How Do Chatbots Reduce Business Costs?

Illustrator: Simone Virgini
chatbots reduce business costs

 Automation has made its way into almost all aspects of a business. From optimizing customer service processes to increasing lead generation, customer satisfaction and engagement, and, most importantly, sales, new technologies like chatbots are becoming essential for streamlining business operations. 

In this article, we're taking a closer look at how one of these technologies — chatbots — can reduce business costs and improve efficiency and productivity. 

What Are Chatbots and What Do They Do?

Chatbots are conversational software that enables businesses to communicate with their audiences instantaneously. They can perform a series of low-skill tasks and, in some ways, replace a human operator in a business' interaction with customers through automated written messages. 

Chatbots have several benefits when it comes to reducing business costs. 

First of all, as already mentioned, chatbots can replace a human customer service operator. This can translate into reduced labor and operating costs. 

Second, they can perform repetitive tasks faster than humans, which results in streamlined and automated processes that save time and money.

And third, they optimize business communication with customers by providing assistance and access to information faster and more efficiently.

On top of this, chatbots are highly customizable and can be integrated into many communication shapes and forms, such as websites, landing pages, social media pages, or applications. 

Main Elements of an Effective Chatbot

Chatbots can be rule-based or NLP. The main difference between the two is how they interact with users and process those interactions.

Rule-based chatbots follow a pre-written conversation script (or set of rules). They use keywords to run specific pre-written commands and cannot "learn" from an interaction. If they find themselves in a situation outside the pre-written script, they will use a standard message to let the user know that they do not understand the command they have been given.

NLP chatbots, however, can learn from their interactions. They use artificial intelligence to make their way through a customer interaction by processing language. Their responses can be broader and cover a wider range of user interactions.

In addition, NLP chatbots can collect analytical data that can then be used to further improve customer experience

The key to setting up an efficient chatbot lies in defining your objectives. Since all chatbot interactions start from what you want your chatbot to do, you must define your chatbot objectives clearly from the get-go.

Your chatbot objectives may include:

  • cutting down on customer waiting times;
  • streamlining the purchasing process;
  • attracting more subscribers;
  • qualifying more leads;
  • improving customer experience;
  • increasing retention rates;
  • decreasing drop-out rates.

Next, you will have to decide what platform your chatbot will be active on. Ideally, it will be the platform where your customers prefer to interact with your business.

Your options include:

  • on your business' website;
  • on your business's social media channels;
  • on instant messaging platforms like WhatsApp;
  • on your app.

Once you've got these two main pillars in place, you can use a specialized platform to set up your chatbot's algorithms and response databases or build your own from scratch.

Reducing Business Costs

Now that we've seen what chatbots are and their main features and advantages, let's dig deeper into how they reduce business expenses. Because, in the end, cost efficiency is one of the main pillars of a company's success.

chatbots reduce business costs

Unlimited Availability

When it comes to availability, you can't beat a chatbot. Chatbots don't need to work in shifts, don't ask for vacation, and don't care about time zones. They can work, work, work 24/7.

But this unlimited availability does not only benefit business owners from a cost perspective. Customers are most likely to appreciate this feature, too. This is because they will no longer be bound by business hours when they're trying to find out additional information about your product or service, finish a purchase, or get in touch with a consultant.

To back this up, a Hubspot study revealed that forty percent of customers care more about getting their questions answered than if they're talking to a human or a chatbot. Add to this the fact that fifty-one percent of customers expect a business to be available 24/7, and you've got your answer to how chatbots can help your business succeed.

Improved Customer Relations & Satisfaction 

You may think that improving customer experience has more to do with increased retention rates and sales. And you wouldn't be wrong; it does. A satisfied customer will most likely make another purchase and recommend your business.

However, there's more to improved customer relations than first meets the eye.

Streamlining the customer's experience also directly impacts the success of your operations. The same elements that improve customer satisfaction translate into business efficiency. And vice versa.

Here's how:

Reduced waiting times

Since chatbots can take over repetitive tasks, you can use them to increase the efficiency of your customer service team. Chatbots can help cut down the queue and reduce waiting times by solving customer issues simultaneously.

For one, this will make your customers happy as they won't have to wait long to have their queries answered, which will automatically increase their satisfaction rates and your retention rates.

But, from a business cost perspective, it will also reduce the load on your customer service team, who will be able to streamline operations and focus on cases that chatbots alone can’t solve.  

Less Room for Error

Well-programmed chatbots leave little room for error. Because they work based on carefully planned databases and algorithms, they can instantly provide up-to-date and accurate answers to customer queries.

Unlike humans, chatbots don't get distracted, have bad days, or forget important details. This means customers will always get the answer they need when they need it. And in less time.

Gather Analytical Data

There is valuable information in customer interactions that can help you plan out and use your business resources better. Many times, this data does not come cheap and requires complex processes to gather and analyze.

One way in which chatbots can help reduce business costs is by collecting this important data free of charge.

Chatbots are very efficient in gathering data that can boost your lead generation and retention efforts and provide input for your sales and marketing campaigns. You can then use this data to identify any elements of the user experience that need improvement and map out your marketing campaigns to better target customers based on their feedback.

For example, chatbots can be used to promote special offers in an interactive and fun way. In exchange for customer data, chatbots can give customers access to personalized offers or discounts. In turn, you can use this information to boost your email marketing campaigns and your sales strategies. 

On top of this, you can use chatbots to see how well your customer service is performing. You can program your chatbots to ask survey-like questions throughout their interaction with users. This will give you access to analytical data on customer satisfaction levels without any additional cost and help you optimize customer service processes to suit your customers' needs better.


Businesses today should aim to use all the automation tools they can to stay ahead. Competition is tough, and even a small advantage can make all the difference.

Chatbots are a proven way to optimize customer service interactions, streamline the customer experience, and gain powerful insight into the customers' thinking. All in all, they can help reduce business costs and increase your chances to gain, retain, and convert more leads.