August 25, 2023

The complete chatbot definition guide

Read this quickstart guide for an updated chatbot definition on today’s smarter-than-ever chatbots. Plus knowledge on chatbot types and how it all works.
Time to read: 
25 mins.
Charles Buchanan
Read this quickstart guide for an updated chatbot definition on today’s smarter-than-ever chatbots. Plus knowledge on chatbot types and how it all works.

This complete chatbot definition guide defines today’s chatbots in a clear and easy way. Expect real-world examples of chatbots alongside discussion on the latest in chatbot types and chatbot software. You’re also going to walk away having learned the (many!) benefits of chatbots for your business and how to build as well as integrate chatbots.

Chatbot definition: What’s the best chatbot definition?

Because a chatbot is essentially what it does, the best way to define the tool is to break down the word itself. Chatbot: A bot that chats. Easy. But not all chatting was created equal. And nor were the bots themselves. Recent chatbot innovations have never made this clearer.

Chatbot definition fact: Chatbots were actually first developed in the 1960s by computer scientists in the USA. They became commercially popular decades later in 2009 after a Chinese firm launched WeChat – a pioneering chatbot platform.

The collective win for all chatbot-using businesses is their benefiting from the additional channel chatbots bring to business. Channel? Yes, communication channel, specifically. What businesses are seeing is really a quicker, easier way for customers to talk to brands (and on platforms they’re already using) – which in turn drives brand engagement.

Chatbot definition: A new customer communication channel

Keeping our chatbot definition simple, let’s now talk two main chatbot software builds – that is, AI versus prebuilt chatbots – and then some chatbot types between these two groups. Ready?

Chatbot definition: AI and prebuilt chatbots

AI stands for artificial intelligence. You probably knew that. What you might not know is another acronym on which all this AI business is based. And that’s NLU. NLU stands for natural language processing. That just means that sentences are understood contextually, and not just by their individual words.

When talking about chatbot software, an AI chatbot is one whose goal is to understand customer input contextually, making for more dynamic conversation rather than something limited to a script or rule. And right there’s the difference between the two types of chatbot software: contextual conversation, versus scripted conversation.

‘Prebuilt’ in the chatbot world is another term for scripted or rule-based chatbots. This means chatbot interactions are guided by question and dialogue options – sometimes called ‘flows’ or ‘trees’.

Both chatbot software builds have their advantages and disadvantages. For example, prebuilt chatbots can be optimised for sales funnels by smartly steering question and answer flows, keeping customers focused and maximising conversions. AI chatbot software, however, can answer more nuanced customer questions because of the software’s greater contextual understanding.

Chatbot definition: Serviceform chatbot builder dialogue flows

Have a look at AI versus prebuilt chatbots for an informative (and neat!) read on use cases between the two chatbot software builds.

Chatbot definition: Types of chatbots

There are actually a number of types of chatbots, to include AI and prebuilt versions. These types are commonly grouped by a defining visual characteristic or behaviour of the chatbot, like full-page chatbots turning an entire page into a product showcase. Examples are:

  • Corner chatbot software
  • Full-page chatbot software
  • Inline (or Engagement) chatbot software
  • Social chatbot software 

Corner chatbots populate webpage corners and are probably the most widely used chatbot type right now. But that’s changing. With the worldwide chatbot market swelling to over USD 15 billion by 2028, other chatbot types are getting their share of attention too.

Chatbot definition: RE/MAX corner chatbot software

Full-page chatbots are on the rise in both real estate and automotive sectors. This is because of their converting power in elegantly showcasing products like properties and cars, then giving timely customer engagement with the chatbot connecting web visitors and companies in real time right there inside the chat window. 

Chatbot definition: First Team full-page chatbot software

Inline bots are also called ‘engagement bots’ for good reason: They engage. This chatbot type lives inside webpages and in between page content, without any hard borders separating them from whatever else a page has going on. A great way to find out more about visitor preferences, the best use case for an engagement bot are webpages supporting a lot of information, like blogs. Engagement bots also perform very well in mobile displays because they’re less disruptive than other chatbot types while being strong context providers. 

Chatbot definition: RengasCenter engagement chatbot software

Social chatbots are, again, exactly what they sound like. They’re chatbots with special platform integration. The benefit with this chatbot type is customer interaction in as few steps as possible – meaning, servicing those customers without leaving the platforms they’re most comfortable on. Popular social chatbot platforms include WhatsApp, Instagram, and Facebook.

Chatbot definition: WhatsApp chatbot software

Market research is clear that customers are likelier to convert when their interest is highest. Whatever your chatbot type, chatbots are all about electrifying the real-time customer experience (while lowering the cost of delivering that experience!), then focusing all that energy into conversion actions like registrations or sign-ups and sales. 

Learn the quintessential chatbot definition and differences between chatbot types, then decide which is best for you by reading our 7 types of chatbots.

Chatbot definition: Why use chatbot software? 

No holistic chatbot definition would be complete without speaking to chatbot benefits. Because there are that many. 

Chatbot software benefits

To no one’s surprise, low-cost 24/7 customer engagement and support are where chatbots continue to make a name for themselves. ‘Business hours’ no longer means what it once did. And that’s because chatbot software is servicing and supporting customers Monday through Sunday, whatever the hour. Before chatbots, 24/7 customer support wasn’t all that feasible without costly outsourcing. Chatbot software has since introduced affordable scalability to businesses of every size and space. 

Automatic lead routing is a use case-grounded innovation in recent chatbot software. When a web visitor is interacting with a chatbot and entering later customer journey stages (think consideration and purchase), you want the visitor at this point in the sales funnel to connect with a company representative as soon as possible and convert.

  • The ‘automatic’ in automatic lead routing means that a human agent gets an email or SMS notification in real time while the web visitor is interacting with the chatbot. 
  • The ‘lead routing’ part of automatic lead routing references the notification going specifically to the person or team responsible for the product or service the web visitor has shown interest in.

A proven turn-off and good way to get customers to drop out of the sales funnel is to hand them off to someone not in the know or who can’t answer their questions and concerns on the spot.

Chatbot software: Automatic lead routing

Chatbot definition fact: Automatic lead routing prevents purchase-ready customers from experiencing bad hand-offs to unknowledgeable live agents and second-guessing completing that purchase.

Actionable feedback collection is another chatbot software advantage. That’s because the best feedback on website experience is collected right after the experience. If you ask for user feedback via email at a later time, customers are far less likely to care enough to relay their experience, let alone remember all of it.

Chatbots are catching web visitor and customer attention in real time, asking about their UI or shopping experience as it’s happening. Where chatbots are saving companies very real money is in capturing actionable feedback that in turn emboldens decision making on what companies can do to optimise their websites and customer support. Remember that as a business, you should never stop optimising. Chatbots are helping businesses optimise, and smartly. 

Interested in more? Read about even more chatbot software benefits in our write-up on the 10 reasons your business should be using a chatbot.

Chatbot software: The relationship between chatbots and live chat

Is chatbot better than live chat? Or vice versa? Neither, actually. Chatbots and live chat work together for all-hour customer support. In a kind of lead-generating circle, where one tool stops, the other starts. 

Chatbot software: Chatbot with live chat

Research shows customers do prefer chat to any other means of connecting with companies. What chatbots can do for your business is automate customer interactions, then qualify those interactions, and ultimately make customer engagement convenient. So what about live chat? That’s where personalisation comes in. Live chat introduces a human element to the chat experience. Anything that can’t be solved through automation, can then be solved by a live customer service agent.

To find out just how deep the synergy goes between chatbot software and live chat, read our quick 4-minute blog on the chatbot vs live chat debate. 

Chatbot definition: What can a chatbot be used for?

Everything. Literally.

Chatbots add fuel to sales cycles – whatever product and/or service you’re selling – and are across industries reducing support costs while increasing lead counts. Asking what a chatbot can be used for is like asking which businesses or industries need revenue. (Hint: All of them.)

Today’s chatbot software and chatbot builders are also highly customisable, some even coming with open brandability (think logos, colour palettes, and employee avatars) to make the chatbot tool a natural-looking extension of your brand.

Check out our top 10 chatbot examples to see for yourself both their customisation and powerful sales generation. Now let’s look at some real-life chatbot applications and use cases.

Chatbot software: Industries

Real estate 

Given the fast-paced world of property listings, chatbots make for ideal 24/7 real estate assistants. Chatbots in real estate have seen a substantial popularity boom for the reason that they act much like an extension of real estate agents themselves. But it’s a version of an agent that can be everywhere and all at once.

Serviceform real estate customer Engel & Völkers saw firsthand the lead generator that Servieform’s unique chatbot software is. In six months, they saw 1200+ leads for an average of 150+ leads every month. These leads were not only qualified by the chatbot, but were both property buyer and seller leads. Today’s chatbots use conversation to quickly find out for agents if a buyer is selling too for twice the lead generation.

Serviceform real estate chatbot software for First Team

Proven lead generation is just one way chatbots are transforming the real estate industry. Take a few minutes to read more about why your real estate agency or brokerage should be using a real estate chatbot.

And speaking about unique chatbot software, Serviceform’s innovative chatbots have introduced a new real estate chatbot type into the mix: Dynamic property chatbots.

One Dynamic property chatbot is all it takes to search and show 1000s of property listings for highly contextual chatbot interactions. And as shown in agency and brokerage lead counts, clients are reacting.

See one of the newest real estate chatbot types in action with Serviceform’s Dynamic property chatbot.

Automotive ecommerce

Chatbots also make for effective closers in auto sales. This is in part because today’s chatbots lend themselves well to visual multimedia as well as full-page showcases for maximum car buyer engagement.

Spain’s Volkswagen Retail Group, a Serviceform customer, quickly experienced this for themselves when Serviceform’s Chatbot started bringing in 100 leads every month. The best part? These were qualified leads. The chatbot was saving Volkswagen Retail Group resources by automating the busiest part of the sales funnel, then ensuring serious, interested leads were being sent to their sales team for follow-up.

Serviceform automotive chatbot software for VW Retail Group

Read more about the exciting stuff today’s chatbots are doing in the automotive industry


Some sectors have unique customer profiles. One example are students.

Students on average spend longer on webpages than other types of online visitors. This makes for an interesting use case in the education sector where chatbots are commonly delayed to trigger after potential students have properly browsed page content.

Chatbot definition fact: Chatbots in education are automating course-finding so students can quickly see study programmes that align with their career goals – all while freeing up staff to focus on other student leads. 

When done right, chatbots in education have a track record of increasing student conversions. Serviceform customer and educational body SEAS saw exactly that.

After having Serviceform build and install a chatbot on their website, SEAS saw a conversion rate increase of over 70%. Incredible. Read more about how today’s chatbot software is increasing student browsing time while decreasing bounce rates.

Serviceform education chatbot software for SEAS

Home services

Another unique customer profile are home improvement customers of the renovation and home services sector.

A consequence of the COVID-19 pandemic was that home transformations actually skyrocketed. People couldn’t go out, so they channelled their frustrations into property facelifts, interior renovations, and various stay-at-home projects. This naturally resulted in an uptick in home service demands.

And do you know which businesses profited most? The ones with chatbots. Chatbots were engaging those prospecting homeowners at all hours while automating early sales funnel actions, ultimately accelerating sales teams getting quotes to customers on their newest home project.

Serviceform home service chatbot software for Vesivek

Chatbot software: Use cases

In expanding on our complete chatbot definition, it’s not wrong to think of today’s chatbot software as replacing scroll bars. Chatbots are casually greeting web visitors and asking them what they want, then showing it to them without the visitor doing anything other than typing why they’ve opened your website or a certain webpage. This is what future website navigation looks like; searching for something by scrolling feels more and more like the past – and it’s losing companies customers.

Chatbot software today is also rich in options for high-conversion techniques like time delay or trigger actions. Trigger what? Actions. What these options mean is chatbots appearing tactfully after a certain time web visitors have spent on-page – as well as after clicking somewhere or even while moving their cursor toward the page’s close button.

Engaging with web visitors at critical touch points in their customer journey is a proven way to re-engage them and foster connection, ultimately increasing sign-ups and sales. Chatbots are touch-point masters.

Chatbot definition: Customer touch points

Want to learn more cool chatbot use cases? Read our top 10 chatbot examples to see chatbot software use cases in action!

Chatbot definition: How to choose the best chatbot builder for your website

Choosing the best chatbot software builder begins with your business goals and marketing objectives for your chatbot. The smartest objectives for your business will always be tempered by budgetary considerations so chatbot builder pricing matters.

If you’re wanting to strengthen customer service, there are a number of ways customer service chatbots can help. But it’s vital to look into chatbot builder features before building to ensure the technical features your business needs (like automatic lead routing) are actually options with the chosen builder.

How about upping your lead count? Because chatbots are proven lead generators and are across sectors successfully adapting to any customer profile.

And how much or little of your sales funnel do you want automated? A final consideration is the effort your business is willing to put forth on handling incoming chatbot software leads. Look for chatbot builders that sync with your backend so customer contact information is automatically saved and in real time for sales teams to follow up.

Chatbot software: Chatbots automating the sales funnel

Chatbot definition: DIY/Template chatbot builds

The rise of templates in chatbot building has been palpable. That’s because people prefer doing things themselves. Templates are ready-made building blocks for building a chatbot. They make things fast. And they make it easy.

What you want to look out for in building your own DIY chatbot, is that the chatbot provider has industry-tailored templates. Keep an eye out for template categories like real estate and ecommerce, or then goal-oriented templates like customer service and lead generation.

See Serviceform’s template library to see for yourself what to look for.

We offer all of the above at Serviceform and even include our 500+ templates in our free forever plan. Free? Yep. In fact, have a peek at our chatbot builder product page to see what the buzz is all about.

Chatbot definition: Serviceform templates library

And because ‘free’ and ‘templates’ probably caught your attention, see our marketing and website conversion templates write-up where we really show that we know our stuff. 

Chatbot definition: Serviced chatbot builds

Serviced chatbot builders do the development and installation work for you.

There are two main benefits to going with chatbot software that’s a serviced build. These benefits are savings on one of the most valuable resources we have – time, and then having a chatbot uniquely optimised for your marketing objectives by web conversion experts. Optimisation is a big word in the chatbot world and can make the difference between getting a few extra leads every month and literally hundreds.

For example, Serviceform customers enjoy the benefits of having us build, set up, and optimise our chatbots for them so they can focus on scaling up while more and more leads come in without any effort on their end.

With both DIY/template and serviced chatbot options available, take a minute to catch yourself up on 2023’s best chatbot builders and chatbot software, then decide for yourself what’s smartest for you and your business.

Chatbot definition: How to integrate a chatbot with your website

You’ll see chatbot software integrations on every pricing page nowadays for good reason: The more integration options a chatbot has, the more applications and customer communication channels for your business.

Skim Serviceform’s integrations library to see what to look for.  

Chatbot software: Integrations

When looking at chatbot software providers, make sure they offer integrations with platforms you’re active on and/or targeting. If you have a WordPress website, for instance, you’ll want to ensure your chatbot provider has easy-made instructions on how to create a chatbot (or any tool) for your WordPress website. Active on Shopify? Great. Look for something like this from Serviceform on 1-2-3 Shopify integrations.

Also, be mindful of what’s most economical for you between DIY integration options versus serviced integrations (where the provider integrates for you). At Serviceform, for example, we offer both integration options for our chatbot software.

Chatbot definition: Conclusion

If you’re leaving this guide at all wiser on what a chatbot is and what a chatbot does, then our complete chatbot definition guide has done its job. This chatbot definition guide defined today’s chatbots as more than bots that chat. We’ve explained how chatbot software comes in two distinct builds (AI versus prebuilt) and in many types (like corner, full-page, engagement, and social chatbots).

The build and type of chatbot software best for your business ultimately depends on what your business goals are as well as industry and stage of your organisation as a startup, scale-up, or mid-sized company, for instance. It’s important to use the right chatbot software for your business to take advantage of the growing list of benefits of chatbots.

How chatbots are built either using chatbot templates for DIY customers or built for you with expert optimisation in mind were also explained as chatbot software options to consider. Wrapping up our complete chatbot definition guide, we lastly mention how chatbot integrations work so whatever your chatbot build and type, the tool works with your website the way that it should.

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