1. Enhance Customer Service and Support

Chatbots let businesses communicate with consumers at any time of the day. In short, these bots simulate human conversation and fix common customer service issues. It's no wonder, then, that 35 percent of consumers would use a chatbot to resolve a complaint or problem.

"A chatbot can have a conversation with a customer but isn't limited by technology because the AI technology is built into the software," says Forbes magazine. "In most cases, chatbots use messenger apps to communicate with customers. A person can type or ask a question and the bot responds with the right information."

2. Automate Simple Transactions

Chatbots can automate simple payments over live chat and messenger apps. Not only will these bots save business owners time, but they can reduce human labor costs, too. Consumers will no longer have to call up a customer service department to pay for a service or settle a bill, so business owners won't need as many staff.

In 2016, MasterCard launched an AI-powered chatbot for customer payments. These bots can answer questions about a customer's account balance, set payment alerts and collect payments. Other companies have also incorporated chatbot technology into their business models. Experts predict that 25 percent of all customer service operations will utilize chatbots or virtual customer assistants by the year 2020.

3. Improve User Engagement

Chatbots don't just communicate simple commands -- they are capable of having human-like conversations with consumers. Think of them as customer service agents and salespeople and marketers all rolled into one.

These bots improve user engagement through personalization:

• They can address consumers by their first name.
• They can recommend products and services based on a customer's previous behaviors and transaction histories.
• They often use everyday, informal speech -- just like a human would.

4. Streamline Social Media Activity

Chatbots also increase user engagement on social media websites like Facebook and Instagram. These bots communicate with consumers through live chat platforms like Facebook Messenger and solve common problems normally handled by a customer service team.

"Chatbots are taking over social media marketing as they allow consumers to engage with them in terms of content consumption, customer service, and transactional engagements," says Chatbots Magazine.

"Shifting gears, it is now possible for consumers to read and receive information, ask queries and even purchase from one chatbot instead of using social media as a portal."

5. Improve User Retention

Chatbots are constantly evolving and becoming more sophisticated. These language learning tools can improve user retention by managing customer service issues in a timely, efficient manner and upselling and cross-selling relevant products and services.

Chatbots are a powerful retention channel for any business. One recent study revealed that average chatbot retention -- the number of consumers who returned to a company within 30 days after communicating with a bot -- is 34 percent.