AI Chatbots: Definition, Benefits and Use Cases

AI chatbots have quickly become some of the most transformative tools in digital industry. From automating tasks to improving customer interactions, these chatbots are reshaping how businesses operate and how users interact with technology. Whether you’re new to the concept or looking to deepen your understanding, this guide will walk you through everything you need to know about AI chatbots—their history, how they work, their benefits, and what makes them essential for the future.

What are AI chatbots?

Chatbots in general are virtual assistants that you can chat with online. Conventional chatbots use pattern matching, keyword matching, or predefined scripts to mimic human-like conversation. The history of chatbots dates back to 1960 when a chatbot named ELIZA was built at MIT Artificial Intelligence Laboratory by Joseph Weizenbaum. It used “‘pattern matching” and substitution methodology to give canned responses that made early users feel they were talking to someone who understood their input. The program was limited by the scripts that were in the program.

AI chatbots that are available today are far more advanced than rudimentary ELIZA. Modern AI chatbots like ChatGPT leverage advanced large language models - for example, transformers or neural networks. These advanced large language models enable chatbots to perform a wide range of tasks such as writing, coding, and providing real-time information, greatly enhancing the user experience. Modern AI chatbots can hold conversations while retaining context, which was missing in conventional chatbots. Modern-day AI chatbots use Reinforcement Learning From Humans (RLHF) to adapt and learn new scenarios.

How do AI chatbots work?

AI chatbots operate by leveraging several cutting edge technologies like natural language processing (NLP), machine learning, and data driven algorithms to simulate human-like conversation. When a user inputs text or speech, the chatbot processes it using NLP techniques to identify the question, intent, and key details.

Once the input is understood, the AI chatbot leverages an AI model, like GPT, to analyze the context and generate an appropriate response. These models use vast amounts of training data to produce dynamic, context-aware, and natural replies. The response is then delivered to the user via text or speech. Leveraging RLHF, chatbots continuously learn from interactions and feedback, refining their ability to provide accurate and engaging conversations over time.

Modern AI chatbots are increasingly integrating with third-party apps and services, making them more powerful and versatile. These integrations allow chatbots to access external databases, APIs, and tools, enabling them to perform tasks like booking appointments, processing payments, retrieving personalized user data, or managing workflows. In short, it opens up a whole new window to enhancing businesses by transforming how customers interact with their brands.

How can AI chatbots help businesses?

AI chatbots, as part of AI-powered tools, have revolutionized the way businesses interact with customers and manage operations by delivering numerous chatbot benefits. By integrating with third-party apps and using advanced AI technologies, these chatbots give your business the scalability and adaptability it needs to thrive in today’s market. Here's how it benefits your business:

1. Automate sales and lead generation

Let’s agree - keeping leads engaged and converting them into customers is the toughest challenge. Prospects often drop off because of delayed responses, one-size-fits-all interactions, or an overly complex sales process. That’s where AI chatbots, like WotNot, step in to bridge the gap, automating and personalizing the sales journey so no lead is ever left behind.

Picture this: A potential customer lands on your website, curious but undecided. Instead of waiting for a sales rep to follow up hours later, they’re greeted instantly by an AI chatbot that’s ready to guide them through the process. This AI chat interaction isn’t just any chatbot—it’s designed with your sales expertise and powered by advanced artificial intelligence.

• Instant engagement:

The AI chatbot immediately engages visitors, answering common questions like, “What’s the pricing structure?” or “Do you integrate with Salesforce?” It eliminates delays and ensures that every visitor gets the information they need right when they need it.

• Tailored interactions:

By analyzing user behavior in real-time, the AI assistant personalizes conversations. For example, if someone’s exploring enterprise solutions, the chatbot might ask, “How large is your team?” or “Are you looking for multi-platform compatibility?” This personalized touch builds trust and makes visitors feel understood.

• Smart lead qualification:

It’s not just about answering questions. AI chatbots can identify high-quality leads by analyzing responses. For instance, if a manufacturing company lands on your site, the bot can track IPs, recognize their industry, and recommend enterprise-specific solutions. It will then hand off the qualified leads directly to your sales team or schedule a demo—no manual effort required.

2. Enhance customer support

AI chatbots are reshaping customer support by providing real-time responses the moment a visitor lands on your website or reaches out through messaging platforms. They ensure immediacy, scalability, and efficiency, delivering a support experience traditional systems can’t match.

Here’s how they make it happen:

• Effortless scalability

During peak seasons or campaigns, AI chatbots manage large volumes of inquiries simultaneously. H&M’s chatbot handles over 30% of customer queries, freeing agents for high-value tasks.

• Quick resolutions

AI assistants instantly address repetitive questions like “Where’s my order?” or “How do I start a return?” Spotify’s chatbot, for example, supports 400+ million users by resolving playback or subscription issues within seconds.

• Seamless escalation

When faced with complex queries, these AI chatbots are smart enough to recognize when human help is needed. They gather all the context—order details, issue history, everything—and pass it along seamlessly. Bank of America’s Erica is a perfect example: it takes care of routine banking tasks but hands off complex financial matters to advisors without dropping the ball.

• Boosting brand engagement

Chatbots interact proactively to create stronger customer connections. Take Domino’s Pizza’s chatbot: it doesn’t just track orders; it helps customers place custom orders through apps, social media, or even voice assistants. Got a dietary restriction? The bot flags it for human review. It’s fast, it’s flexible, and it ensures no customer gets left behind.

3. Improve business operations

Running a business isn’t just about external challenges—internal processes can be equally complex. Employees need quick answers to HR policies, IT troubleshooting, and inventory updates, but the traditional back-and-forth with multiple teams can be slow and inefficient. AI chatbots, as part of a suite of ai tools, simplify these operations, providing instant responses and streamlining workflows across departments.

Take internal communication, for example. Employees frequently ask repetitive questions: “How do I apply for leave?” or “What’s the process for updating my tax details?” Instead of overwhelming HR or IT teams, AI chatbots integrated into platforms like Slack or Microsoft Teams handle these queries instantly. No delays, no human intervention required.

Inventory management is another pain point for businesses. Picture this: A warehouse manager needs to check if 1,000 units of Product X are in stock. Instead of logging into an ERP system and navigating multiple steps, they can simply ask a chatbot, “Do we have this in inventory?” The AI bot connects to the ERP in real time and provides an immediate answer.

And then there’s CRM integration. Sales reps don’t have time to dig through systems for order details or customer data. An AI chatbot solves this by fetching information on-demand. “What’s the status of Order #12345?” A quick message to the bot, and the answer is delivered instantly, keeping the sales process moving smoothly.

By automating routine tasks, chatbots reduce the need for large support teams. For instance, a travel agency chatbot can handle thousands of booking inquiries, freeing up agents to focus on high-value customer interactions. Similarly, a healthcare chatbot automates appointment scheduling, minimizing administrative overhead and improving efficiency.

4. Provide data insights

By connecting directly with internal systems like accounting, CRM, and ERP tools, AI chatbots give you instant access to critical data.

Let’s say you need to know, “How many orders did we fulfill last Christmas?” or “What’s the five-year trend for Product X?” Instead of combing through spreadsheets, you simply ask the chatbot. It pulls the data, crunches the numbers, and delivers the answer in seconds.

This isn’t theoretical—it’s practical. A marketing manager could ask, “What’s our customer churn rate this month?” and the chatbot retrieves the data from the CRM instantly. Similarly, a warehouse manager might query, “Do we have enough stock for next month’s demand?” The chatbot connects with the ERP system and provides a real-time inventory update.

But it’s not just about retrieving data—it’s about finding patterns. If customers consistently complain about a product, the chatbot flags it for your team to address. If sales trends show a drop in a particular region, you’ll know exactly where to focus your efforts.

AI chatbots cut through the noise, making it easy for your team to get the information they need, when they need it. They take the guesswork out of decision-making and give every department—from marketing to finance—a way to operate smarter, faster, and with better data.

5. Integrate seamlessly with third-party tools

Integrating multiple tools often creates friction, but AI chatbots and AI agents simplify this process by seamlessly connecting with CRMs, payment gateways, and other platforms. For example, Meta AI chatbots enhance workflows by automating tasks such as order tracking, ticket booking, or customer relationship management. These integrations not only expand your AI chatbot’s capabilities but also ensure smooth, interconnected operations, reducing manual intervention and improving efficiency.

6. Humanize your brand with AI chatbots

AI chatbots bring a human touch to your brand by delivering personalized, conversational interactions that resonate with customers. Even with a basic understanding of AI, you can leverage chatbots to adapt to user behavior, preferences, and past conversations, ensuring every response feels relevant and aligned with your brand’s voice.

By using conversational tones and proactive engagement, chatbots turn routine exchanges into meaningful experiences. For example, instead of a cold “Your return has been processed,” the chatbot might say, “We’ve got your return sorted! Expect a refund in 3–5 days.” Small touches like this create a more approachable, human-like interaction.

Available 24/7 across platforms like WhatsApp, Instagram, and your website, AI chatbots ensure consistent, friendly engagement. Whether it’s following up on abandoned carts or offering tailored recommendations, they help build trust and loyalty, making your brand more relatable and memorable.

What makes the best AI chatbot

The best AI chatbots aren’t just smart—they’re purposeful. They’re built to fit seamlessly into your workflows, adapt to your needs, and deliver real value to your business and customers. Here’s what makes a best AI chatbot stand out:

1. Powered by the latest AI models

The foundation of any top-tier AI chatbot is its large language model and NLP capabilties. Advanced AI models like GPT-4.0 are fast, accurate, and continuously refined through millions of interactions.

For example: Platforms like WotNot’s AI Studio are built with cutting-edge NLP capabilities, ensuring your chatbot understands user queries and delivers meaningful conversations..

2. Understands context and responds smartly

Great chatbots don’t just answer—they understand. Whether it’s remembering the history of a conversation or tailoring follow-ups based on prior interactions, they feel less like a bot and more like a human assistant.

Example: Bank of America’s Erica uses customer data to offer personalized financial advice, creating a more relevant and engaging experience.

3. Omnichannel accessibility

Your chatbot needs to meet customers where they are—whether it’s on your website, WhatsApp, or Slack. Consistent support across platforms is essential.

Example: Sephora’s chatbot provides personalized beauty advice, whether you’re chatting through Messenger, Instagram, or their website.

4. Easy to customize without code

No one has time for complex setups. The best chatbots let you tweak workflows, prompts, and tone with ease, so they align perfectly with your brand voice.

Example: WotNot’s no-code bot builder platform makes building and customizing chatbots accessible, even for non-technical teams.

5. Seamless handoff to human agents

Even the smartest AI chatbot knows when to step aside. It should transfer complex queries to human agents, ensuring continuity by retaining all relevant context.

Example: Zendesk’s Answer Bot manages repetitive questions but escalates complicated issues to live agents without missing a beat.

6. Integrated with your business tools

A great chatbot isn’t just reactive—it’s proactive. It should connect with your CRM, ERP, or payment gateways to automate tasks and deliver actionable insights.

Example: A Slack bot integrated with your ERP system can instantly answer, “Do we have 1,000 units in stock?”

7. Built with security in mind

Customers need to trust your chatbot. Data privacy and compliance with regulations like GDPR or CCPA are non-negotiable.

Example: Microsoft Teams’ bots offer enterprise-grade security, ensuring sensitive information stays protected.

The best AI chatbots combine intelligence, adaptability, and usability. They don’t just answer questions—they transform how your business operates, creating a more streamlined, engaging, and secure customer experience.

The best AI chatbots in 2025

AI chatbots have become indispensable tools for businesses and individuals alike, offering solutions that range from automating tasks to enhancing customer engagement. In 2025, the field of AI chatbots has seen significant advancements, with new players entering the market and established names refining their capabilities. Here’s a closer look at some of the best AI chatbots this year and what they bring to the table.

1. ChatGPT

ChatGPT, created by OpenAI, is built on the GPT-4 architecture and excels at providing conversational, context-aware responses, much like engaging AI characters. Designed to handle a wide range of tasks, it’s commonly used for customer support, content creation, coding, and answering complex queries. Its advanced language processing capabilities, coupled with an intuitive user interface, make it a popular choice for businesses and individuals. With API integrations, it’s flexible enough to fit seamlessly into various workflows.

Pros:-

• Handles diverse tasks with advanced conversational abilities.

• Offers flexibility with API integration.

Cons:-

• Can be costly for businesses with high usage.

• Occasionally produces inaccurate responses.

Pricing:-

Free tier available; Plus plan costs $20/month for faster and priority access.

Reviews & ratings:-

G2: 4.7/5 (600+ reviews)

You can check our guide to explore some ChatGPT alternatives.

2. Perplexity AI

Perplexity AI focuses on delivering fact-based, cited responses, making it an excellent tool for research and knowledge-intensive tasks. It uses real-time web search capabilities to stay updated with the latest information. While it doesn’t offer extensive conversational depth, its ability to reference sources adds transparency and reliability, making it ideal for users looking for precision over general chat capabilities.

Pros:-

• Excels at factual, source-cited responses.

• Keeps information up-to-date with real-time web access.

Cons:-

• Limited conversational and creative abilities.

• Dependent on available online content for responses.

Pricing:-

Free tier available; Pro plan costs $20/month for faster and smarter response.

Reviews & ratings:-

G2: 4.6/5 (35+ reviews)

3. Google Gemini

Google Gemini is Google’s next-generation AI designed for multimodal functionality, processing text, images, and even videos. Integrated into the Google ecosystem, it’s ideal for users who rely on Google services like Search, Docs, and Workspace. Gemini provides real-time, data-driven insights and supports a variety of business and personal tasks. It’s particularly powerful for users looking to leverage its deep integration within Google’s infrastructure.

Pros:-

• Multimodal capabilities enhance functionality

• Works seamlessly across Google’s ecosystem.

Cons:-

• Best suited for users already using Google services.

• Privacy concerns may arise due to extensive data integration.

Pricing:-

Included for free with Google Workspace subscriptions; Workspace plans range from $6 to $18 per user per month.

Reviews & ratings:-

G2: 4.4/5 (160+ reviews)

4. Claude (by Anthropic)

Developed by Anthropic, Claude is an AI chatbot focused on safety and reliability. It is designed to handle complex language tasks while minimizing risks associated with AI misuse. Claude’s emphasis on ethical and harm-free interactions makes it a great fit for organizations that prioritize compliance and safe user experiences. Its consistent updates ensure its capabilities continue to improve over time.

Pros:-

• Prioritizes safety and ethical use.

• Handles complex tasks effectively.

Cons:-

• Limited customization compared to competitors.

• Responses may feel overly cautious in some scenarios.

Pricing:-

Free tier available; premium plans range from $20 to $25 per user per month.

Reviews & ratings:-

G2: 4.5/5 (20+ reviews)

5. Meta AI

Meta AI is Meta’s conversational AI tool, designed to integrate seamlessly with platforms like Facebook, Instagram, and WhatsApp. It combines text and image generation capabilities with automation, making it a versatile tool for businesses aiming to enhance customer engagement on social media. While its features are still evolving, its deep integration with Meta platforms ensures easy adoption for users already operating in this ecosystem.

Pros:-

• Works well across Meta platforms like Instagram and WhatsApp.

• Offers text and image generation for diverse use cases.

Cons:-

• Limited functionality outside of Meta’s ecosystem.

• Data privacy concerns may arise with deep platform integration.

Pricing:-

Currently available for free on Meta platforms, with future premium features expected.

Reviews & ratings:-

G2: 4.3/5 (140+ reviews)

If you don’t like any of the other options, you can check our guide on how to create your own AI chatbot.

Future of AI Chatbots

AI chatbots are no longer just tools—they’re transforming the way you do business and engage with technology. With advancements in natural language processing, generative AI, and seamless integrations, the future of AI chatbots lies in their ability to help you build deeper, more personalized connections with your audience while keeping operations efficient. As you embrace automation and innovation, these chatbots will play an even bigger role in simplifying your workflows, enhancing communication, and delivering exceptional user experiences. The possibilities for how you can use them are endless, and you’re just beginning to uncover their full potential.

If your business is considering AI chatbots, schedule a meeting with WotNot to explore how our platform can support all your chatbot needs.