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What Are Chatbots?
Understand what chatbots are and how they play an important role for different businesses nowadays.
Written by
Sophiie Bankeher
Published on
Aug 14, 2025
What Are Chatbots?

Chatbots are software programs designed to have real-time conversations with people, much like texting with a human. They can be powered by simple pre-written rules or advanced artificial intelligence (AI) that enables them to understand a user’s intent and respond with relevant, helpful information.


You’ve probably seen them pop up on websites with a friendly “How can I help you today?” message — that’s a chatbot in action. Modern AI chatbots such as Sophiie go beyond scripts; they learn from your content and adapt to respond naturally to a wide range of questions, acting as smart assistants that never sleep.

They’re always ready to guide customers, provide instant answers, and help visitors take the next step toward making a decision.

How does an AI Chatbot help your business?

Integrating an AI chatbot into your website can completely transform how your business interacts with visitors. Instead of waiting for emails or phone calls, your chatbot responds instantly—handling questions, capturing leads, and providing help exactly when it’s needed.

It is like you’re adding a 24/7 customer service agent to your business—one that never takes breaks, calls in sick, or forgets to follow up. This not only keeps visitors engaged but also creates a smooth, seamless experience that encourages them to stay and explore.

Instant support, any time

An AI chatbot ensures your visitors get immediate answers to their questions — whether they land on your website at 2 p.m. or 2 a.m. This is especially valuable in Australia’s service-driven economy, where customers expect fast responses regardless of time zones or public holidays. By being “always on,” your chatbot captures leads and assists customers even when your team is offline.

An improved customer experience

Today’s consumers value convenience above almost everything else. Chatbots deliver fast, relevant, and friendly interactions that guide users to the information they need without unnecessary delays. For industries like professional services and retail, this means reducing frustration, building trust, and increasing the likelihood of repeat business.

Lead qualification and automation

AI chatbots don’t just chat — they ask smart, targeted questions to qualify potential customers. Details like budget range, service needs, and timelines can be collected in real-time and automatically pushed to your CRM or sales software. For example, a financial firm using an AI chatbot for financial services could pre-qualify lending enquiries before a human advisor even steps in, saving hours in manual follow-up.

Operational efficiency

By automating repetitive questions like “What are your opening hours?” or “How can I reset my password?”, chatbots free up your staff for more complex, high-value work. In Australian small businesses, where teams are often lean, this kind of automation can mean the difference between struggling to keep up and consistently exceeding customer expectations.

Stronger user retention

Visitors who get instant help are far more likely to stay on your site and return in the future. A well-designed chatbot can share resources, answer common concerns, and follow up with email prompts via an AI email responder — all of which keeps your brand top-of-mind and nurtures ongoing engagement.

Different Types of Chatbots

Not all chatbots are the same, and the right choice depends on your business goals. Here are the common types of chat bots used in different industries:

Rule-based chatbots follow a fixed script and respond based on predefined keywords, making them ideal for basic, predictable interactions.

AI-powered chatbots use natural language processing (NLP) and machine learning to understand diverse queries and respond in a human-like way.

Hybrid chatbots combine rule-based and AI-driven approaches, offering flexibility by handling simple questions with rules while using AI for more complex queries.

Voice-enabled chatbots use speech recognition for hands-free, conversational interactions — perfect for mobile apps or situations where typing isn’t convenient.

How Different Industries Benefit from AI Chatbots

AI chatbots have evolved from being a novelty to becoming an essential tool for modern businesses. They provide round-the-clock support, streamline operations, and enhance customer engagement—making them valuable across industries of all sizes. From answering routine inquiries to handling complex requests, AI chatbots help companies save time, reduce costs, and deliver a smoother experience for customers and clients alike.

  • E-commerce. They answer questions about shipping, returns, and product availability, make product recommendations, and recover abandoned carts with timely reminders or incentives.
  • SaaS and technology. They provide onboarding support, qualify leads, book demos, and connect prospects to the right team members.
  • Customer support. Chatbots handle high-volume FAQs, collect support ticket details, and improve resolution times, leading to better CSAT scores.
  • Local businesses. They can book appointments, share operating hours, and capture visitor details after hours — ensuring no enquiry goes unanswered.

Why Consider Using an AI Chatbot?

With the rise of modern AI, Australian businesses are reaping significant benefits, transforming how they operate and compete.

Rising popularity across business sectors

According to industry.gov.au, there is a positive trend in AI adoption among Australian small and medium businesses - “40% of SMEs are currently adopting AI, a 5% increase compared to the previous quarter (July – Sept 2024)”. This growing number of Australian businesses are in sectors: Service, Retail Trade, Construction, healthcare and education and more.

The top five AI applications businesses are adopting remained unchanged from last quarter, with generative AI assistants now taking the lead:

  • generative AI assistants
  • data entry and document processing
  • fraud detection
  • marketing automation
  • customer support and chatbots

Market momentum

Recent research reveals that the Australian chatbot software market was valued at USD 5.6 billion in 2024 and is projected to grow at an impressive CAGR of 16.8% between 2026 and 2033, reaching USD 21.4 billion by 2033.

A key driver behind this rapid growth is the rising demand for enhanced customer service. Today’s consumers expect fast, efficient, and personalised support whenever they reach out. This shift in expectations is motivating Australian businesses to adopt advanced chatbot solutions that can deliver instant, accurate, and engaging responses — helping them stand out in an increasingly competitive market.

Widespread AI adoption among SMEs

New figures from Minister for Industry and Innovation Tim Ayres reveal that AI adoption among Australian small and medium enterprises has risen to 41%, up 5% from the previous quarter. The data shows tangible benefits, with 22% of businesses reporting faster decision-making and 18% experiencing improved productivity. Service and retail sectors lead the way in adoption, and most states and territories are seeing growth. Encouragingly, the proportion of businesses unsure how to use AI has dropped to 21%, indicating greater awareness and readiness across the board.

See the report here: Australian AI Adoption Tracker report shows business harnessing AI

High trust in workplace AI

According to Google, among Australian AI users, 74% incorporate AI into their daily work, leveraging it for a variety of purposes such as drafting written content, generating creative ideas during brainstorming sessions, and tackling complex problem-solving tasks. This reflects a growing trend of integrating AI tools into professional workflows to boost productivity, enhance creativity, and streamline decision-making processes.


Conclusion

Conclusion AI chatbots are no longer a nice-to-have — they’re a powerful, always-on customer engagement tool that can boost efficiency, cut costs, and enhance user satisfaction. With adoption rates rising rapidly across Australian industries, businesses that embrace this technology now will be better positioned to meet customer expectations, capture more leads, and stay ahead of competitors. Whether you’re looking to improve support, qualify prospects, or simply be available 24/7, an AI chatbot like Sophiie can help you deliver smarter, faster, and more personalised service.