In today's online world, chances are you've encountered chatbots—they're changing how customer service is delivered. Could a chatbot be right for your own business? More importantly, how can your organization balance personalized customer experience and human contact with the productivity-boosting automation offered by today's technology?

Here's what you need to know.

How chatbots work

Most of us have seen a chatbot in action: Using the latest technology, including machine learning and artificial intelligence (AI), a chatbot provides an automated response that's customized to an individual's questions. Often added to a business' website or as a small box or window pop-up, a chatbot's functionality is frequently enhanced to integrate information and data from other programs to provide specific information to the user.

When deciding if a chatbot is right for your business, consider your customers and how comfortable they are communicating online and through mobile, as well as which methods would work to support your service initiatives.

How a chatbot can help your business

For most companies, a chatbot can serve as a simple customer service solution. They can effectively answer frequently asked customer questions, such as business location, hours, etc. This improves business efficiency, freeing up time for your support/customer-service staff to work on more value-added issues that require human attention.

Start by testing a chatbot in your business as an option for a simple but common request. Using it to answer your customers' five most commonly asked questions right on your website is a good start.

Using a bot allows you to connect with your customers via mobile or desktop computers to help them make purchases, look up order histories, and assist with mobile orders and payments.

Chatbots can also be programmed to introduce customers to a "live" customer service person during regular business hours by channeling the user query to the right department. In addition, multi-function chatbots can deliver marketing messages based on a re-targeting algorithm so customers can receive offers tailored to their buying patterns.

Don't hide the fact that you're using a chatbot. Instead, assure customers they'll still have the option to talk to a live person if they prefer, a concept known as "escalation." Some businesses, like American Express^®, emphasize their use of chatbots to complement customer service of live employees outside of typical business hours by making them available 24/7 via the business website.

When a chatbot might backfire

Although they closely mimic human interaction, a chatbot is simply a technological tool. To use it most effectively, business owners need to understand its limitations and capabilities before introducing it to customers.

If you or someone on your team doesn't have the time or desire to create and implement a chatbot strategy, now might not be the right time to try one. Without a detailed execution plan and training, a chatbot can be a business failure right out of the gate if it issues confusing, inappropriate or incorrect automated responses to customer queries and statements.

Another potential issue is impersonal interactions that frustrate and/or irritate the user, leaving them feeling like they're talking to a machine instead of getting appropriate customer service help. This includes not using a customer name in a chat box, or not giving the user a simple path to connecting with a human. In other cases, chatbot responses and phrases might sound automated instead of natural, or they don't align with the company’s brand.

Incorrect or incomplete initial setup of a chatbot is another thing to watch for. A chatbot needs access to all programs and data necessary to answer customer questions. For example, if a customer wants a shipping update on their order, the chatbot needs access to their shipping software.

Strategy and integration are key

In today's rapidly changing technological environment, it can be tricky for businesses to find the right balance between automation and human contact. There are pros and cons depending on your type of business. For example, if a service is being provided, there is nothing better than having the assurance of a human touch and live confirmation that an issue or order will be resolved to the customer's expectations. The same rings true for specific circumstances. For American Express, a delayed payment due to an accident in the family requires empathy and sympathy, which only a human representative can convey.

In cases of frequently asked questions, however, a chatbot that can fire off precise information quickly and efficiently is often the most expeditious option. Policy and procedures determined by discretion and user-case scenarios will best help you define the role of chatbots to further your business initiatives.

With a clear implementation plan in place—one that can support human customer service, sales and marketing communication—a chatbot could positively impact your overall customer experience.

This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.