Chatbot Development Process

One of the greatest things to hit the customer service world recently is the development of chatbots. The days of waiting (not so patiently) on hold to find out the answer to your most burning questions are becoming a thing of the past. 

The chatbot market size is expected to grow from $2.6 billion in 2019 to $9.4 billion by 2024 at a compound annual growth rate (CAGR) of 29.7%.

While chatbots are simple for customers to use, they do take thorough and thoughtful planning while in the development stage. With upfront planning, working with all stakeholders synergistically and the guidance of a proven chatbot consultant/project manager, you have the best chances for successful implementation, adoption and ROI.

Chatbots are useful in customer service, including providing product recommendations and engaging with customers through a variety of campaigns.

For example, chatbots have been used to:

– Answer consumers questions quickly, at any time of the day or night
– Provide recommendations based on the customer’s past purchases
– Let customers know about sales or promotions
– Help customers find information or products on a company website

Business Benefits of Chatbot Development

Keep Things Running 24/7: Typical office productivity is usually 6-8 hours/day, but chatbots work around the clock allowing your business to never truly sleep. In a recent study, it was determined that 71% of consumers want the ability to solve customer service issues on their own, which also means on their own time.

Deliver Personalized Responses: Because of the built-in AI, bots can read human intent and deliver personalized responses. In turn, customer satisfaction increases, which drives customer acquisition. 

Increase Retention Rates: Customer acquisition, however, is expensive. As more customers are retained, your ROI increases. The inclusion of a chatbot will provide insight into how your customers truly feel towards your business, allowing you to make data-driven decisions to increase customer lifetime value. 

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Photo by Anete Lusina on

4 Steps to Start the Chatbot Development Process on the Right Foot

Here’s what you need to know before you kickoff the chatbot development process:

1. Determine your main goal for the chatbot: Brainstorm what problems you are hoping your bot will solve for you and your customers, and then pick one very specific use case.

2. Identify the target audience for the bot: Determine whether there is a specific persona that will have their needs met by your chatbot. 

3. Create a chatbot project plan: Document what your project requires, including experts you need to lean on, timing expectations, and forward-thinking implementation strategies.

4. Develop a minimum viable product (MVP): Finally, you need to develop the most simple version of the bot with the bare minimum functionality. This is the first baby step within an agile chatbot development process.

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The Agile Chatbot Development Process

As developers often quip: Failure is a feature. Failing fast during the chatbot development process means fixing errors quickly and more affordably throughout the design cycles. Agile consultants and software teams use a distinct process to step through the chatbot development process in order to not only make the most of the budget but to also ensure that the product developed meets all stakeholders’ expectations. 

Chatbot Development Process

To illustrate the agile chatbot development process in action, ChatC’s proven process is summarized below. You can get a feel for what’s involved at each step of the project and for more details on timing or your commitments at each stage, check out our process here

1. Discover automation opportunities: Automation is the delegation of the human control function to a machine. So, how can you let a chatbot take over human functions? Ultimately, if you have staff entering data or responding to repetitive questions, there are opportunities for automation. The first step includes:

– Exploring the business value of chatbots
– Understanding and determining the feasibility of applying conversational AI

2. Define use case: A use case is a list of actions that define the interactions between a system and a role to achieve a goal. Include the following in your documentation:

– Decide on the exact business application 
– Document KPIs to ensure project success
– Learn about the vendor landscape

3. Determine vendor and finalize budget: The agile approach to vendor selection makes use of a streamlined process to pick the right supplier and finalize the budget, including:

– Leverage ChatC’s extensive pre-vetted vendor relationships
– Facilitate RFI and/or RFP if required
– Determine the budget
– Shortlist vendors and evaluate proposals

4. Document system architecture: System architecture is the behaviour or structure of the software that provides services and automation. More specifically, you’ll want to:

– Decide on tech stack integrations
– Strategize how and where the automated chatbot will be deployed

5. Develop proof of concept: A proof of concept shows that the goal of a project is viable and will be a success. Include the following:

– Reimagine the customer/employee journey and come up with a simple strategy to test out your solution
– Kick-off the development team
– Conduct small user group testing and feedback

6. Deploy minimal viable product (MVP): An MVP is a product developed with the most minimal functionalities, to see how the target audience will respond. Include the following in your plans and execution:

– Set Minimum Viable Product (MVP) requirements
– Mobilize the right team to build a minimal viable product (MVP)
– Begin learning together with all stakeholders (customers, operations, IT, etc.)

7. Determine scalability: Scalability is when a software solution is able to handle an increased amount of work. This is where the user group can increase and your team can begin to look at expanding the bot’s reach. Include the following:

– Review performance and KPIs of the MVP
– Determine how quickly the chatbot can be scaled 

8. Data analytics and support: By paying close attention to the data collected by the chatbot, your business decisions can be confidently driven using customer preferences moving forward. Be sure to:

– Put regular data monitoring practices in place (chatbots can be configured to make this even easier)
– Explore custom analytics to discover key insights
– Determine level of support required

Chatbots are the Present and Future – Explore Your Use Case Now

Many brands have already jumped on the chatbot train to reap the benefits of the next-generation technology. Delaying this decision could cause you to lag behind your competition. 

However, developing a chatbot is a substantial and ongoing investment for your team, and should be handled with care up-front. Consider the benefits of working with industry veterans, who have managed chatbot development projects for major Fortune 500 companies. 

Are you wondering how a Chatbot Consultant can help you to develop your company’s chatbot? Get in touch with one of our team members today. 

7 replies
  1. dean jonson
    dean jonson says:

    Thank you for providing a good explanation about the chatbot development process. I enjoyed during a read you mentioned about 4 steps to start the development process for Chatbot. Moreover, the benefits of chatbot in business with 3 points also look very interesting.
    but you don’t mention any Chatbot platform where we can start So, I think should Mention a chatbot like
    BotPenguin here. It has great advantages as you mentioned here.


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