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The Complete Beginner’s Guide To Chatbots

Love them or hate them, Chatbots are undoubtedly here to stay! One of the most well-known examples and gifts of artificial intelligence, chatbots today are becoming increasingly popular for both B2C and B2B brands that want to create delighting customer experiences, each time every time. With every passing day, chatbots are becoming more useful, more responsive, and smarter and we all are likely to see more of them in the years to come.

So, what exactly is a chatbot? Why are chatbots such a huge opportunity? How does a chatbot work? Let us find answers to these and many more questions in this complete beginner’s guide to chatbots.

Let’s do this.

What Is A Chatbot?

Chatbots – also known as “conversational agents” – can be defined as software applications that mimic spoken or written human speech for the purpose of simulating an interaction or conversation with a real person. 

Powered by Artificial Intelligence, a chatbox is a service powered by rules to delight customers and improve their experience and journeys.

Examples of Chatbots

Today, you can find a chatbot for almost every reason and everything. The success of AI-powered Virtual Assistants such as Siri and Alexa is a huge testament to the growing popularity of chatbots across the world. 

With a chatbot, you can do endless things and here are a few examples:

Grocery bot. It can help you easily pick out and order weekly or monthly groceries.

Personal finance bot. This bot can help you manage your money better.

Weather bot. You can get updates about the weather, whenever you ask.

That was interesting! Right? If you were to ask me, I would say the possibilities with bots are simply endless. You and I can build anything imaginable under the Sun and we should actually do it instead of hoping that the world will turn upside down one fine day to help us out. That doesn’t happen in the real world. Right?

Why Chatbots Are Such A Huge Opportunity?

You may be wondering, “Why on earth anyone even cares about chatbots? To me, they look like just another simple text-based services. So, what’s the big deal?”

Nice question. I’ll tell you exactly why exactly people care about and appreciate chatbots.

For the first time ever in many years, people have started making use of messenger applications more than they are using social networks.

stats of chatbot

Did you get my point? Well, let us read that again – Today, people are using messenger applications more than they are using social networks.

Logically, every business owner wants to build a business online by exploring the best option where the people are and the place where everyone is and more are heading is now inside messenger applications.

This is the biggest reason why chatbots are such a huge deal. Potentially, a chatbot is a humongous business opportunity for anyone who is more than just ready to jump headfirst and build something really good that people are looking for and want.

But, how does a chatbot works? How do they know what, how, and when to talk to people and provide the right answers to their questions? Isn’t that insanely difficult to do?

Well, it is! But, that’s exactly what makes Artificial Intelligence the hottest thing in the town.

How Do Chatbots Work?

Natural Language Processing or NLP is the technology at the heart of chatbot technology. This is the same technology that forms the basis of the voice recognition systems that are used by popular virtual assistants like Apple’s Siri, Microsoft’s Cortana, Amazon’s Alexa, and Google’s Google Now.

A chatbot processes the text provided by the user to them (a process called “parsing”) before offering a response that is based on a complex series of algorithms that identifies and interprets what the user said or infer what they want or mean to say. After this, the chatbot determines a series of appropriate answers in the context of the queries.

Types Of Chatbots

There are two types of chatbots:

  1. Chatbots that function based on a set of predefined rules.
  2. Chatbots that function based on Machine Learning.

Chatbots that function based on rules: These bots as only as smart and capable as they are programmed to be. Limited in presence, these bots only respond to very specific commands. If users say different things or ask questions that are not in the programmed list, these chatbots are completely clueless.

Chatbots that function using machine learning: Powered by Artificial Intelligence, Machine Learning powered chatbots not just understand commands, but also language. These chatbots grow smarter over a period of time as they engage more with people.

Potential Use Cases For Artificial Intelligence

Artificial Intelligence can be deployed in different fields, such as:

  • Repetitive tasks and fraud detection
  • Customer support, transactions, and help desks
  • Wealth management for masses (e.g. Trading, Smart Wallets)
  • Underwriting loans and insurance
  • Social media monitoring
  • Personalized messaging
  • Maintaining and continuously improving Customer Relations
  • Sentimental Analysis and Textual Analysis
  • Accessing insightful and actionable data

We hope that this complete beginner’s guide to chatbots was useful to you in more than just a way. 


Chatbots are changing the world we live in, in more ways than anyone could have ever imagined. Whatever the purpose, Artificial Intelligence, and its powered devices, systems, and processes herald a new age of astounding breakthroughs, possibilities, and innovations in technology. As Artificial Intelligence progresses, every profit-driven business must ask itself the big question – “How am I going to benefit from this?

Have you asked yourself this question yet? Whatever your reply, contact us now and we will guide you with everything to help you transform your business in more than just a way!


Ajay Dubedi

CEO | Founder

“More than 11 years of industry experience. Responsible for strategy, vision, and project delivery at Cloud Analogy.”

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