What is a Chatbot and How Can I Use It For Business?

What is a Chatbot and How Can I Use It For Business?

What is a Chatbot? Artificial intelligence has come a long way in the past couple of years — and its practical applications are staggering. But to some small business owners, A.I. may still be just a concept out of sci-fi that conjures up terrifying images of Arnold Schwarzenegger’s “Terminator.”

Thanks to the surging popularity of chatbots, the idea is starting to seem a little less scary.

Chatbots have been around for decades, but companies are only now beginning to exploit the technology from a business point-of-view. Just as a robot may simulate all or part of the actions o a human being, a chatbot is essentially a bit of interface software designed to simulate human conversation. Thanks to a few clever coding tricks, chatbots are able to pick up on linguistic ques in the responses from users and begin to learn.

The more a chatbot communicates with a particular user, the more it is able to pick up on language patterns, topics of interest and more in order to respond accordingly.

What is a Chatbot and How They Work?

Chatbots are software applications that mimic human conversation using text or voice commands. Here’s a breakdown of the technology and functionality behind chatbots:

  • Natural Language Processing (NLP): Chatbots use NLP to understand and interpret human language, allowing them to respond in a way that feels natural and intuitive.
  • Machine Learning: Over time, chatbots learn from interactions to improve their responses and become more attuned to users’ needs and preferences.
  • Integration with Data Sources: Advanced chatbots can pull information from various databases or the internet to provide accurate and relevant responses.

Upon first glance, it may seem like chatbots are just a silly way for users to fritter away an afternoon engaged in a fake conversation. But the truth is, they can actually be incredibly useful in streamlining various tasks.

The better chatbots are plugged into a number of data resources via pre-programmed protocols. This means they are able to deliver information or services on demand — like breaking news stories, cinema times or other pertinent information based on a users preferences.

Because chatbots are designed to absorb user information and preferences, they remember things. This means if you ask a chatbot what the weather is going to be like on Sunday afternoon, the program will already know your precise location and the level of detail you’re looking for.

More complex chatbots do not only draw upon multiple data sources in order to answer queries, but they can also aggregate multiple apps in order to perform relatively complicated tasks. A prime example is Assist’s local services chatbot.

It leverages the combined power of completely different apps like Uber, OLSET and Eat24. which means you can order a taxi, make dinner reservations and book a hotel room all by sending a few lines of text to Assist via Facebook Messenger.

That makes life simple for users, and it also automatically provides business owners with plenty of new sales leads.

What is a Chatbot and How Can I Use It For Business?

How Can I Use a Chatbot for My Business?

Although some of the more high-tech chatbots are capable of providing some relatively high-level service, chatbots definitely are not for everyone.

By and large, chatbots are going to be most useful for retailers or service providers dealing with regular and frequent orders. That might include small media outlets, restaurants, information hubs or digital retailers.

One of the reasons that chatbots can be so instrumental for smaller businesses is because they can vastly reduce the amount of time staff members must spend answering frequently asked questions that could be delaying a purchasing decision online.

Bearing that in mind, small businesses operating out of virtually any industry could benefit from investing in a simple chatbot that is programmed to relay information from various FAQ or blog pages.

Not only do basic functions like this free up your time, but they also help to forge a sense of brand loyalty — so long as everything is working properly.

The Potential of Chatbots for Small Businesses

Small businesses stand to gain significantly from integrating chatbots into their operations. The digital age demands swift, efficient customer service and engagement, which chatbots can provide around the clock. Here’s how small businesses can harness the power of chatbots:

  • Customer Support: Automate responses to frequently asked questions, allowing staff to focus on more complex queries. This not only speeds up response times but also ensures customers receive assistance anytime, enhancing satisfaction.
  • Sales and Marketing: Chatbots can guide customers through the purchasing process, recommend products based on user preferences, and even handle transactions. This personalized shopping experience can increase conversion rates and boost sales.
  • Feedback Collection: Implementing chatbots for surveys or feedback requests can provide valuable insights into customer preferences and behavior, aiding in refining products and services.

How Do I Create a Chatbot?

If you’re keen to explore how you might be able to deploy a basic chatbot on your company website, there are a few resources worth checking out.

If you already know a little bit about coding and would like to try to create your own chatbot, The Pandorabots Playground is a free and user-friendly development area designed to help businesses create chatbots with loads of different features.

That being said, the team at Pandorabots also works with companies in order to produce chatbots based on their specific requirements. Other chatbot services like nanorep work with businesses to produce relatively simple — but, according to the company, effective A.I. solutions.

Just remember: the key to using chatbots effectively is to make sure they enhance your customer’s experience. So don’t hop on the bandwagon and invest in a chatbot just because you want your business to look modern or trendy.

So if you’re truly interested in deploying a chatbot and think it could be a smart move for your company, sit down and have a long, hard think about why your customers would benefit. Then come up with a list of possible functions or key information the chatbot would need to provide, and always do your research.

What is a Chatbot and How Can I Use It For Business?

Exploring the Potential of Chatbots for Small Businesses

  • Chatbots and Their Practical Applications
    • Chatbots, or interface software simulating human conversation, are becoming increasingly popular.
    • They learn from user interactions, adapting to language patterns and user preferences.
  • Understanding Chatbots
    • Chatbots access data resources and deliver information or services on demand.
    • They remember user information, providing tailored responses based on user preferences.
    • Some chatbots can aggregate multiple apps, simplifying complex tasks.
  • Utilizing Chatbots for Business
    • Chatbots are most useful for businesses with regular and frequent orders, such as retailers, restaurants, and digital retailers.
    • They reduce staff time spent on answering common questions and can enhance brand loyalty.
  • Creating Your Chatbot
    • Resources like The Pandorabots Playground offer user-friendly development areas for chatbot creation.
    • Consider the specific needs and functions your chatbot should provide to enhance the customer experience.
TopicKey Points
Chatbots and Their Practical Applications- Chatbots simulate human conversation.
- They adapt and learn from user interactions.
Understanding Chatbots- Chatbots access data and provide on-demand services.
- They remember user information and preferences.
- Some chatbots can aggregate multiple apps for complex tasks.
Utilizing Chatbots for Business- Ideal for businesses with regular and frequent orders.
- Reduce staff time spent on common questions.
- Enhance brand loyalty.
Creating Your Chatbot- Resources like The Pandorabots Playground are available.
- Consider specific needs and functions for customer benefit.

What is a Chatbot and How Can I Use It For Business?

Challenges and Considerations for Chatbot Adoption

  • User Experience: Ensuring a seamless and user-friendly experience is crucial. Chatbots should be intuitive, responsive, and able to handle diverse user queries effectively.
  • Data Security: Protecting customer data and privacy is paramount. Implement robust security measures to safeguard sensitive information collected during interactions.
  • Training and Maintenance: Chatbots require ongoing training and maintenance to improve their performance over time. Regularly update their knowledge base to stay relevant and accurate.
  • Human Integration: While chatbots can automate many tasks, there should be a clear strategy for human intervention when complex or sensitive issues arise. Balancing automation with human touch is essential.
  • Scalability: Consider the potential growth of your business. Ensure that your chatbot solution can scale to accommodate increased demand and evolving customer needs.
  • Multi-Platform Accessibility: Optimize chatbots for various platforms and devices to reach a broader audience. Ensure compatibility with websites, messaging apps, and social media.
  • Feedback and Improvement: Encourage user feedback to identify areas for improvement. Actively seek input to enhance the chatbot’s functionality and user satisfaction.
  • Compliance and Regulations: Stay informed about data protection regulations and compliance requirements in your industry or region. Ensure your chatbot aligns with these standards.
  • Cost Management: Evaluate the costs associated with chatbot development, maintenance, and support. Create a budget and cost-effective strategy for implementation.
  • Continuous Learning: Embrace a culture of continuous learning and adaptation. Chatbot technology evolves, and staying updated on industry trends is vital for success.

Navigating these challenges and considerations will enable businesses to leverage chatbots effectively, delivering enhanced customer experiences and achieving operational efficiencies.

Challenge or ConsiderationKey Points
User Experience- Chatbots should provide a seamless and user-friendly experience.
- They need to be intuitive, responsive, and effective in handling diverse user queries.
Data Security- Protecting customer data and privacy is crucial.
- Implement robust security measures to safeguard sensitive information collected during interactions.
Training and Maintenance- Regular training and maintenance are necessary to improve chatbot performance over time.
- Update the knowledge base to ensure relevance and accuracy.
Human Integration- Have a clear strategy for human intervention in complex or sensitive situations.
- Balancing automation with a human touch is essential for certain scenarios.
Scalability- Consider the potential growth of your business and ensure the chatbot can scale accordingly.
Multi-Platform Accessibility- Optimize chatbots for various platforms and devices to reach a broader audience.
- Ensure compatibility with websites, messaging apps, and social media.
Feedback and Improvement- Encourage user feedback to identify areas for improvement in chatbot functionality and user satisfaction.
- Actively seek input to enhance the chatbot's performance.
Compliance and Regulations- Stay informed about data protection regulations and compliance requirements in your industry or region.
- Ensure your chatbot aligns with these standards to protect user data.
Cost Management- Evaluate costs related to chatbot development, maintenance, and support.
- Create a budget and cost-effective strategy for chatbot implementation.
Continuous Learning- Embrace a culture of continuous learning and adaptation to stay updated on chatbot technology and trends.
- Keep pace with industry developments to maintain chatbot relevance.

What is a Chatbot

Future Trends in Chatbots

  • AI Advancements: Chatbots will continue to benefit from advances in artificial intelligence, enabling more natural language processing, understanding context, and providing even better responses.
  • Multilingual Capabilities: Future chatbots will likely support a broader range of languages, making them accessible to a global audience and expanding their reach.
  • Voice-Activated Chatbots: With the rise of voice assistants like Siri and Alexa, chatbots may become more voice-activated, offering users a hands-free way to interact.
  • Enhanced Personalization: Chatbots will become more adept at personalizing user experiences by analyzing data and tailoring responses and recommendations accordingly.
  • Increased Industry Adoption: More industries, beyond retail and customer service, will embrace chatbots for various applications, from healthcare to finance.
  • Improved Emotional Intelligence: Chatbots may develop emotional intelligence, recognizing and responding to users’ emotions, which could be particularly useful in healthcare and mental health applications.
  • Integration with IoT: Chatbots could integrate with the Internet of Things (IoT) devices, enabling users to control smart homes or access IoT-related information via chat.
  • Augmented Reality (AR) Integration: Future chatbots may work in tandem with AR technologies, enhancing virtual experiences, such as virtual shopping assistants.
  • Ethical Considerations: As chatbots become more sophisticated, ethical considerations about their use and potential biases may become more prevalent.
  • Expanded Use in Education: Chatbots could play a more prominent role in education, offering personalized tutoring, language learning support, and more.
  • Greater User Empowerment: Users may have more control and customization options, allowing them to define how chatbots assist them in various tasks.


Chatbots represent a formidable tool for small businesses in the digital era, offering a way to enhance customer engagement, streamline operations, and gather insights.

By understanding the technology and addressing potential challenges head-on, businesses can effectively integrate these digital assistants into their strategy. As chatbot technology continues to evolve, staying abreast of advancements will be key to leveraging their full potential.

Remember, the goal of implementing chatbots should always be to enrich the customer experience and support business growth.

With careful planning and execution, chatbots can become an invaluable asset for any small business looking to thrive in today’s competitive landscape.

Chatbot Photo via Shutterstock


Nash Riggins Nash Riggins is a Staff Writer for Small Business Trends and an American journalist based in central Scotland. Nash covers industry studies, emerging trends and general business developments. His writing background includes The Huffington Post, World Finance and GuruFocus. His website is NashRiggins.com.

5 Reactions
  1. Given the reaction I see from people using IVR phone systems, I don’t know how excited people will be knowing they have to deal with a chatbot instead of a real person. I personally am not excited about it.

  2. As you mention the focus should be on enhancing the customer’s experience rather than has been the mistake in the call center industry with brainless automation that drives customers away. Information should only be requested once in a smart system…I have however yet to engage with one on the phone!

  3. Of course every client should receive first-class service. But innovative technologies is coming and enterpreneurs must introduce innovations before their competitors do that. I think that time invested in chatbot studying will be paid off in the future.

  4. FAQs, instructional videos and blogs– all key uses cases for businesses wrt chatbots. Thanks for the write up! 🙂

  5. Now in 2020, technology has progressed a lot. AI-powered chatbots are helping companies across industries automate sales, marketing, and customer service. I want to note that chatbots are now difficult to distinguish from a real person.
    Most people use voice assistants on their smartphones, which speaks of the popularity of AI. Additionally, funnel chatbots will become a new source of valuable customer insight for online businesses.
    If you still haven’t integrated a chatbot into your business operations, you may be lagging behind the competition. You have the opportunity to develop it in 2020. But before you hire a development company, you need to know about the best player on the market – Syndicode.

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