What Is an AI Chatbot? Definition and Business Uses
Definition
AI chatbot: An AI chatbot is a program that holds a natural-language conversation, by text or voice, using a large language model to understand questions and generate answers. In business, it is usually limited to answering from the company's own approved information.
How it differs from old chatbots
Older chatbots followed fixed decision trees (“press 1 for billing”). AI chatbots understand free-form questions, including typos, slang and multiple languages, and generate answers in natural language.
What makes a good business chatbot
- It answers from your information (often using RAG), not the open internet.
- It says “I don’t know” and hands over to a person instead of guessing.
- It discloses that it’s AI.
- Someone reviews its conversations regularly and improves its answers.
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Related terms: AI agent · RAG (retrieval-augmented generation) · Large language model (LLM)