How do Chatbots work?

The global chatbot market is rapidly growing, projected to reach $9.4 billion by 2024 with a 29.7% compound annual growth rate. Chatbots vary in complexity, from basic rule-based systems that respond to specific keywords, to advanced AI-powered chatbots that understand customer intent through Natural Language Processing (NLP) and generate conversational responses.

AI chatbots, enhanced by machine learning, improve over time by analyzing customer queries and consulting a knowledge base for accurate responses. If a query is unclear, the chatbot can ask follow-up questions to refine its understanding. If necessary, it can escalate complex issues to a human agent.

In customer service, chatbots can handle routine inquiries efficiently, with escalation to live agents only for complex issues. They offer a concierge-like experience, improving customer satisfaction with quick, personalized interactions. Additionally, intelligent chatbots can use trigger management to handle tasks like renewals or cancellations, boosting efficiency and reducing churn while enabling upselling opportunities.

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