What Is a Chatbot? How Do Chatbots Work?

Lisa Plitnichenko, Marketing Manager

Chatbots: Definition, Functions & Use


What is a chat bot

Software that does exactly what humans do… This idea isn’t new, and, maybe there are fewer and fewer people to be impressed by chatbots, however, you can’t even imagine how powerful the chatbots of today can be. 

Extensive use of various messengers where users hang out much of their time boosts the chatbots’ popularity. Digital friends and assistants, chatbots now perform a plethora of functions from educational and therapeutic to travel or meeting planning.

69% of consumers prefer to use chatbots for the speed at which they can communicate with a brand


But what is actually a chat bot? 

Simple (or not as simple as you can imagine) software that stimulates interaction by imitating human written or spoken speech.

Screenshots of the conversation with the cleverest AI chatbot-Mitsuku
Mitsuku bot is the Loebner Prize winner (the annual AI competition that awards the most human-like bots), highly rated by Chatbots magazine, one of the most authoritative sources of information on chatbot applications.

By 2020, over 50% of medium to large enterprises will have deployed product chatbots

Van Baker, research vice president at Gartner

The meteoric chatbot rise resulted from the desire of the brands to improve communication with end-users. Actually, it has changed the communication drastically. Visiting the biggest e-commerce platforms, a user may get an immediate response to the question at any time without waiting for the morning to come.

Moreover, the enormous number of tasks can be addressed through the interface consisting of numerous elements. The list of such tasks starts from the routing ones (booking, takeout) to job-related tasks. By replacing the interface where a user should take several actions to reach the goal by a chatbot, you’ll make users’ life easier, thus, enhance the User Experience of your website or app and decrease its bounce rate that seems to be a sound idea.

In addition, chatbots may replace the live chats to cut costs or focus on getting more significant problems solved. Of course, the situation when a chatbot is unable to meet the customer demands or resolve challenging issues is rather possible, thus, as a chatbot owner, you should definitely leave a user the possibility to send a request to the website’s support.

Gartner forecasts that by 2020, over 85% of customer interactions will be handled without a human.

That is why a business owner/ CTO/ manager should consider the possibility of chatbot introduction to improve customer service and make the information accessible 24/7. All the more value of global chatbot market is going to increase significantly in the future:

The graph predict the rise of chatbot market
The global chatbot market is expected to reach USD 1.25 billion by 2025, growing at a CAGR of 24.3%, according to a new report by Grand View Research, Inc.

How do chatbots work

After defining chatbots, understanding the major principles of their work would be a great idea. As chatbots could be conditionally divided into two big categories: simple chatbot (question-answer chatbot or conversational agent) that recognize the most frequently asked questions basing on pre-prepared commands, and chatbots that use all the potential machine learning gives to imitate a human interlocutor as precisely as possible. 

Simple chatbots

The first category includes chatbot options, available for any business (the ones you usually can see on websites that offer all kinds of products). As a rule, communicating with such chatbots, a user gets the list of standard questions, to which a chatbot may reply using the recognition of the prescribed keywords.

Chatbot with the prescribed lines
Chatbot uses a set of canned questions and answers.

The best thing about these chatbots is an easy implementation. The basic functions they offer can be enough to satisfy the needs of e-commerce store visitors (answer the frequently asked questions,  offer solutions to common problems, etc.).

AI-powered chatbots

AI chatbots are mostly based on NLP (Natural Language Processing). NLP is the ability of a machine to recognize, comprehend human speech, define a proper answer/ action to react, and respond in a way a user understands. Two process user’s input, NLP uses two technologies:

  1. NLU (Natural Language Understanding) for searching the best ways to deal with unstructured human speech and convert it into a form a machine understands.  
  2. NLG (Natural Language Generation) for turning machine language into a human one and producing the output.

Good examples of AI chatbots are the well-known personal voice assistants Siri (Apple), Alexa (Amazon), Google Assistant, etc. that may actually give rise to a whole new epoch of the internet search, making it more human-like.

Compare two search requests: 

“Gas station near me” (that a person will probably enter into the search engine);

“Siri, show me the nearest gas station, please” (that a person will probably tell a voice assistant with an intention to find the gas station).

AI-based chatbots and personal voice assistants can be the universal people’s helpers in any industry, used to personalize education, customize buying experience, and optimize the completion of routine tasks.


This comparative characteristic is intended to make the difference between simple and smart chatbots clear: 

Simple chatbotsSmart chatbots
Are based on…pre-written keywordsAI
Learn from conversation
Use prescribed conversations steps (are strictly limited)
Recognize user’s free form input
Process user’s input despite the mistakes of all kind
Can be easily implemented

Despite the numerous differences, both simple and smart chatbots (except for the ones that offer only prescribed lines to a user) have the same work structure:

Simple chatbot receives user's input, recognizes the intent, and pick up the most appropriate response in the database
Simple chatbot structure

Main chatbot features

As you can tell, chatbots of today are all different depending on the functions their creators had an objective to include. However, all (good) chatbots without exceptions have several common traits.

So, what should good chatbots do?

  • Simplify our lives. The main objective of both simple and smart chatbots is to save the user time by shortcutting to a goal. In case if user intent is to find out whether the e-shop delivers in certain countries, a chatbot will give this info right away so that a site visitor should not waste time trying to find the proper paragraph on the website containing this info.
  • Give the impression of the human touch. No matter are you talking to a simple or smart chatbot, the main objective of both is to give a user an impression he/she is communicating with a human being, so chatbots should be more personalized than any of the apps you’ve dealt with before.
  • Provide extended support to their users. As users turn to chatbots in order to make their life easier, the existence of proper documentation and the possibility to get timely assistance through a chatbot itself (e.x. “Help”, “How it works” sections) are of high importance. Moreover, giving hints about additional functionality to a user through the chatbot itself is a great idea as well.
  • Interact in a short and simple manner. Users of today have less and less time to be wasted on the investigation that is why the quicker chatbot meets customer needs, the more satisfied a user becomes.

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    What can a chatbot do?

    1. Hold a conversation

    This is probably the main reason for chatbots creation. But why are people so curious about communicating with AI chatbot instead of talking to their own kind?

    • High response rate. Chatbots’ mission is to satisfy human curiosity right here right now, thus, it’s always easier to turn to a chatbot in order to get an immediate response.
    • Entertainment. Why not chat with a chatbot when you have to kill another hour? Especially if it is able to give you a few funny tips imitating being a human. 
    • Novelty. Chatter bots are a relatively recent invention so that a man is still curious about a chat bot meaning and working algorithms. Even more curious is he to gossip about the boss and see a chatbot reaction to the funniest meme he’s ever laughed at.

    2. Increase end-user engagement by improving customer service

    Chatbots can provide the answers to the frequently asked questions immediately so that you shouldn’t wait for the support agent to come or stay up all night thinking of whether this e-shop provides delivery in other countries or not. Of course, in most cases, a user may get his information on the FAQ page, however, justified by highly competitive e-commerce environment, a user prefers to go on another site instead of wasting time to find answers on his/her questions. In this way, chatbots may help increase the conversion and boost user engagement. 

    3. Reduce a set of routine actions a user performs to only one command

    From 4 actions to one request:

    Bran wants to buy a car. A used one to save money, but he also wants to check the information about used car warranties, as his friend once told him that used car with warranties is better than without it. He types his request into a search engine and finds one of the numerous sites:

    Chatbot may simplify your routine tasks
    One of the features a chatbot could do is to simplify the working process of a human being.

    4. Close deals

    A HubSpot survey found that 47% of consumers would be open to making a purchase from a chatbot. 

    Today, chatbots aren’t only for answering questions but for closing deals. Millennials claim to use a chatbot as a personal shopping assistant twice more likely compared to older generations.

    People start using a chatbot to make a hotel or restaurant reservation instead of talking to a real person. 

    It means that rightly programmed chatbots could become your devoted sales representatives, offering an exceptional service 24/7.

    The Bottom Line

    This post was created to define chatbot and find an easy way to show how a chatbot works. The team tried its best to make a definition of a chatbot clear and simple for you. Don’t hesitate to drop us a message if any questions arise, and our expert in chatbot development will be happy to share his knowledge with you. 

    You are welcome to share any of your experiences connected to chatbots starting from your ideas in this regard as to why you have chosen one or another chatbot type.

    4 thoughts on “What Is a Chatbot? How Do Chatbots Work?

    1. When it comes to getting questions answered or problems solved, there is one thing that almost all customers have in common – they do not like to wait.

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