A chatbot is a software application that simulates text-based conversation with users, ranging from simple rule-based responders to sophisticated AI-powered agents capable of complex dialogue.

The term "chatbot" covers enormous variance. At one end: keyword-matching systems that recognize "hours" and return store hours, breaking down on any variation. At the other end: large language model-powered agents that understand nuanced requests, maintain multi-turn context, and execute complex workflows. Calling both "chatbots" obscures critical capability differences.

For evaluating chatbots, focus on specific capabilities: Can it handle questions not explicitly programmed? Can it maintain context across multiple turns? Can it execute actions, not just provide information? Can it recognize when it's failing and escalate gracefully? Can it improve from feedback? The answers to these questions determine whether a chatbot will create value or frustration.

Chatbot reputation has been damaged by years of poor implementations. Many customers approach chatbots expecting to be frustrated and looking for "talk to human" options. Overcoming this perception requires delivering actually useful interactions—which is possible with modern AI, but requires more than just deploying a chatbot.

Related terms: Conversational AI, Intelligent Virtual Agent, Fallback intent