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Updated Oct 23, 2023

How Chatbots Can Help Grow Your Small Business

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Donna Fuscaldo, Business Operations Insider and Senior Analyst

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Chatbots are much more than digital assistants. They can help your small business save money, close sales, and connect with customers in an increasingly digital world. Their popularity has grown steadily since early in the pandemic as many small businesses were forced to do more with fewer employees and resources. We’ll explore chatbot uses and explain how to find the right chatbot tools to grow your business. 

What is a chatbot?

Chatbots are an example of artificial intelligence (AI) tools transforming business. A chatbot is a software application that relies on AI to perform tasks humans typically carry out. Amazon’s Alexa and Apple’s Siri are popular examples of conversational bots. Other examples include ChatGPT, Facebook Messenger’s chatbot, SMS chatbots and social media bots.

Chatbots learn from user behavior, becoming more realistic and efficient over time. They can perform various business tasks, including approving expense reports, finding sales leads and connecting with customers online.

“For sales [reps], chatbots are a useful tool for information gathering on prospects so they can be better funneled and identified as a qualified lead,” said Jesse Wood, president and CEO of eFileCabinet. “For customer service, chatbots can be immense timesavers when a customer is looking for quick answers to simple questions, especially if they can do it right from the product interface.”

Did You Know?Did you know

According to a Tidio survey, 62 percent of consumers would be happy to use a realistic chatbot online instead of waiting to speak to a customer service representative.

How are chatbots used?

You can deploy chatbots in various areas of small business operations and across industries. New applications for chatbots are emerging at a dizzying rate. For small businesses, chatbots are most commonly used in the following capacities:

  • Chatbots in sales: Chatbots can gather information on prospects, identify qualified leads, and automate outreach and follow-up. A bot can chat with customers and offer instant replies to their questions. “Based on profile and context, you can automate tasks such as informational queries and personalized recommendations,” said Juergen Lindner, an advisor to early-stage startups. “This gives both customers and internal sales teams seamless access to information and processes through text and voice.”
  • Chatbots in customer service: Call centers commonly use chatbots to provide quick replies with default answers to common questions, thereby freeing customer service reps to tackle more challenging queries. “Certain chatbots can be customized in several creative ways, allowing for new forms of engagement with both prospects and customers,” Wood said. “For example, chatbots can be programmed to bring up competitive analysis if the name of a competitor is brought up. Chatbots can also act as surveys, collecting feedback from customers on a regular basis.” 
  • Chatbots in marketing: A bot can effectively interact with customers and upsell. Businesses can automate conversations with existing customers and potential new ones. They can also suggest items, provide information, and send leads to sales and marketing teams, all without human intervention.

What makes a chatbot effective?

A chatbot should reflect your brand and reduce the workload for your team. 

  • Chatbots must reflect your brand. If your chatbot is confusing or doesn’t reflect your branding, it could damage your business’s reputation and lead to lost sales. “If the company’s brand is fun, the chatbot should be fun,” said Jason Junge, CEO of PointerTop. “If [it’s] serious and professional, the same [goes] for the chatbot. It’s also important that the chatbot be succinct and to the point. … Otherwise, visitors will feel that their time is being wasted as most do today with automated phone answering systems.”
  • Chatbots must lessen the workload. An effective chatbot should also reduce, not add to, the range of tasks your team must perform manually. They should handle typical inquiries, thus empowering your sales staff to deal with more challenging interactions. “Chatbots are all about business productivity and efficiency gains,” Lindner said. Small businesses operate with limited resources, which makes utilizing data, automation and digital interactions so important. Applications like chatbots can free small business owners and their staff to focus on their core business.”

Add chatbot functionality to your website’s landing page to get visitors to engage with your company.

What are some effective strategies for chatbot replies?

Here are some examples of tactics and styles small business owners can employ with their AI chatbot responses:

  • Chatbot sales replies: Chatbots can provide sales reps with solid leads. However, according to Junge, they should focus on qualifying questions and capturing contact information simultaneously. The responses should lead the prospect to the correct sales funnel.
  • Chatbot customer service replies: When you’re using chatbots for customer service, keep the chatbot reply messages short, clear and concise to prevent the customer from exiting the conversation, Junge advised.
  • Chatbot marketing and engagement replies: Your chatbot’s responses when performing marketing functions will depend on your specific goals. If you want to direct users to a particular page of your business website, use the chatbot to invite them to learn more. If you want to generate buzz, the chatbot can offer a discount or deal in exchange for an individual’s email address.
  • Chatbot survey replies: Customer surveys are a great way to get customer feedback or glean ideas for new products and services. Chatbot responses can vary. “The format varies depending on the length and subject matter of the survey,” Junge noted.
Key TakeawayKey takeaway

Use chatbots for in-house purposes, like AI-powered HR functions. For example, AI-powered chatbots can guide new employees through the onboarding process and explain employee handbook basics.

What should I look for in a chatbot?

Chatbots are becoming ubiquitous as the world becomes more digital. Chatbot software prices are decreasing, presenting many opportunities for small business owners to implement this technology. But which software is right for you? Keep the following considerations in mind:

  • Choose a chatbot solution that solves a problem. Experts recommend focusing on programs that solve a particular problem or are designed for a specific business use case, such as customer service. These chatbots are trained to respond to defined patterns or use machine learning to detect patterns and evolve based on the data and interactions. “It’s best to implement a chatbot with a singular goal, whether that’s to improve customer service, generate leads, etc.,” Wood said. “Program chatbot responses with a singular goal that will better funnel customers to the desired destination — for example, to a live demo or conversation with sales.”
  • Choose a data-savvy chatbot solution provider. Lindner recommended purchasing solutions created by a vendor that understands data. Choose chatbots that provide “white-box” or explainable AI over “black-box” solutions in which you hand over your data to algorithms that are difficult to understand.  
  • Choose a chatbot vendor you’re comfortable with. Junge advised comparing the price; functionality; look and feel; ease of use and integration; and support levels offered by chatbot solutions. It’s imperative to work with a vendor with whom you feel comfortable entrusting your data.
  • Choose the level of chatbot functionality you need. Evaluate your needs. You may need a straightforward solution or more robust chatbot functionality. “Chatbots can be intimidating for small businesses to consider; however, some are very simple to use and install, where the more complicated ones can be installed by your own web developer, the chatbot company itself, or with professional assistance,” Junge said. “It will take time and work to build the chatbot conversations, but once installed, the chatbot will prove of great benefit.”

The best live chat apps — including LiveChat, Tidio, HubSpot Live Chat, and LiveAgent — include integrations with the best CRM software, multichannel support, analytics reports and management tools.

Chatbots are more than the future — they’re here now

What might have once seemed like the future — outsourcing some of your most menial and most significant work to chatbots — is here now. While you can’t (and shouldn’t) source all of your tasks to bots, implementing them can save you valuable time while streamlining the customer experience. Look for a chatbot that addresses your exact use case, and you’ll be well on your way to leveraging a tool that makes all the difference.

Max Freedman contributed to this article. Source interviews were conducted for a previous version of this article.

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Donna Fuscaldo, Business Operations Insider and Senior Analyst
Donna Fuscaldo has spent 25 years immersed in the intersecting worlds of business, finance and technology. As an expert on business borrowing, funding and investing, she counsels small business owners on business loans, accounting and retirement benefits. For more than two decades, her trusted insights and analysis have appeared in The Wall Street Journal, Dow Jones Newswires, Bankrate, Investopedia, Motley Fool, Fox Business and AARP. In addition, Fuscaldo has used her personal and professional experience to provide guidance on employment matters for the likes of Glassdoors and others. With a bachelor of science in communication arts and journalism, she is skilled at breaking down complex subjects related to business and careers for practical application.
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