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What is an AI chatbot? Unlocking the secrets

Georgia Brooker

August 16, 20234 minutes

illustration of what is an AI chatbot, from giving a brand its own chatbot to supporting agents as they assist direct customers

Meet the AI chatbot, your friendly virtual companion ready to converse and assist! An AI chatbot is a remarkable computer program designed to engage in interactive conversations with humans (minus the robot vibes). Harnessing the power of artificial intelligence (AI), these clever virtual assistants understand and respond to incoming communications across a variety of messaging apps in a conversational way, making interactions as natural as chatting with a friend. From answering questions and offering support to providing personalized recommendations, AI chatbots are paving the way for a more seamless and efficient user experience.

We’re here to give you the CliffsNotes on the best AI chatbots, from how they make their magic happen to what you can do with them.


How do AI chatbots work?

This isn’t the stock question-and-answer model that you might have played with on the internet growing up — AI chatbots are highly intelligent software that are constantly learning and evolving to improve their functionality. AI chatbots operate through a sophisticated combination of natural language processing (NLP), natural language understanding (NLU), and generation using language models so they can hold a “human” conversation. When customers interact with conversational chatbots, their input is preprocessed and analyzed using NLU techniques to comprehend intent and extract key information. From there, dialog management maintains context, guiding the conversation flow. 

So, how does it end up seeming more human than robot? We can thank advanced machine learning and generative AI models, integrated with knowledge bases — these help to generate the contextually aware, hyper-relevant responses you get when interacting with a well-made chatbot. Further, sentiment analysis and conversational intelligence help brands tune chatbots in response to emotions — resulting in a more casual and less rigid tone. Quality AI chatbots are essentially self-learning, building upon their existing knowledge to become better every day.


What is an AI chatbot used for?

Chatbot AI technology has been designed to serve a huge range of functions — it’s essentially like having another human brain on board (albeit a freakishly organized one). Here are some of the main uses of conversational AI and AI chatbots in business. 

  • Customer support: An AI chatbot has all the benefits of a human customer service rep, minus the human error. They can be your first-line support agents in customer contact centers, dealing with frequently asked questions, troubleshooting issues, and providing instant automated responses.
  • Task automation for operational efficiency: Besides customer support, these virtual agents can automate tasks such as scheduling appointments, order tracking, and feedback collection, streamlining business processes with integrations throughout your tech stack.
  • Improved sales and conversions: In e-commerce settings, conversational commerce chatbots can offer product recommendations and assist customers through the buying process, positively impacting sales and conversions.
  • Data collection and analysis: Chatbots can gather valuable user data and insights from conversations across a variety of mobile apps and messaging applications, helping you understand customer preferences and pain points for better decision-making.
  • Smart issue resolution: Chatbots can troubleshoot common problems and guide users through step-by-step solutions in a conversational way, effectively resolving issues without human intervention.

Benefits of using AI chatbots

There are oodles of ways that AI chatbots can make your life easier and your business run smoother. Here are some of the key benefits of harnessing a chatbot platform:

  • 24/7 availability: AI chatbots can operate round the clock without fatigue, providing instant support and information to users at any time — so if someone needs help at 3 a.m, they can get it. 
  • Cost-effective: By automating customer interactions, businesses can save on labor costs. Chatbots can juggle multiple conversations without the need for human intervention.
  • Improved response times: Chatbots can use AI to process and respond to user queries instantly, leading to reduced wait times (and more satisfied customers).
  • Scalability: Short-staffing? Never a problem with AI-powered conversational customer service! Because they can handle an unlimited number of interactions, AI chatbots ensure no customer gets left behind during peak periods or spikes in demand.
  • Consistency: Your AI chatbot doesn’t have bad days — it’s always on and performing at its peak, so your support quality remains high.
  • Personalization: Advanced chatbots can analyze user data to offer personalized recommendations and a tailored customer experience, enhancing engagement and customer loyalty.
  • Multilingual support: AI chatbots can easily be programmed to understand and respond in multiple languages, broadening their reach and supporting global customer bases.
  • Adaptability and learning: Your clever little chatbot is always learning from its interactions. It becomes more proficient and capable of handling diverse queries and scenarios over time.
  • Enhanced user engagement: With their conversational nature, chatbots create a more engaging and interactive experience for users (see some chatbot examples here). This translates into more time on page and in apps. 

Finding the right AI chatbot

Because it’s such a fast-growing field, finding the right AI chatbot software for your business can seem like a daunting task. Enter LivePerson, with a conversational AI platform built to deliver superhuman results with an uncannily human touch. LivePerson offers a range of AI capabilities, including the ability to build, manage, and optimize responsible AI chatbots to scale your conversational care and commerce needs.

See what all the fuss is about and get an AI chatbot and conversational AI demo today!