Why Businesses Are Using SMS Chatbots and How to Build One

Types of SMS chatbots and when to use them

There are three types of text-based chatbots that are very commonly used nowadays. 

1. Rule-Based Chatbots

This simple SMS chatbot functions in a pretty straightforward way, using preset rules or decision tree logic. They respond to specific keywords, phrases, numbers, commands, or actions that have been fed to them in advance. 

So basically, it’ll ask you to press “1” for the first option, “2” for the second, and “0” to return to the main menu.

Where are these rule-based SMS chatbots used: 

• Appointment booking

• FAQs

• Order tracking

• Simple lead qualification

• Event registrations

• Surveys & feedback collection

• Payment reminders

Select a Rule-based chatbot:

For basic things like booking confirmations, order tracking, FAQs, collecting feedback, etc, the chatbot flow will be pretty predictable. Here, a rule-based SMS chatbot would be a good fit. It works perfectly when structured and repetitive elements are involved. Also, they require less investment and are easier to deploy.

2. AI-Powered Chatbots

These bots are a step ahead of the rule-based ones. 

They use Natural Language Processing (NLP) to understand the context and intent behind a query. So this chatbot actually gets you, even when you misspell or use informal language, and comes back with the answers you seek. 

They learn over time and become more effective as they handle more two-way conversations, increasing customer satisfaction. 

Where are the AI-Powered SMS chatbots used? 

• Complex customer support

• Technical troubleshooting

• Multi-step service inquiries

• High-volume support environments

Select an AI-Powered SMS Chatbot when:

If you expect the conversations to be more versatile in answering questions, it would take a deeper understanding to answer them. In this scenario, you would need an AI-powered SMS chatbot. Its NLP capabilities would be able to decipher the nuances of incoming messages and shoot back instant responses.

3. Hybrid Chatbots

As the name suggests, this is a combination of both of its predecessors. It uses simpler rule-based logic to tackle regular tasks and uses AI to understand language and the intent behind it.

 It can also use both of those modes at the same time, switching seamlessly to execute complex conversations. 

Hybrid chatbots provide the best customer experiences due to their flexibility and comprehension of natural human language.

Where are the Hybrid SMS chatbots used?

• Customer support with escalation logic 

• E-commerce conversations during the buyer’s journey

• Service businesses handling bookings and related queries

• Sales qualification with open-ended questions  

Select a Hybrid SMS Chatbot when: 

When answering questions as well as handling complex analysis and customer queries, a hybrid chatbot is the best option for you. It is one of the more scalable options and will grow along with the growing needs of your business.  

The industries using SMS chatbots successfully

Chatbots are a commonplace occurrence in our lives. However, some industries, more than others, have been reaping the benefits of SMS chatbots a lot more than others. 

• Restaurants and Food Services: As food delivery services are time-sensitive, they use SMS chatbots to confirm orders, send pickup info, and share special offers. 

• Financial Services & Fintech: They use SMS chatbots for account alerts, verification messages, one-time passwords, and quick customer support interactions. 

• E-commerce and courier services: Online retailers use SMS chatbots to confirm orders, track delivery updates, and remind customers of abandoned carts. SMS bots help keep senders and receivers updated on the journey of their cargoes. 

• Government bodies: Any public notifications and information by government organizations are mostly conveyed by SMS chatbots. 

• Healthcare Providers & Clinics: Hospitals and diagnostic centers rely on SMS chatbots for appointment confirmations, patient follow-ups, and updates on report collections. 

Why do Businesses Rely on SMS Chatbots?

This question may come to your mind if you are new to the concept of chatbots or are thinking of trying one out. Humans can do what a chatbot does, sure. 

However, processing enormous amounts of data in seconds and handling hundreds, even thousands, of conversations simultaneously would take an entire army of trained professionals. 

A chatbot? You just have to set it up, train it once, and it takes care of the rest without needing any handholding. 

Here are some of the primary reasons for businesses to employ an SMS-based bot: 

Unlimited Accessibility- No need for any apps

Text messaging is available and possible on all mobile phones. Unlike web-based chatbots or in-app messengers, they don't require an internet connection or any specific app. 

This means you can reach people who don’t possess a smartphone or don’t prefer to use the internet avidly. 

Instant Delivery and High Open Rates

Text messages have the highest open rates among all other messaging media. This means SMS’s have the highest probability of reaching the target and being seen by them. 

This means businesses can send time-sensitive messages and rest assured that they will be delivered and read in time. 

Pre-Established Credibility

In this day and age of apps, in-app notifications come a dime a dozen. And most of them turn out to be promotional material and are ignored. But texts are considered credible, as most of the important information is delivered through them. 

Remember where you receive our transactional messages, delivery notifications, and OTPs?

This means any information businesses send through a chatbot will not be ignored. And when opened, they bring action and customer engagement, which is the main goal. 

Automation saves time and resources

Setting up a chatbot might cost money. But it doesn’t cost as much as getting the same tasks done by hiring a team of employees. 

And another important resource chatbots save other than money is time. The instantaneous response possible with an automated chatbot leads to faster resolutions of problems. 

SMS chatbots vs Messenger chatbots: What's the difference

When exploring the subject, I noticed that a lot of businesses prefer to use SMS-based bots instead of web or messenger bots. Which makes me ponder the reason behind this pattern. 

So here are all the key differences I found, which might help you decide as well. 

When should you use an SMS chatbot?

You must have encountered a variety of chatbots in your daily lives. Sometimes it’s they who initiate conversation, but it can also be the other way round. I have compared two of the major categories in the previous section. 

Now is the time to ask whether an SMS chatbot is the right choice for you. 

Here are the considerations under which choosing an SMS-based chatbot will be the right choice for you: 

• If the outcome is time-sensitive: Visibility-wise, an SMS outperforms all other apps. So if you want your message to be seen as quickly as possible, then SMS will be the best medium. 

• When a rich experience is not necessary: The required outcome might be as simple as a link-click, or 2 step information process, or a one-line answer to a query. In this case, you should go for SMS chatbots. 

• When customers are not inclined to use the website or app: Additional steps in the journey make a lot of customers non-responsive. If you want to give them a simpler way to initiate communication, an SMS bot will be the perfect solution. 

• If you are not handling prolonged conversations: SMS is mostly suitable for short exchanges. If you predict incoming queries or the following answers in the use case are going to be lengthy, an SMS chatbot might not be a suitable bet. 

If your requirements are aligned with the conditions I’ve mentioned, you are the perfect candidate for using an SMS chatbot. 

So let’s get into the details of building one!