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An Ultimate Guide To Chatbot Development: From Implementation To Monetization

Maryna Cherednychenko - March 12, 2021 - 0 comments

More than half of modern users prefer chatbots over human agents because they provide quick answers to simple daily questions. It is expected that 80% of businesses will use chatbots in 2021 and shift most of the standard issues onto bots’ shoulders. If you still have no bots among your staff members, now is the right time to get some. Tireless employees will work 24/7 with equally high productivity, letting humans deal with more creative tasks. In this post, we will dig deeper into the chatbot development topic. We’ll see how chatbots work and what technologies are used for their creation. Besides, we’ll consider the prominent use cases for different business purposes.

Benefits Of Using Chatbots

If you still hesitate to invest in chatbot development, look at the perks you will receive.

Better Service

In 2016, Oracle published a report showing that more than 50% of clients expect businesses to provide customer support around the clock. With chatbots, this can be easily achieved. Also, bots can capture data and trends during customer interactions which helps optimize replies during next contacts.

Faster Responses

If a company receives many typical calls, there is no need to write new templates or expand personnel. A well-built chatbot will give timely answers to all users. It will advise on the company’s products and share brand-related info in a matter of seconds.

Lower Costs

Bots can save you a lot of money since you reduce monthly salary and other human-related payments. Of course, you will have to pay for development. However, once created, the cost of running and updating the bot is relatively low.

Easy Shopping

Except for advising on various matters, chatbots can sell goods directly from the chat. When a client selects the product, the bot sends them a link to place an order. The user only needs to enter the card details and click “Pay.” It is very convenient and takes a minimum of time.

Personalized Offers

A bot remembers the client’s choice and offers the relevant goods next time. Besides, it keeps records of all dialogues and queries, which lets loyal customers count on deeply personalized service with special offers and discounts.


Chatbot benefits for business

Chatbot benefits for business

What Type Of Chatbot Do You Need?

There are several classifications of chatbots. Here we will talk about the types of chatbots in terms of their ability to make decisions. According to this criterion, rule-based chatbots and AI-based chatbots exist. Let’s consider them in more detail.

Rule-Based Chatbots

Such chatbots cannot improvise. They answer according to a clearly defined algorithm using the “if-then” logic. There is a database with typical questions and canned responses. You can expand it as new queries arise and train bots to use this data during the conversations. A non-trivial problem will confuse the rule-based bot because it does not know how to think and make decisions.


  • Easier to train
  • Cheaper to develop
  • Faster to launch


  • Standard answers only
  • No personalized service

Best for

  • Start-ups and small businesses


  • Swelly, Yes Sire, Roof AI chatbots


AI-chatbots mimic human behavior. Unlike rule-based bots, they do not respond with standard phrases but select an answer depending on the question’s content. AI-bots use machine learning to gain new knowledge. So, the more they talk to customers, the more intelligent and accurate they become. Such bots are great for solving issues that are more complex than regular FAQs.


  • Better service
  • Clearer answers
  • Customized approach


  • Longer development
  • Expensive implementation

Best for

  • Big companies or firms that often deal with non-trivial cases


  • eBay, Disney, Marvel chatbots


Rule-based bot vs. AI-bot

Rule-based bot vs. AI-bot

How Chatbots Work

Let’s take a look behind the scenes and see what a chatbot is made of. What components does it need to understand human speech and generate the correct answers? The essential list is below.

Bot Middleware

Middleware is responsible for the optimal infrastructure of the chatbot program. It is developed and used as a backend or server and takes care of the following tasks:

  • get messages from communication channels
  • communicate with the NLP engine to extract the context of the messages
  • connect with the company database to reach user profile
  • log dialogues

Channel Connector

The connector unites the backend with communication channels. The latter are usually popular instant messengers like Telegram or WhatsApp. The integration is established using a specific method that suits a particular channel and enables the bot middleware to use messages from this channel.

NLP Engine

NLP engine is the prime element as it allows the bot to interpret human speech and give reasonable replies. NLP translates verbal language into precise inputs that a machine can further process. This is done with the help of intent and entity extraction. Once the bot identifies them, it proceeds to look for the most appropriate answer. Here is an example of how NLP extracts entities from the text:

Customer says: I want to book a ticket from Paris to London on September 15th

NLP interprets: {From : Paris, To : London, Date : 9/15/21}

Context Storage

The bot needs to understand the context of the question to formulate the correct answer. Entities alone are not enough because they may reflect different things in various situations. In multi-turn chat, it is essential to follow the focus of the conversation. For that, the bot regularly checks the context storage. It allows them to ask follow-up questions and stay informed even if the dialogue is interrupted for some time.

Enterprise Background

This part is not essential and can be applied only to AI-bots. However, we recommend considering it if you need a helpful bot for your business. When a bot has an enterprise background, it understands what the company does and what it aims for. This awareness helps walk in customers’ shoes and provide a better service. For example, if you run an eCommerce store with clothes, the style-savvy bot will be more accurate than a general-purpose bot that speaks English.


Chatbot components

What a chatbot consists of

How To Make Chatbot

If you want to make a chatbot, but don’t know where to start, here is a simple algorithm to help you move in the right direction.

Step 1. Select chatbot type. Answer two simple questions: why do you need a bot, and what do you want it to do? For simple “how-to” queries rule-based bot would be best suited. Yet, if you want it to provide human-like consultations, AI-bot should be your choice.

Step 2. Choose a communication channel. How will your users reach a chatbot? Will it be an independent service in your app or on your website, or should the bot talk through popular messengers? Perhaps you want to use a multichannel strategy? The latter might be an optimal solution as it allows to reach a broad audience of clients.

Step 3. Define tech stack. The chatbot development tools depend on the chosen platform or communication channel. If, for example, you decide to create a bot only for Facebook messenger, you can use native FB tools. If you want to run your bot on multiple platforms, it’s better to use custom chatbot development frameworks, such as IBM Watson or BotKit.

Step 4. Train the bot. If you make a rule-based bot, you can skip this step. If you opt for a smart assistant, you should educate it before it starts working. The easiest way is to feed the AI-bot with an existing knowledge base and real tickets from customers. Also, you can provide third-part information related to your business and teach how to behave in certain situations.

Step 5. Test and deploy. Try the trickiest questions to make sure the bot can respond appropriately. When it is released, don’t let it out of your sight. The most convenient way to control a bot is to connect it to your CRM system. Thus, you will have easy access to all dialogues, statistics, and analytics.


How to make chatbot

How to make chatbot

Best Chatbot Use Cases

Today chatbots are used in various business areas, from retail to finance. Let’s see the most prominent use cases which will help you expand business opportunities.


Chatbots can gather tons of useful user data by engaging users in a conversation in a playful way. Such chatbots allow you to get a report on audience preferences and reduce the cost of marketing research. A bright example is a Swelly bot that runs on Facebook Messenger, Kik, Telegram, Line, and Viber. It allows users to choose between two response options, displaying the result as a reward.


Swelly bot

Swelly bot

Brand Promotion

Another indirect way to run a business through a bot is to increase brand awareness. This is achieved through offering the right value proposition, which positively affects the perception of the brand. An example of a branded bot on the Kik platform is the H&M bot. The bot communicates in a relaxed tone, uses emojis. It helps users find the right clothes and advises on creating fashionable outfits based on customer preferences.


H&M bot

H&M bot

Referral Links

A chatbot who knows your preferences can advise you on a product or service but not execute the transaction on its own. A good example is the Kip bot available for Slack, Messenger, Kik, and Telegram. The chatbot first sends suggestions and then links to the store where you can make the order. Such a chatbot is not tied to a single vendor and can provide the user with multiple merchants’ results. When a user completes a purchase, Kip receives a referral fee for sending the user to that store.


Kip bot

Kip bot


Chatbots can become a full-fledged sales channel eliminating the need to install an app on a smartphone. The taxi services Uber and Lyft have been using this method for a while, allowing clients to order through Slack and Facebook Messenger chatbots. Another example of a personal salesperson is the Alexa voice assistant, which helps order items on Amazon. As the chatbot market grows, more and more paid services will migrate to instant messengers.


Lyft bot

Lyft bot


Chatbots collect a lot of personal information during communication, which helps improve targeted ads, and as a result, increase the click-through rate on sponsored links. The bots offer suitable ads during conversations and suggest relevant products in a friendly manner. The KalaniBot chatbot can also be asked for a discount or a promotional code. It targets teenagers and communicates as if being their pal.


Kalani bot

Kalani bot


A chatbot is another type of user experience and a way to promote a product, service, or brand. End users do not pay for bots; however, they pay for their services – ads, consultations, promotion. Organizations develop chatbots to improve service, grow brand awareness, and make extra profit. If you want to raise your business with the help of smart assistants, get in touch. We will advise on the best possible solution tied to your business needs.

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