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How to Create the Best Chatbot for Your Business

Matt D'Angelo
Matt D'Angelo

Chatbots, artificially intelligent computer programs designed to simulate conversations with your customers, are poised for enormous growth. According to Oracle, 80 percent of brands will be using chatbots by 2020, meaning chatbots will become vital tools for all businesses in the near future. From assisting in customer service matters to finding new music, chatbots bridge the gap between natural human interaction and infinite data to help us better understand our world. This is a big responsibility, and as this technology continues to grow, some headaches are likely to emerge along the way.

According to some millennials, issues with chatbots have already begun.]

Two major problems to keep in mind

There are a few major challenges that chatbots need to overcome. The overall goal, however, is for a chatbot to conduct its service accurately and in an empathetic, humanlike manner. These two qualities – accuracy and empathy – drive positive chatbot interaction. Customers are a demanding bunch; they want a chatbot to respond like it's a human, but access and deliver data like a robot.

Connecting with the customer

A major issue for customers is if a chatbot can understand and respond to what they're asking in a normal, humanlike way. Customers want to easily interact with a bot until their problem is solved or they are referred to a human source for assistance. All too often, chatbots are too formulaic, overly friendly and fake. A user's experience with a chatbot should be like that of any other area of your business, so take your chatbot seriously.

Engagement and retention

The other big challenge business owners face is maintaining a favorable retention rate. If a chatbot isn't developed properly, or there is a major gap in its interactions with users, customers will get frustrated and close the chat. This potentially means losing a valued customer because of a technological mishap. Ilker Koksal, CEO of Botanalytics, said that 40 percent of users never get past the first text message, and 25 percent of users don't continue after the second message. These numbers are staggering for any business owner, and should be considered when you're trying to develop a bot that keeps customers both engaged and coming back to your service.

How you can improve your chatbot

While some involve new software or different strategies, the most important thing a business owner can do when assessing and deciding how to improve their chatbot is to consider the program's analytics.

1. Review analytics.

Analytics can tell the entire story of your chatbot. Use them wisely. When reviewing analytics, be on the lookout for user drop-off points and what's causing them. Such things as error messages are clunky and destroy the human facade that chatbots are developed to exhibit. Repetitive messages correlate with retention and engagement rates – consumers won't use your product again if it sounds like a malfunctioning robot.

Rare Carat is a diamond company that paired with an IBM Watson team to create Rocky, a chatbot that assists customers with finding a diamond or learning the difference between diamond qualities like cut, fluorescence and carat. Martim Schnack, chief technology officer, and Ajay Anand, CEO, both said that analytics are an important part of improving Rocky.

"The drop-off points are big," Anand said. "Measuring where users drop off in that flow, every day we at least see the number of completed searches, and we just want to see that number going up, and then trying to understand how we can take out unnecessary content, unnecessary steps and just keep nudging users along with the right flow."

By reviewing analytics, you can stay on top of the good and bad areas of your chatbot. It's important to consider how a different approach to this technology could change your user's experience and better your business.

2. Know your audience.

The difference between an effective chatbot and another annoying message is knowing your audience, how to communicate with them and what they need from your business. Good chatbots target a specific audience and provide welcome information to the user.

Kelsey Hunter is the founder and CEO of Paloma, a messaging platform aimed at helping brands engage with customers through Facebook Messenger and other social platforms. Messenger has been a testing ground for many different bots, and Hunter said that bots fail when they don't give users the information they're looking for.

"The biggest initial problem [with companies using chatbots] is not hooking up with all the data sources that makes this stuff so relevant and makes converting a customer more probable," Hunter said. "The higher the relevancy, the higher the likelihood of conversion. So, you want to take all the content you can get to power those conversations."

The key to developing an effective chatbot is working from data you have about your customers and gaining a better understanding of what they want from your business. Hunter said one way to find out more information on users is to develop direct visibility into the conversations they are having with your bot. By doing this, brands can pull relevant information about their customers. It can also help with how you structure your bot. By providing a "no" answer option, you can better understand what your customers want or need from your business.

"Letting me say no is really important. I haven't seen bots handle this process well," Hunter said. "But finding a no is a pretty traditional marketing and sales tactic because it's a really good data opportunity. So I say no, and they go, 'That's OK, do you want to tell me why?'"

Hunter said that response is a feedback opportunity. Paloma offers users the ability to view feedback and learn more about their customers to better meet their needs in the future. "That's a really good way of getting a quick view into sentiment that's not something that can be analyzed very well through a traditional bot analytics dashboard," she said.

3. Focus on being conversational.

The way we talk is very different from the way we write, and the way we write and speak is significantly different from the way we message one another. Loaded with colloquialisms, idioms, misspellings and emojis, the language of texting and instant messaging has taken on its own style. This can be one of the biggest hurdles for a bot to overcome when trying to properly understand and respond to a user.

A good way to avoid mishaps at the start of an interaction is to tell the customer about the bot. This can be either directly or indirectly, but setting an expectation upfront will change how the customer interacts with your bot. This is especially important for customers who have had little interaction with chatbots and may think they are speaking directly with a customer service or company representative.

Besides saying "this is a bot" outright, there are fun and conversational ways to introduce people to your bot. Rocky, Rare Carat's chatbot, starts things off with a playful message to set expectations.

"I can try answering questions like 'what is fluorescence?' or 'what is the highest clarity?' I'm not great at that, though," Rocky says. "What I'm better at is guiding your search. Shall we do that?"

Establishing expectations gives users the opportunity to test your chatbot while softening any imminent letdowns. Establishing expectations is also important when it comes to the possibility of repetitive answers. Oftentimes when a chatbot gets stumped, it will constantly reply with the same response, which can be frustrating for customers.

One way to avoid this problem, and contribute to your bot's conversation skills, is to prompt your bot to redirect the user to something it can help them with. Rocky does this as well, saying, "Sorry, I didn't get that. Can I try to help you with your search? I'm better at that. Or try asking a different way …" It then displays two buttons for the user to decide if they want to search or ask a question.

This kind of response is significantly more inviting than an error message or a message that simply asks to try again. This would also be a good area to offer an option for human assistance, especially in customer service, in case the bot isn't able to help the customer.

4. Use auto-response buttons.

Using buttons allows users to interact with your bot in a way that standardizes a conversation. It can make things easier for your chatbot and keep the user focused on reaching the information they need in the quickest, most efficient way. Some business owners may worry that auto-response buttons will work against the conversational appeal of a chatbot. Schnack said Rare Carat testing showed that auto-response buttons helped customers and didn't work against that appeal. From a mobile standpoint, the auto-response buttons allowed users to complete standardized, obvious answers without the inconvenience of typing something out.

"Instead of losing half the screen on mobile to the keyboard for each response, whenever there were obvious responses, we added buttons and saw higher completion rates," said Schnack.

While auto-response buttons are a valuable tool, it's important to not overuse them, as they can get in the way of the natural humanlike personality you've worked so hard to develop for your bot.

5. Give your bot a personality.

Give your chatbot a personality and, once you choose it, stick with it. With a singular personality, your chatbot will be able to grow naturally and customers will know what to expect when interacting with it. This includes creating dynamic, conversational responses that aren't in any way mechanical or robotic –the responses should give your bot a certain kind of feel.

Another way to create a personality is to give your bot an avatar or branded illustration. This way, users feel they're talking to a specific being as opposed to just a robot. Schnack and the Rare Carat team worked this out for Rocky, which is a suave, wise-looking bear with a trendy scarf and monocle.

"Rocky the Bear was born after several sessions that included rhinos and bulldogs with our illustrator, Suraj Maurya," Schnack wrote. "The impact was immediate and clear – people liked talking to a friendly bear with a monocle and a pipe more than an unidentifiable machine."

Once people felt like they were interacting with another living thing as opposed to a robot, the Rare Carat team and IBM built out other personality areas to ensure that Rocky reflected the Rare Carat brand.

"If you want to be considered a cool company, make sure your bot is cool – make it funny, using jokes and puns," Schnack wrote. "Another thing we've found helps is having different responses for the same question. That way the conversation will feel much more natural."

Part of creating a personality is also mapping out all the potential interactions your bot will have with users. Lisa Kipps-Brown, CEO of Glerin Business Resources, said that this was a crucial step in improving a chatbot.

"Map out the entire flow before you even begin to develop the chatbot. This helps you cover every angle and prevents having to go back and change things after development," said Kipps-Brown. " is a great tool for this, letting you create visual conversation flows and convert them into mockups that you can export as video to get feedback on."

Bottom line

Chatbots have the potential to be very beneficial to your business and brand if they are created and maintained properly. If you emphasize human interaction and strive for accuracy, then you'll be on the right track to creating an effective chatbot for your business. Anand and Schnack said that the most important thing to remember is that a chatbot is never finished. It is a tool that needs to be constantly updated and fine-tuned to be effective.

"You're never done building [it]. Every night, our human gemologist sits down with Rocky to see what he got wrong and teaches him the right answers," said Anand. "He goes to school every night and comes out smarter the next day."

Image Credit: Pranch/Shutterstock
Matt D'Angelo
Matt D'Angelo
Business News Daily Contributing Writer
I've worked for newspapers, magazines and various online platforms as both a writer and copy editor. Currently, I am a freelance writer living in NYC. I cover various small business topics, including technology, financing and marketing on and Business News Daily.