What Are Bots? How Do AI Chatbots Work?

The ultimate guide to chatbots.

Ruchika Drabla

Sep 21 • 4 min read

How do AI chatbots work

Chatbots are simply fascinating! 

From ordering a pizza to booking our flight tickets to reminding us about our daily medicines, chatbots can perform all kinds of tasks, including taking us through complex B2B processes.

Customers’ in today’s times expect to have a good experience with the business they interact with. The experience is equally important as the product or service the business has to offer. And, chatbots are becoming an integral part of customer service experience.

But before we start talking about the benefits a chatbot can offer your business, let’s talk about 

what are bots

I What are chatbots? 

II How do chatbots work?

III How does a rule-based chatbot differ from an AI chatbot? 

IV Why does your business require AI-powered chatbot?

V How to build your first chatbot?


The Oxford dictionary defines a chatbot as “a computer program designed to simulate conversation with human users, especially over the Internet.”

Chatbots are basically rule-based or AI-based programs that stimulate conversations with us humans via the interface of chat, voice, touch or gestures. It is like we’re talking to another person who is accessible 24x7x365.

Also called as virtual assistants or conversational AI chatbot or conversational agent or intelligent AI assistant, bots promptly reply to us after interpreting and processing a user request.

A basic rule-based chatbot might be your front-face for assisting your customers by answering FAQs as it is the more advanced conversational AI chatbots that are intuitive and give the sophisticated chatbot experience today’s customers want from a business.


how do chatbots workChatbots are designed to interact with humans. How do they do it is a long story.

Chatbots identify the intent of a user. They extract relevant entities, analyse and then share the most appropriate response. 

There are three classification methods that a chatbot uses to do all that is required of it.stats showing usage of chatbots

  1. Pattern Matching- With the standard structured model of AIML (Artificial Intelligence Markup Language) the bot uses pattern matching to group the text. It reacts to anything that matches that pattern

  2. Natural Language Understanding (NLU)- Following the concepts of entities, context and expectations, NLU converts text into structured data to understand the input given by a user.

  3. Natural Language Processing (NLP)- NLP converts the input text or speech to structured data. It comprises of tokenization, sentiment analysis, normalization, entity recognition and dependency parsing.

Now that you know what are chatbots and how chatbots work, you should also know the types of chatbots. I’m sure you already know the answer to it, but let me tell you again,

  • Linguistic Based (Rule-based chatbots)

  • Machine Learning (AI chatbots)

Now we come to our next question            


You must have interacted with a linguistic-based bot on quite a few platforms including Facebook Messenger and other eCommerce websites. Often referred to as rule-based chatbots, linguistic-based bots follow predetermined paths. They use if/then logic to create conversational flows. They can be rigid and a little slow to develop. Although these bots use NLP, but interaction with them is structured and specific. 

AI chatbots also called as conversational chatbots or virtual AI assistant, they are quite interactive and personalised. They converse with a user giving a human-in-the-room experience. Highly sophisticated and task-oriented, they are more contextually aware and learn with every new interaction.


Rule-Based Chatbot

Conversational AI Chatbot

Follow predetermined rules

Understand the context and intent

Specific and structured conversations

Converse understanding customer sentiments 

Ideally suitable for answering common queries

Ideally suitable for interaction and goal conversion


Are you like a little confused? Which chatbot would work for your business?

Well, it all depends on your use case.

Both rule-based and AI powered chatbots have their separate advantages. 

If you want to create a predictable, controlled experience for your users, rule-based chatbots can help you focus on guiding your audience toward your specific goal.

But if you want a smart assistant who can help you assess better with the massive data you have, handle complex queries, facilitate faster decision making then AI powered lead generation bot may be a better choice for your organisation.


Offering convenience to customers, cost-saving to businesses and boost the efficiency of employees, chatbots allows organisations to resolve a lot of customer issues without any human intervention. Also, it regulates a lot of mundane tasks freeing up employees to focus on other important task.

Take a look at how adopting chatbot in your business strategy can prove to be a real benefit:

  1. Can be customised according to the industry

  2. Reduce customer wait-time

  3. 24x7x365 availability

  4. Better customer engagement

  5. Reduce customer churn rate

  6. Automate leads

  7. Can be used across customer support, sales, marketing, HR, IT

  8. Compliant 

  9. Scalable

  10. Easy to build & integrate



how does a chatbot work infographic


Before we tell you how you can build your first chatbot within hours, we want to tell ask whether or not your organisation requires a chatbot. All you need to do is answer a few questions and you will know whether or not an AI chatbot can work for your organisation.

  1. Which business process will your chatbot automate?

  2. On which platform will your bot engage with your customers?

Now that you are clear on why and where you want to integrate a chatbot, let’s build your very own chatbot.


Written by

Ruchika Drabla

Growth & Marketing Head

Marketing growth professional with 9+ years of experience in all verticals of Performance Marketing, I'm an AI enthusiast and loving my role as Growth leader in Conversational AI startup GenieTalk.ai

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