AI chatbots are transforming customer service across industries, from retail to finance to healthcare. They help businesses offer quick, personalized support, often around the clock, improving customer experience and streamlining internal processes. But with the number of customer service chatbot options on the market, it’s essential to understand the difference between ready-made solutions and custom-built ones to choose the best fit for your business.
What is a customer service chatbot?
Customer support chatbots are AI-driven programs designed to simulate human-like interactions with customers. These bots can handle a range of queries, from providing basic information to guiding users through complex processes.
At a time when AI has become mainstream and the technologies are readily available, these chatbots have evolved to resemble human-like interactions - the days when interactions with early customer service chatbots were at best cringy are gone for good.
Modern chatbots use natural language processing (NLP) to understand customer questions and respond in a conversational way. Advanced chatbots even incorporate machine learning, allowing them to improve over time based on past interactions.
Advantages of an AI chatbot for customer service
An AI customer service bot brings several benefits that make them appealing to businesses looking to improve their customer service operations. Key advantages include:
24/7 availability
Customer service chatbots are available 24/7, allowing customers to get help whenever they need it, even outside traditional business hours. This capability aligns with the fast-paced demands of modern consumers, who increasingly expect on-demand service regardless of time zones or holidays. Simply put, a customer service bot just doesn't take breaks.
According to Tidio, 62% of consumers prefer using chatbots over waiting for a human agent. Being able to interact with a customer service bot at any hour helps reduce frustration and improves customer loyalty. The reassurance that assistance is always accessible helps foster a positive brand image, encouraging repeat interactions and long-term customer retention.
Finally, the round-the-clock support increases the likelihood of engaging with customers at their convenience, enhancing engagement rates and building a stronger rapport with the audience.
Reduced operational costs
Customer service chatbots can handle numerous customer queries simultaneously, which significantly reduces the need for extensive customer service teams. This capability allows businesses to focus on hiring for more specialized roles, leading to optimized labor costs.
With fewer human agents, companies can lower expenses associated with office space, equipment, and training, further enhancing cost savings. IBM reports that businesses can save up to 30% on customer support costs by implementing a customer service bot.
Consistency in responses
Chatbots provide accurate and consistent answers every time, reducing the chances of misinformation or conflicting advice often seen with human representatives. This consistency builds trust with customers, who know they can rely on the information they receive.
A study by Userlike found that 48% of customers don't care whether a human or a chatbot helps them, as long as their query is resolved. And these days, best customer service chatbots can be programmed to communicate in a consistent tone and style that aligns with the company’s brand voice, offering customers a unified experience across all interactions.
With consistent responses, businesses don’t have to spend extensive resources on training employees for standardized queries, saving both time and money.
Scalability
Customer service chatbots are inherently scalable and can manage increasing customer inquiries without compromising response times or requiring additional staffing. This scalability is especially beneficial for seasonal businesses or those experiencing sudden spikes in customer interactions. Juniper Research predicts that chatbots will save businesses over $8 billion annually by reducing chat support costs.
For businesses undergoing rapid growth or expanding to new markets, chatbots allow them to scale their customer service seamlessly, providing uninterrupted service as demand increases.
Since customer service chatbots can handle more interactions without proportional cost increases, businesses can better predict and manage customer service costs as they grow, enhancing operational efficiency.
Data collection and analysis
According to Drift, 55% of businesses using chatbots generate more high-quality leads, demonstrating the effectiveness of data collected through chatbot interactions.
An AI chatbot for customer service gathers valuable data on customer preferences, frequently asked questions, and pain points. This information can be used to improve customer service strategies, inform marketing campaigns, and refine product offerings.
With customer service chatbots, businesses have access to real-time data and analytics, allowing them to quickly identify trends and adapt to changing customer needs.
Shorter response times
AI-powered chatbots respond to inquiries almost instantly. According to HubSpot, 90% of consumers consider an “immediate” response to be important, and chatbots are key to meeting that expectation without overwhelming human support teams. Short response times improve customer satisfaction and can reduce the likelihood of cart abandonment or negative feedback.
Since customer service chatbots can handle simple inquiries, human agents are free to focus on complex issues, reducing their workload and improving their productivity.
Waiting times are one of the biggest frustrations for customers, especially during peak times. By reducing wait times, chatbots can help businesses maintain a positive brand image and avoid losing customers to competitors offering quicker support.
How can a customer service chatbot improve your business?
AI chatbots have become integral to customer service strategies across various industries, enhancing efficiency and customer satisfaction. Here's how businesses are leveraging them:
Answering FAQs
Many companies deploy customer service chatbots to handle frequently asked questions, reducing the workload on human agents. For instance, Decathlon, a sporting goods retailer, experienced a 4.5-fold increase in customer inquiries during the spring of 2020. To manage this surge, the company implemented a digital assistant capable of understanding over 1,000 unique customer intents, automating 65% of customer inquiries.
Guiding product selection
Chatbots assist customers in making informed choices by providing personalized product recommendations. The cosmetics retailer Sephora uses an AI chatbot to offer product suggestions based on customer preferences, enhancing the shopping experience.
Managing inquiries
Financial institutions employ customer service chatbots to handle routine account-related questions.
Bank of America’s chatbot Erica, assists customers with tasks like checking balances, viewing transactions, and providing financial advice.
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Processing returns and refunds
Retailers use customer service chatbots to streamline the returns and refunds process.
H&M, the fashion retailer's chatbot guides customers through return policies and procedures, simplifying the process.
Lead qualification
Businesses use customer support chatbots to gather preliminary information from potential customers, identifying qualified leads.
Drift offers a chatbot that engages website visitors, qualifies leads, and schedules meetings with sales representatives.
Best customer service chatbots: pros and cons
A variety of off-the-shelf customer support chatbot solutions exist, each with its own strengths and limitations. Let’s look at some popular ones:
Intercom
Intercom is a robust customer communication platform designed for engagement across customer support, sales, and marketing. Used for customer support and communication at various stages of the customer journey.
Pros: Highly customizable chat flows, strong integration options, and powerful analytics to track and optimize interactions.
Cons: Pricing can be high for small businesses; limited flexibility for highly specific use cases.
Zendesk Answer Bot
An AI-powered customer service bot built into the Zendesk suite, intended to help with customer support and ticket management. It provides automated support for companies already using the Zendesk platform.
Pros: Integrates smoothly with Zendesk support tools, ideal for businesses already using Zendesk, and offers multilingual support.
Cons: Limited functionality beyond answering basic questions; customizability is constrained.
Drift
A conversational AI platform with a primary focus on B2B marketing and sales, using customer service chatbot-driven engagement. Drift is designed to qualify leads and guide prospects through the buyer’s journey with conversational marketing.
Pros: Built for lead generation and engagement with CRM integration, making it ideal for businesses focusing on B2B sales and conversion.
Cons: Primarily marketing-focused, so it may lack some of the customer service functionality needed in more support-heavy industries.
Freshdesk Messaging
Part of the Freshworks suite, Freshdesk Messaging is geared towards small to medium-sized businesses seeking an affordable customer support chatbot. A support-focused chatbot for companies already leveraging Freshdesk, ideal for handling straightforward customer inquiries.
Pros: User-friendly, affordable, integrates with the Freshdesk support suite, and offers some automation capabilities.
Cons: Less advanced NLP and machine learning compared to pricier options; may not meet the needs of large-scale operations.
Tidio
A beginner-friendly customer service chatbot solution that caters primarily to e-commerce businesses. Tidio supports small businesses and e-commerce sites looking for basic customer engagement and support automation.
Pros: Affordable, integrates well with e-commerce platforms, and easy for beginners to use.
Cons: Limited in terms of advanced AI capabilities; may not scale well for larger enterprises.
While these ready-made solutions are ideal for many businesses, they may not be suitable for complex or unique requirements. For some companies, a custom customer support chatbot offers the control and flexibility they need.
When to consider a custom AI customer service chatbot
A custom customer support chatbot is often the best solution for businesses with specialized needs that off-the-shelf solutions can't fully support. Here’s a closer look at key situations where a custom chatbot for customer service can offer tangible benefits:
With highly specific industry requirements
In industries with strict regulatory and compliance standards, such as healthcare, finance, or legal services, a custom customer service bot can be tailored to adhere to relevant laws and data-handling protocols (e.g., HIPAA for healthcare or GDPR for data privacy).
These industries often demand heightened data security and privacy features, which are not always available or sufficiently robust in generic chatbot platforms. For example, in healthcare, a customer service chatbot may need to manage patient information securely and respond to regulatory audits, which custom solutions can support more effectively.
Additionally, businesses may have industry-specific terminology or processes that generic chatbots struggle to handle accurately, potentially leading to customer frustration or compliance risks.
When integration with proprietary systems is required
If your business relies on unique internal systems, databases, or CRM solutions, a custom-built customer service chatbot can be programmed to interact directly with these proprietary tools. Off-the-shelf chatbots often have limited integration options, which can lead to gaps in functionality or data consistency.
For instance, an e-commerce company with a proprietary inventory system might need a customer support chatbot that can access real-time stock levels, customer order history, and personalized recommendations directly from the backend, enabling highly responsive and accurate support.
With sophisticated workflows or specialized queries
For organizations that manage intricate customer journeys or face a high volume of specialized inquiries, a custom customer service chatbot can be built to support multi-step processes and in-depth responses. Generic chatbots are typically limited in their ability to navigate complex scenarios and may struggle with specialized language, leading to unresolved customer issues.
Industries like insurance or technical support often involve detailed, step-by-step guidance, which can require sophisticated conversational flows that address nuanced customer needs. For example, an insurance provider might need a customer service chatbot that walks customers through claims processing or policy renewals, adjusting for policy-specific rules and exceptions.
Businesses that rely on technical support chatbots for troubleshooting can also benefit from a custom solution capable of handling advanced problem-solving workflows that adjust dynamically based on the customer’s responses.
When you want to maintain brand-specific voice and tone
A well-defined brand voice helps create a consistent customer experience, and for companies prioritizing brand differentiation, a custom customer service chatbot can be tuned to reflect this voice across all interactions.
Generic solutions may offer some customization, but they rarely provide the level of detail needed to fully capture a brand’s unique personality. For example, a luxury brand might need a customer support chatbot that offers a refined, polished tone, while a younger, more playful brand may want an informal, conversational style.
Custom customer service chatbots allow for nuanced language choices, custom phrasing, and adaptable response styles, ensuring that every interaction aligns with your brand identity and strengthens customer trust.
How to build a customer service chatbot in 7 steps
Building a custom chatbot for customer service involves several key steps:
1. Define objectives and functionality
Start by outlining your customer support chatbot’s purpose and scope. Determine what tasks it will handle and what success looks like for your chatbot.
2. Choose a platform and tech stack
Select the platform and technologies you’ll use to build your customer service chatbot. Options include using frameworks like Rasa or Dialogflow if you have technical resources or opting for custom development on a preferred backend.
3. Build and train the NLP model
For a customer service chatbot to understand natural language, you’ll need to train it on relevant data. This might include past customer queries, product information, and other data points. Machine learning models require ongoing training to maintain high accuracy.
4. Develop conversation flows
Design conversational flows that guide users through common interactions. These should be structured yet flexible, allowing for some level of back-and-forth.
5. Integrate with customer service platforms
If you use tools like Zendesk or CRM systems, integrate them so the chatbot can provide relevant information and record interactions as needed.
6. Test extensively
Test the chatbot with a range of scenarios to ensure it handles diverse queries effectively and refines its language and responses over time.
7. Deploy and monitor performance
Launch the customer service chatbot and use analytics to track its performance. Metrics like response accuracy, customer satisfaction, and engagement rate can indicate how well it’s performing and where adjustments are needed.
Building a customer service bot gives businesses full control over functionality, language, and data, creating a powerful customer service tool that can evolve with changing needs. While off-the-shelf options work well for many companies, a custom solution often pays off for those with specialized requirements.
Build a custom customer service chatbot with us
An AI chatbot for customer service offers significant business advantages, from efficiency to consistency, and can be a game-changer for businesses. While ready-made solutions like Intercom and Zendesk Answer Bot provide quick and cost-effective options, even the best customer support chatbots may not cover all of your business requirements. For companies with unique needs, a custom customer service chatbot offers a path to greater functionality and flexibility.
If you’re ready to take the next step towards building your own customer support chatbot, don’t hesitate to reach out to us through this contact form to schedule a free consultation call. We’ll discuss your exact needs and how we can help you meet them
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