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How to Measure Chatbot Effectiveness

Chatbots and Chatbot Effectiveness

Read on to learn more about the outlook of the chatbot market, the importance of chatbot effectiveness, and what metrics can measure success.

More companies than ever are using artificial intelligence (AI) chatbots in today’s digitally driven business environment. Chatbots are indispensable tools organizations can use for various purposes, but mainly to assist with customer service needs.

Chatbots are becoming increasingly popular, but how do businesses measure their effectiveness? What metrics can companies use to determine if the return on investment (ROI) is worthwhile?

The State of Chatbots in 2022

Conversational chatbots are AI software that engages in humanlike conversations with users through online messaging. Modern chatbots leverage natural language processing (NLP), a subfield of AI that allows computers to understand the text and spoken words, much like people can.

Predictions from Statista show that the global chatbot market will reach $1.25 billion by 2025, a dramatic increase from $190.8 million in 2016. 

Additionally, many consumers are becoming more comfortable receiving customer service assistance from these advanced chatbots. Experts suggest these tools can help organizations save as much as 30% on customer service expenses, making them a worthwhile investment.

The Importance of Effective Chatbots

Some of the best chatbot capabilities include answering questions, resolving complaints or problems, paying bills, collecting important data, making reservations or appointments, and scheduling meetings. Customers also use them to purchase items or sign up for newsletters or email marketing lists.

The global chatbot market is rapidly growing, but companies can still struggle to implement effective ones. Chatbots are valuable tools for businesses, but that value heavily relies on their effectiveness, and ineffective bots are not wise investments.

How to Measure Chatbot Effectiveness: Tips for Businesses

What makes a chatbot effective? How can a business measure the success of its chatbot?

Like many business investments, leaders can measure their effectiveness and value using qualitative and quantitative metrics. Organizations can create a dashboard of key performance indicators (KPIs) and continuously monitor the success of their chatbots.

It’s vital to understand which metrics to use for measuring chatbot effectiveness.


The quality of chatbots plays a major role in their effectiveness. Here are some important qualitative KPIs to consider.

1. Comprehension Level

Comprehension level is an effective measure for chatbots that measures how well the chatbot understands user inquiries. This depends on the bot’s current knowledge base and if it comprehends questions or requests.

Chatbots with low comprehension levels are likely to ask questions they do not have a meaning for or lack the necessary knowledge in the field. For instance, an e-commerce chatbot solution would not know answers to questions about legal matters.

2. User Feedback

Another qualitative metric is user feedback, and luckily, there are simple ways to gather it. At the end of a chatbot session, businesses can ask users simple yes or no questions, such as:

  • Did the chatbot resolve your issue?
  • Did you get answers to your questions?
  • Would you use this chatbot service again?

Businesses can receive feedback from chatbot users to measure how they perceive the bot, what it does well, and which areas it can improve in. 

3. Satisfaction and Evaluation Rates

Satisfaction and evaluation rates are similar to user feedback because they determine if the chatbot is serving its primary purpose. This“ is crucial in any customer service environment. 

People with poor customer service experiences are unlikely to return to the company offering support. Businesses can send more comprehensive surveys to users to ask specific questions about satisfaction and provide an opportunity for users to evaluate the chatbot.

4. Self-Service Rate

The self-service rate for chatbots consists of the number of users that can get the support they need without interacting with a human customer service agent. This measurement will be high if people get the information they need through the bot.


Quantitative metrics are just as important as qualitative ones. They help companies determine whether or not to continue offering chatbot services. Here’s what to measure.

1. Activity Volume

A chatbot’s activity volume is the number of interactions it has with users. This begins when someone asks a simple question, and the bot engages in a constructive conversation.

There are two questions to help companies determine a chatbot’s activity volume:

  • Is the number of user interactions increasing or decreasing?
  • How frequently are people using the chatbot?

2. Bounce, Retention, and Goal Completion Rates

Other quantitative measures worth reviewing are the bounce, retention, and goal completion rates. Below is a brief description of each one:

  • Retention: The proportion of users who return to the chatbot on different occasions during a period of time.
  • Goal completion: The success rate of a chatbot completing a specific task.

These three rates will give businesses a glimpse of how effectively a chatbot provides value during user interactions.

3. Number of Conversations

The number of chatbot conversations can be helpful if a business targets a specific segment. Leaders can measure the number of discussions the chatbot engages in and identify areas of improvement. 

Taking advantage of opportunities to increase chatbot engagement to remain competitive is crucial.

4. Customer Support Savings

Businesses can understand their chatbots’ effectiveness by determining reductions in costs associated with customer support. In other words, how does the bot help save money?

Identifying the amount of cost savings a chatbot contributes to the organization is essential, as it informs business professionals if the solution is worthwhile.

Measure Chatbot Effectiveness Using These Metrics

Artificial intelligence is becoming increasingly prevalent across all industries, so understandably, businesses want to invest in and implement AI-based solutions. 

Chatbots are no exception, as they can vastly improve a company’s customer service operations. Metrics provide a plethora of information about chatbot effectiveness.

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