According to IBM, over 265 billion customer service requests are put in each year, costing around a trillion dollars to resolve. And with more and more consumers choosing to do business online, that number is only expected to grow. Fortunately, as much as 80% of these requests can be taken care of without a CS rep – and that's where chatbots come in. Today we're going to take a quick look at the most common types of chatbots – and how they can elevate your customer engagement strategy.  

Why are chatbots effective? 

Before we get into the different types of chatbots, it's important to understand why companies choose to leverage chatbots in the first place. From reducing the load on customer service centric teams, to gathering valuable data, chatbots have quickly become a tour-de-force when it comes to improving the prospect journey.

While you can find a chatbot for just about anything these days, most of the different types of chatbots you'll find fall into one of four categories. 

4 different types of chatbots you're likely to encounter

Guided Conversation

The most common types of chatbots are what we call "guided conversation", or "rules-based". Used in a variety of contexts, these chatbots lead users through scenario trees, offering them predetermined options to choose to help them complete simple service requests and get information. Think "Choose Your Own Adventure" but for finding an apartment.

AI/Natural language processing

Unlike guided conversation bots, "AI" bots utilize natural language processing (NLP) to guide users through human-like conversations. Instead of giving users a predefined set of options to choose from, NLP bots analyze user queries for key words and phrases, and then answer accordingly. The cons with this type of bot are that it's much more expensive to create, requires a long training period before it can be active, must be constantly updated and maintained, and often fails and gets confused.

Hybrid

As the functionality of Natural Language Processing can cause issues in the prospect's experience due to misunderstood questions or responses, some brands utilize hybrid chatbots, which provides the capabilities of NLP combined with the effectiveness of Guided Conversation. While they mainly operate in a rules-based way, they also have a limited capacity to answer other queries through NLP. By introducing a text field many consumers enter questions the bot is not equipped to answer which confuses the bot. See NLP bot above.

Voice-based

A newer type of chatbot we're beginning to see emerge are based in voice-recognition technology. In 2020, 24% of American consumers owned a smart speaker, creating the opportunity for advanced companies to create more personalized chatbot experiences. While this is still an emerging category, it's exciting to imagine the possibilities here.