A chatbot (sometimes referred to as a chatterbot) is a computer program that attempts to simulate the conversation or "chatter" of a human being via text or voice interactions. A user can ask a chatbot a question or make a command, and the chatbot responds or performs the requested action.
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Chatbots can be thought of as the spokesperson for artificial intelligence (AI). It's an accessible form of AI that is commonly put to use in businesses across sales and service departments and in the consumer app and device market.
How chatbots work
Chatbots such as ELIZA and PARRY were early attempts at creating programs that could at least temporarily fool a real human being into thinking they were having a conversation with another person. PARRY's effectiveness was benchmarked in the early 1970s using a version of a Turing test; testers only made the correct identification of human vs. chatbot at a level consistent with making a random guess.
Chatbots have come a long way since then. They are built on AI technologies, including deep learning, natural language processing and machine learning algorithms, and require massive amounts of data. The more an end user interacts with the bot, the better voice recognition becomes at predicting what the appropriate response is when communicating with an end user.
Chatbots can be stateless or stateful. A stateless chatbot approaches each interaction as if it was with a new user. A stateful chatbot is more sophisticated; it can review past interactions and frame new responses in context.
Adding a chatbot to a company's service or sales department today requires little coding, because there are a number of chatbot service providers that allow developers to build conversational interfaces for any business application.
Examples of chatbot uses
Chatbot use is on the rise, both in the business and consumer markets. As chatbots get better, consumers have less to quarrel about in interacting with them. Between advanced technology and a societal transition to more passive, text-based communication, chatbots help fill a niche that phone calls used to fill.
Chatbots have been used in instant messaging (IM) applications and online interactive games for many years but have recently segued into business-to-consumer (B2C) and business-to-business (B2B) sales and services. Chatbots can be added to a buddy list or provide a single game player with an entity to interact with while awaiting other "live" players. If the bot is sophisticated enough to pass the Turing test, the person may not even know they are interacting with a computer program.
In sales, chatbots are being used to assist consumers shopping online, either by answering noncomplex product questions or providing helpful information that the consumer could later search for, including shipping price and availability. Chatbots are also used in service departments, assisting service agents in answering repetitive requests. Once a conversation gets too complex for a chatbot, it will be transferred to a human service agent.
Chatbots are also in use as virtual assistants -- conversational assistants that help people navigate their daily lives. Apple, Amazon, Google and Microsoft all have forms of virtual assistants; apps, such as Apple's Siri and Microsoft's Cortana, or products, like Amazon's Echo with Alexa or Google Home, all play the part of personal chatbot.
Why chatbots are important
The time savings and efficiency derived from AI chatbots conversing and answering reoccurring questions is attractive to companies looking to increase sales or service productivity.
As consumers continue to move away from traditional forms of communication, chat-based communication methods are expected to rise. Chatbot-based virtual assistants are increasingly used to handle simple tasks, freeing human agents to focus on higher-profile service or sales cases. This leads to cost savings -- employees cost more -- and it also allows companies to provide a level of customer service during hours when live agents aren't available.