Chatbot
Quick Answer
A chatbot is a software application that engages in conversation with users via text or voice. Modern AI-powered chatbots can answer questions, perform actions, escalate complex issues, and learn from each interaction to improve over time.
In Depth
What Chatbot really means
Traditional chatbots followed scripted decision trees and broke easily when users phrased things unexpectedly. LLM-powered chatbots handle natural language gracefully and can be grounded in a knowledge base via RAG, making them genuinely useful for customer support, internal helpdesks and self-service portals.
A good chatbot is measured not just on deflection rate but also on customer satisfaction, task completion and clean handover to humans when it hits its limits.
Why It Matters
Business relevance for UK organisations
UK SMEs deploy chatbots to cover out-of-hours support, deflect routine queries and qualify inbound leads — typically at 10–20% of the cost of additional human headcount.
Real-world example
How this shows up in practice
A London e-commerce brand deployed a 24/7 chatbot that now resolves 68% of customer queries without human involvement, at a total cost 83% lower than hiring equivalent support staff.
Related Terms
Continue exploring
Virtual Assistant
A virtual assistant is an AI system that helps an individual or team complete tasks, usually across multiple tools. Unlike a single-purpose chatbot, a virtual assistant combines conversation, context and actions to work alongside its user throughout the day.
TechnicalLarge Language Model (LLM)
A Large Language Model (LLM) is a type of neural network trained on vast quantities of text to understand and generate human language. LLMs power chatbots, copilots, content generators and many modern AI features across consumer and business software.
TechnicalRAG (Retrieval Augmented Generation)
Retrieval Augmented Generation (RAG) is an architecture that combines a language model with an external knowledge source. Before generating an answer, the system retrieves relevant documents and feeds them to the model as context, dramatically reducing hallucinations and keeping answers current.
BusinessAutomation
Automation is the use of technology to perform tasks that would otherwise require human effort. AI extends traditional automation by handling tasks that involve judgment, unstructured data or natural language — not just deterministic, rule-based steps.
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