Home

Product and service reviews are conducted independently by our editorial team, but we sometimes make money when you click on links. Learn more.

How Chatbots Can Help Grow Your Small Business

Donna Fuscaldo
Donna Fuscaldo
Senior Finance Writer

Chatbots are becoming ubiquitous; here's how to use them in your small business.

  • Chatbots are becoming more popular as e-commerce continues to grow.
  • Chatbots rely on artificial intelligence and machine learning to perform tasks that are typically done by humans.
  • Your business can use chatbots to help find quality sales leads, improve customer service and engage customers at different points in the sales journey.
  • This article is for small business owners considering using AI chatbots on their website.

Chatbots are much more than a digital assistant, they help small businesses save money, close sales, and connect with customers in an increasingly digital world. Their popularity has soared amid the pandemic with many small businesses forced to do more with less staff and resources.

"Chatbots are all about business productivity and efficiency gains," Juergen Lindner, senior vice president of global marketing for SaaS at Oracle told Business News Daily. 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, said Lindner.

What is a chatbot?

A chatbot is a software application that relies on artificial intelligence, or AI, to perform tasks that are typically carried out by humans. Amazon's Alexa and Apple's Siri are two popular examples of a conversational bot. Facebook Messenger's chatbot, SMS chatbots, and social media bots are other examples.

Chatbots learn from user behavior, becoming more realistic and efficient over time. They can perform a variety of business tasks, whether it's approving expenses, interacting with customers online or finding leads.

"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."

Key takeaway: Chatbots are software programs that use AI to automate certain tasks for humans such as answering questions or automating certain tasks, like approving expenses.

How are chatbots used?

Chatbots can be deployed across different areas of a small business's operations and can be used in most industries. New applications for chatbots are emerging at a dizzying rate. For small businesses, chatbots are most commonly used in:

  • Sales. Small business owners are employing chatbots to engage with customers, particularly during the pandemic as more sales are taking place online. They are also using it to interact with potential customers. A bot can engage in live chat with a customer who has questions and offer an instant reply.

    "Based on profile and context, you can automate tasks such as informational queries and personalized recommendations," said Lindner. "This gives both customers and internal sales teams seamless access to information and processes through text and voice."

    For sales, chatbots can be used to gather information on prospects, identify qualified leads, and automate outreach and follow-up.
  • Customer service. Call centers commonly use chatbots because they can provide a quick reply with a default answer for the more mundane questions, freeing up customer service reps to tackle more difficult queries.

    "Certain chatbots can be customized in several creative ways, allowing for new forms of engagement with both prospects and customers," said Wood. "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." [Looking for alternatives to customer service chatbots? Here are other top customer service programs.]
  • Marketing. A bot can be an effective way to interact with customers and upsell, especially on Facebook Messenger. Using a bot, businesses can automate conversations with existing customers and potential new ones, they can suggest items, provide information, and send leads to sales and marketing teams – all without the need for human intervention. 

Key takeaway: Chatbots are used by small businesses in many industries to help with their sales, customer service and marketing.

What makes a chatbox effective?

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. If [it's] serious and professional, the same [goes] for the chatbot," said Jason Junge, CEO of PointerTop. "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."

Key takeaway: Before going live with a chatbot, make sure the chatbot reply messages are clear and complement your company's branding.

What are some effective strategies for chatbot replies?

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

  • Sales. Chatbots can provide sales reps with solid leads, but according to Junge, they need to focus on qualifying questions and capturing contact information at the same time. The responses should lead the prospect to the correct funnel.

  • Customer service. When using chatbots for customer service, keep the chatbot reply message short, clear and concise to prevent the customer from exiting the conversation, said Junge.

  • Marketing and engagement. The responses your chatbot provides when it's performing marketing functions will depend on your particular goals. If it's to direct users to a certain page of your 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.

  • Surveys. 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 said.

Key takeaway: Depending on the function the chatbot is performing, the strategy behind the responses it provides will vary. If you're attempting to capture leads, for instance, your chatbot should focus on asking qualifying questions while also obtaining a customer's contact info. With customer service functions, the answers should be short.

What should I look for in a chatbot?

Chatbots are becoming ubiquitous as the world becomes more digital. The price of chatbot software is coming down, presenting many opportunities for small business owners to implement this technology. But which software is right for you?

The experts we spoke with for this article recommended focusing on programs that solve a singular problem or that are designed for a specific business use case, e.g., 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.," said Wood. "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."

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, he said.  

Junge advised comparing the price, functionality, look and feel, ease of use and integration, and support levels offered with chatbot solutions. It's imperative to work with a vendor with whom you feel comfortable entrusting your data.

"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," said Junge. "It will take time and work to build the chatbot conversations, but once installed, the chatbot will prove of great benefit."

Key takeaway: Choose a chatbot software solution that helps you achieve your primary goal. For instance, if you want a chatbot to increase the number of leads, focus your search on lead generation chatbots. It's also imperative that you trust the provider with your data. Last, additional features to consider include price, ease of use, look and feel, and integrations offered.

Image Credit: demaerre / Getty Images
Donna Fuscaldo
Donna Fuscaldo
Business News Daily Staff
See Donna Fuscaldo's Profile
A lifetime New Yorker, I am a veteran finance and business journalist that has contributed to several national media outlets including Forbes, Investopedia, and Bankrate.com. I have spent my career providing consumers and business owners with advice and guidance to help them navigate the world of finance. As a senior finance writer, I report on all aspects of finance from managing cash flow to choosing the best accounting software.