I was discussing, some people will like modern apartment or home while others might prefer something with a vintage look. They may be single or married with three kids. All this means they will be looking for different things in an apartment or home.

To close the lead, pinpointing what the client wants is one of the primary goals. If you’re serving endless listings that the customer doesn’t want, then frustration will set in and the customer will bail on you.

Chatbots ask probing questions very interactively, and then only show the options that the client prefers. The results are a big increase in your conversion rate and overall user experience.

Increase Engagement

To get the information from users first we invented physical forms, they were not a huge success because most of them ended up in a bin. Then came the online forms. While they were much better, there is room for immense growth.

Chatbots took the information gathering process to the next level.

This process is different because users don’t have to give answers and get nothing in return, instead they know that chatbot will show them some great options as soon they are done asking questions. This intrigues the users and increases the chances of users giving businesses the information they need significantly

Learn more about using chatbots in Real Estate.

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Insurance

Chatbots are changing the game in the Insurance industry as well. According to statistics, 47% of people prefer to make a purchase from a chatbot and 53% of people want to buy a product from someone who they can reach on a chat app.

Why do people like chatbots so much? There are multiple reasons for that answer, and we’ll discuss some of them below.

Payment Help and Claims Processing

Chatbots can help customers with the insurance claims process. This single task makes up a huge portion of the staff work related to insurance. Additionally, chatbots will remind the customers for payment and provide information about their existing claims.

These two features can help companies save a lot of money and increase the customer satisfaction rate.

Client Awareness

Chatbots can answer all the redundant questions that most clients want to know about, and they don’t get tired or bored doing so. Also, because they respond much faster than humans, they’ll actually do a better job.

Whether clients want information related to policy comparisons, process flow, or policy suggestions, a good chatbot will take care of it efficiently.

Conversion

Chatbots are pretty good at telling what the users want. And because they work so fast, they can retrieve the right data within nanoseconds.

Chatbots will ask the client some questions and then come with the offer that’s most likely to make the client interested. And again, the fact that chatbots are available 24/7 can further increase leads and conversion rates.

User Experience and Feedback

According to Uberall 8/10 users have enjoyed their experience with a chatbot. This is really no surprise, since chatbots give prompt and more personal responses.

Because of the positive experience, users are more likely to leave feedback when asked by a chatbot.

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Restaurants

Like all the other industries in this list, the effect of chatbots in the Restaurant business is astonishing.

While we will not include all the benefits in this section, we’ll include the top 3.

Revamping the Reservation System

Making reservations and dealing with customers is no simple task. It can be time-consuming and complicated. A chatbot can help simplify the process, and it can free up the staff’s time as well.

Restaurants that have chatbots installed on their social media accounts, website, email, and phone are going to save some money and reduce headaches. That’s because unlike humans chatbots are always available, work faster, and make fewer mistakes.

Make Personalized Recommendation

Knowing what the customers like and dislike is essential for a brand to succeed in the food industry.

If a young person who expects a restaurant to know his/her preference doesn’t get food recommendations of their liking, they’ll start ordering from a restaurant that understands them better.

The one thing that’s obvious about chatbot is they can often understand human preferences better than humans. They are also good with providing the information in a timely manner.

With these two features, chatbots can make recommendations that the user prefers and as a result, make the business boom.

Improve Table Service

A lot of us have been in a situation when we told our order to the waiter/waitress and 20 minutes later when we asked how long it’ll take, it turned out our order hadn’t even been placed yet.

Unlike humans, chatbots can’t forget an order. Once they have noted the order they’ll not only make sure it’s delivered but they’ll give customers a much better guess about when their order will be ready.

Receiving Reviews

Receiving 5-star reviews is essential for any restaurant to succeed in the modern era.

Because the first thing customers do nowadays is visit Google or Yelp and type in a query similar to ‘restaurants near me’ and decide which restaurant to order from by seeing reviews and ratings. The more reviews a restaurant has, the better tested it is. Therefore, the number of reviews matters a lot.

Many customers don’t read a review unless they had a negative experience. That means many people that’ll give a 5 star review won’t give a rating unless asked. Manually asking each user about feedback and ratings can be very time-consuming, and that’s exactly where a chatbot comes in handy.

A chatbot can automatically ask the user about their experience and feedback. The company won’t have to spend any resources and they’ll get more positive reviews.

In Conclusion

Chatbots have changed the way businesses operate and they’ll continue to do so in the future. Hopefully in this article we have answered some basic questions about what they are, how they work, and how they can have an impact on different industries and departments.

We hope you’ve found the information in this guide insightful.

If anything is not clear or you have any question related to chatbots,
please feel free to ask in the comments section.

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2 thoughts on “What is a chatbot for? Different Types of Chatbots and Their Uses”

  1. Very very interesting article on chatbots! I’ve learned so much and now I wonder how many times I’ve been talking to a chatbot thinking its a real person. Thank you for sharing!

    Reply

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