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Different Types of Chatbots: Which is One Right for your Business?

Jenna Alburger

February 9, 2022

different types of chatbots: development options, industries, use cases

Different types of chatbots each have their own advantages and disadvantages. When choosing a chatbot, you’ll want to find a solution that suits your budget, needs, use case, and industry. 

In this article, we’ll review:

Different types of chatbot development
        Drag-and-drop chatbots
        Chatbot frameworks
        Custom-built chatbot
Different types of chatbots by industry
        Ecommerce
        Banking
        Insurance
        Hospitality
Different types of chatbot use cases
        Customer service chatbot
        Marketing and sales chatbot
        Novelty chatbot
Different types of chatbot personalities

Keep reading to find out which type of chatbot is right for your business. 

Different types of chatbot development

There are 3 main approaches to chatbot development you’ll need to consider when you’re first starting out. It’s important to understand these differences; this decision will have the biggest impact on your project scope and budget. 

Drag-and-drop chatbots

A drag-and-drop chatbot builder is a tool that allows anyone with basic computer skills to build a chatbot. It doesn't require you to write code or learn any commands in CSS. 

Usually, you start with ready-to-use templates. Then, you’ll use a visual builder to customize conversations. 

drag and drop chatbot builder botsup.io
image source: botsup.io

Pros:

  • Easy to use and build
  • Speeds up development
  • Affordable 
  • Can be built without technical knowledge
  • Marketing or sales teams can “own” the bot (maintain full control) 

Cons: 

  • Only good for simple use cases
  • Limited in how it integrates with your internal tools and software
  • Basic user interface
  • Low personalization and flexibility 
  • Limited control: you’ll need to rely on third-party service and support 
Takeaway: Drag-and-drop chatbots are a good choice if you’re a business professional looking for a do-it-yourself option. If you only want to automate simple FAQs, you can usually get by with a drag-and-drop builder. However, if conversational support is a central part of your business strategy, you’ll want to consider more advanced types of chatbots. 

Chatbot frameworks

Chatbot frameworks, or conversational platforms, are a great option for companies that need more control and flexibility. They are modular frameworks, where customers pick from prebuilt elements and integrations for their own use case.

With chatbot frameworks, you’ll save time with templates, plugins, and integrations–while maintaining the freedom to build exactly what you want. 

different types of chatbot experiences

Pros: 

  • Don’t have to start from scratch, but still have freedom and control
  • Good for higher-level use cases and workflows
  • Rich-media interfaces (can use product carousels, date selectors) 
  • Better automation capabilities (can route to multiple customer service agents)
  • Serve customers in multiple languages
  • Many open-source plugins to help build out your bot –like AI, NLP, and NLU libraries
  • Scaleable: you can deploy your bot across multiple channels
  • Secure: better for brands that require GDPR or ISO-27001 compliance 

Cons: 

  • Requires a developer (can be a junior developer or expert developer, depending on how much customization you need)
  • More expensive than a DIY chatbot, pricing usually depends on contact volume
Takeaway: Chatbot frameworks, like Hubtype's, are growing in popularity because give a rich foundation to chatbot developers. They are good for businesses with more complex use cases, like routing customers to multiple customer service agents.


Learn more about Hubtype's conversational platform.

Custom-built chatbot

Finally, custom-built chatbots are a good option for businesses that have specialized needs that can't be solved by a development framework. These types of chatbots are better for organizations that want to integrate with complex systems, in cases where APIs won’t work. 

Pros: 

  • 100% freedom to build custom software
  • Can build specialized integrations with internal tools
  • Can be built to address specific security protocols 

Cons: 

  • Requires a significant budget
  • Requires large technical team (either internal or external)
  • The responsibility of frequent updates and maintenance lies internally
  • Will take time to develop and launch
Takeaway: A completely custom-built chatbot should only be considered when you have highly technical needs that other types of chatbots won’t fill. For example, when you need highly-specialized integrations or have complex security protocols. 

Different types of chatbot by industry

Almost every industry can benefit from a chatbot. Below are some common ways different industries use chatbots. 

Ecommerce

Ecommerce is the industry that benefits the most from modern chatbots. Technology has evolved to the point where customers don’t need to go to a company’s website to shop. Instead, they can do everything through a simple conversation.

ecommerce chatbot
Hubtype conversational commerce platform


With an ecommerce chatbot, you can: 

  • Send shipping confirmations
  • Help customers track orders
  • Upsell and cross-sell products
  • Personalize product recommendations
  • Field FAQs

There’s a new term to describe the intersection between chatbots and shopping–conversational commerce. Read more about how conversational commerce is shaping online retail.

Banking

Today’s banking customers expect more convenience from their banks. They expect speed, personalization, and low-effort experiences. For that reason, many banks are adopting banking chatbots. 

banking chatbot
Example of Hubtype's conversational banking experience


With a banking chatbot, you can:

  • Help people choose mortgage loans
  • Break down investment risks
  • Simplify bank applications 
  • Get financial advice
  • Prevent fraud
  • Perform core banking activities like payments, transfers, and deposits

Banks can gain a lot from building a bot. Banking customers ask many of the same questions, so there are a lot of opportunities for automation. 

Insurance

Chatbots are a key differentiator in the insurance industry. They help customers generate quotes and better understand their options. 

insurance chatbot
Example of Hubtype's insurance solutions


With an insurance chatbot, you can:

  • Automate claims processes
  • Managing policy renewals
  • Generate leads by engaging visitors on your website
  • Collect customer feedback and reviews
  • Educate customers on different policies and options

The confidence in conversational AI within the insurance sector is high. In fact, 71% of insurance executives believe strongly that customers already prefer interacting with an insurance chatbot over a human agent.

Hospitality

Many hospitality brands use chatbots to increase direct bookings and improve customer satisfaction. They even can help guests from all over the world in multiple languages. 

With a hospitality chatbot, you can: 

  • Help customers in multiple languages
  • Help compare rooms and properties
  • Automate bookings 
  • Update reservations 
  • Send reminders
  • Follow up with guests 

Due to the social and travel conditions caused by the pandemic, guests now increasingly value more efficient interactions with restaurants and hotels. Experts predict that AI and Automation will be widely adopted across the industry, as a means to improve service and reduce operational costs. 

Different types of chatbot use cases

Now that you understand the different levels of chatbot complexity, you’ll need to think more about what you want it to do. Let’s explore different types of chatbots by each use case. 

Customer service chatbot

Customer service chatbots are the most common type of chatbot. They typically handle FAQs and pass customers to support agents when necessary. 

Customer service chatbots will help you:

  • Automate repetitive questions
  • Provide proactive support 
  • Better manage seasonal ticket volume
  • Free up human resources for higher-value work
  • Direct support tickets to the right person
  • Collect customer satisfaction feedback

To start building your customer service use case, ask yourself: 

  • How many inquiries could your chatbot handle?
  • Would your customers find value in your customer service bot?
  • What operational costs could your chatbot reduce?
  • Could offering 24/7 customer support differentiate your brand?
Takeaway: Many companies that these types of chatbots find that they handle up to 80% of customer support questions. Their customers get fast, reliable answers and their support team has more time for valuable work.

Marketing and sales chatbot

The next most common chatbot is a sales or marketing chatbot. The purpose of these types of chatbots is to assist customers in buying your products or services. 

Sales and marketing chatbots are more proactive, in that they send relevant information to customers with the goal of moving them through the sales funnel. 

A sales or marketing chatbot will help you: 

  • Personalize the customer experience
  • Send promotional notifications 
  • Upsell and cross-sell products
  • Analyze customer feedback and data

To start building your sales or marketing use case, ask yourself: 

  • Can a chatbot help you streamline the way people buy your products and services? 
  • Would you benefit from intelligent product suggestions? 
  • Would proactive reminders and notifications make your customers happier? 
Takeaway: Companies that use sales and marketing chatbots passively generate more revenue. They have a salesperson that’s always on and ready to influence buying decisions.

Novelty chatbot

The last type of chatbot use case is an entertainment, or novelty chatbot. These chatbots are a fun way to engage with your brand, and usually don’t handle any serious issues. 

A novelty chatbot will help you: 

  • Entertain customers
  • Build relationships outside of a traditional business context 
  • Generate buzz
Takeaway: These types of chatbots, although built for fun, tend to be more complex to build. They often use Artificial Intelligence (AI) to interpret what people are saying. They’ll need to be ready to field a wide range of inputs from people, as there is no specific business use case. 

Different types of chatbot personalities

Now that we've reviewed the main types of chatbots, let's look at the traits and personalities that chatbots can have. From fun to functional, chatbots types have many uses.

The one that curates content 🗞️

First, there are content bots. Content bots curate for their audience. For example, they suggest topics and media that are user-specific and do so in a conversational manner. For example, CNN's news chatbot can message you headlines and articles based on your preferences.

The one that’s just for fun 😀

Next, there's the "one-trick-pony." This type of chatbot is a novelty usually designed for a specific purpose. For example, it will help transform an image into a meme or a piece of text into a video mashup. It's usually meant to be funny and engaging and has the potential to go viral with its users.

The proactive one 

Then, there are proactive bots. They're in the right place at the right time. For example, airline chatbots types send timely reminders to check-in, claim baggage, and even serve up weather reports when you land.

The protective one 🛡️

Bots can serve as a line of defense for your customer service team. And, they're equipped to handle irritated customers in a friendly way.

The chatty one 🗣️

The purpose of a social chatbot is to widen and solidify the user base. They entertain people with conversations and try to make a connection with them.

The personalized assistant ✍️

Intelligent personal assistants like Siri and Alexa can respond to almost any request. They play an active role in supporting human activities. They remember appointments, control other devices in the home, search the web for questions, make purchases, and more.

Start with Hubtype, a framework for success

With Hubtype’s conversational platform, you’ll be set up for success from day one. Our chatbot framework gives brands the flexibility and freedom they need to build custom chatbots, without having to start from scratch. 

Companies like Levi's®, Michael Kors, EPSON, Guess, Bankia, and Allianz choose Hubtype to help them with their chatbot needs. 

Still not sure which of these types of chatbots is right for you? We can help steer you in the right direction. Contact our sales team, today.

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