10 ways chatbots can improve customer service with AI

Chatbots are nothing new. While some latecomers to the party still get excited every time they say ‘Hey Google’ or throw a question at Apple’s Siri or Amazon Echo’s Alexa; the word ‘chatbot’ can be traced as far back as the 1950s and a program called Eliza was imitating human interaction and responding with intelligent phrases of its own in the 1960s. Eliza’s best days may be well and truly behind ‘her’ but she certainly paved the way for popular proteges such as Siri and Alexa.

More importantly, there is no end in sight for the current boom in chatbot technology.

For proof, look no further than a Business Insider report that shows the global chatbot market is expected to almost quadruple from $2.6 billion in 2019 to an incredible $9.4 billion in 2024. Much of that growth is being driven by the retail and eCommerce industries, which are committed to doing all they can to provide consumers with what is the main brand differentiator in 2021 – a quality Customer Experience (CX). Now ranked more important than price and product, CX is the key to not only attracting but keeping business in the modern world and chatbots are playing a pivotal role in providing customers with seamless omnichannel experiences.

Where some businesses once used chatbots to show customers how technologically advanced they were, today they are a vital tool for streamlining customer service, reducing costs and facilitating happier customers. In a world where endless information is at our fingertips, people are no longer comfortable waiting on hold for lengthy periods to make an enquiry or resolve an issue. They want immediate action and chatbots are allowing businesses to provide just that.

One should also not underestimate the role the global COVID-19 pandemic has played in driving the growth of chatbots. At a time when human contact had to be limited, businesses not already onboard were forced to embrace digital transformation and the power of chatbots to automatically engage with incoming messages or start conversations in a natural human manner. From healthcare and retail to eCommerce and government messaging, chatbots have been essential in complementing regular workforces during an unprecedented period.

Benefits of Chatbots in Customer Service

A Salesforce report has found that while 23% of customer service organisations use AI chatbots, a further 31% are planning to start using them within the next 18 months. The chatbot revolution is clearly gathering momentum and nowhere is that more so than for their ability to facilitate efficient customer service. If you have wondered how chatbots can improve customer service – let alone a suite of AI chatbots – read on.

Increased Personalisation

Imagine employing a system that gathers data about individual customers – their preferences, their habits, their shopping history – and using it to deliver them a personalised experience. Automated chatbots use such detailed insights and reports to design and deliver improved customer service, along with decreasing talk time and providing faster solutions. Increasing customer engagement should be a goal of any business and chatbots are helping many organisations know their customers better than ever.

Instant Resolutions

AI allows chatbots to offer more than just a suggestion when a customer asks a question. Using source material such as knowledge bases and FAQs, they are able to automatically answer such questions by searching for relevant details based on what customers are typing or saying before they even finish doing so. Customers love speedy responses and businesses love happy customers.

Data Collection

Data is as precious as gold for modern businesses and chatbots ensure that nothing is missed in the search for it. With many organisations engaging in literally thousands of customer conversations, the risk of missing a crucial piece of information is ever-present when left to humans. Chatbots, on the other hand, are able to communicate and gather information and transform all incoming user queries into big data. Every customer is unique and by storing all the information from each interaction, chatbots create a repository of real data that can be used to improve systems or even create new products based on customer feedback. Acting on what customers actually want rather than solely the information a brand wants to convey is crucial to enhancing the customer experience.

Reduced Frustrations

As consumers come to expect more from their online experience, buyer journey abandonment is on the rise. The current online shopping cart abandon rate is almost 70% and plenty of that churn is due to customers who can’t find what they want on a website going elsewhere. Chatbots can help by answering simple questions and pointing customers in the right direction. They also lessen the risk of customers being forced to repeat answers to the same questions multiple times, which is not only frustrating but degrades the customer experience. Quality AI chatbots can display information to live agents about what a referred customer wants, along with historical data and recommended tips and insights.

Complex Conversations

AI chatbots offer so much more than traditional interactive voice response (IVR) technology. Rather than expecting customers to navigate to their answer through a keypad, conversational AI chatbots proactively engage with them and guide their journey. The conversation also provides context that enables a business to offer more than a simple answer. For example, if a customer has booked a hotel room and tickets to a major sporting event in Sydney, AI-powered chatbots have the ability to offer additional options such as car hire or dinner reservations to enhance their trip.

24/7 Support

This is one of the most basic advantages of implementing chatbots. It also happens to be one of the most appreciated by customers. With modern consumers adhering less and less to traditional business hours, chatbots allow organisations to engage with their customers and provide instant solutions 24 hours a day, 365 days a year without lengthy waiting times and the huge expense of employing live agents around the clock. Indeed, 24/7 availability has been pinpointed as the number one benefit of chatbots and removes the annoyance of being forced to wait for a customer support response via voicemail or email.

Less Errors

Humans will always have a huge role to play in delivering exceptional customer experience. However, when it comes to tedious and time-consuming interactions, the reality is they are more likely to make simple errors than chatbots. If programmed properly, AI-powered chatbots can be relied upon to give customers prompt and correct answers each and every time, which is music to the ears of both customers and business leaders.

Continuous Learning

How wonderful would it be to know that every one of your employees is committed 100% to self-improvement? Well, one of the joys of AI-powered chatbots is they automatically enhance their quality based on past experiences and, in turn, deliver customers with better responses. Their ability to add query-based information to their knowledge bank and continually upgrade their data means they are ever-evolving and capable of answering more complex questions related to similar topics.

Growing Enthusiasm

It’s fair to say no one looks forward to contacting customer support. The potential for lengthy waits, awkward conversations or lack of resolution means many people even dread the thought of making that call. Such concerns are why the public embrace of AI chatbots is on the rise, with one survey showing 70% of people are happy to use them if it means they can resolve their issues without needing to email or make a call. The technology driving chatbots is improving by the day and as it does, there is little doubt that people’s enthusiasm for engaging with them is also set to rise.

One Language

In an increasingly global world, breakdowns in communication are often cited as one of the greatest frustrations when consumers contact customer service agents. Different languages, accents and colloquialisms are all barriers to quality engagement but employing an AI chatbot can help minimise such frictions. By running on Natural Language Processing (NLP) standards, chatbots are not only able to understand different tones and languages with ease but store unique words and sentences that develop and increase their existing knowledge base. The power of artificial intelligence and machine learning then allow the chatbots to deliver answers to queries that they are yet to be programmed for.


Artificial intelligence has long been predicted to change the way we live, work and play. For smart organisations, it is also changing how they can better support their consumers. Adding AI-powered chatbots is no longer a value-add but a must-have, especially for retail and eCommerce businesses, with agents and customers alike certain to appreciate an investment in what they all have on their wish lists - a better customer experience.

With the roll-out of automation no longer a matter of if but when for many companies, learn how to prioritise which processes are candidates for automation and how they will benefit from RPA.

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