Chatbot vs Live Chat – Which One to Choose for Your Business?

In a competitive business environment, companies today are going the extra mile to provide exceptional customer experience. Chat, being one of the best channels for customer service and sales, is an obvious choice for organizations.

But, are you implementing a chat solution just to be in the race? Or is there a deep understanding and evaluation behind using a live chat or a chatbot for your business?

Live chat has been in use for quite a long time, whereas chatbots are relatively new in the game. At HappyFox, we have worked with customers to implement live chat and chatbot solutions for various businesses covering different industries and use-cases. 

In this blog, we’ll try to compare and contrast the two solutions based on our key learnings, on the following aspects:

#ChatbotLive chat
1A chatbot is a software program designed to interact with customers as a human would. Chatbots can be Rule-based or Artificial Intelligence & Machine Learning bots.Live chat is a widget on your website that lets a live person chat with customers in real-time.
2Chatbots are interactive and proactively engage with humans.Live chat has limitations in proactively reaching out to customers.  
3Chatbots are great for automation and answering FAQs.Live chat is great for answering complex questions that need human support.
4A chatbot can be trained as a support bot, sales bot, conversational bot, or transactional bot based on the requirement.Live chat can also be used for different applications by routing the chat to department-specific support agents.

Response Time

At the outset, it looks like chatbot responds within seconds; live chat has human limitations and might not be as fast as a chatbot

But is it enough to measure just the first response time while evaluating the two? The answer is NO; there are several factors and KPIs to consider while validating response time:

a) Time for resolution

Chatbots might provide quick answers, but they are limited in their capacity to answer only specific questions. Even AI Chatbots learn different semantics with time.

Imagine a scenario where a customer goes around different options in a rule-based bot only to find that his issue is not even under those options. Finally, a real person answers it for the customer. 

This leads to a bad experience and increases the time for resolution. Whereas in live chat the first response time might be higher, but the query resolution time might be lesser.

b) Deflection rate

The deflection rate is also a great metric to see if the bot is helping reduce the number of tickets and FAQs. In live chat, live agents have no option but to answer repetitive questions.

c) Customer satisfaction

You might be wondering what customer satisfaction has to do with the response time. Considering only response time without understanding customer satisfaction is a job half done. You might have great numbers to showcase on the response times but if the customers are not satisfied then even quick responses are of no use.

 A combination of live chat and chatbots can help achieve the best of the two worlds where both personalization and faster response times can be achieved.


Chatbots operate with about 100% uptime. They can work 24/7, 365 days a year. Businesses that serve their customers 24/7 have an edge over others. Thus chatbots score higher in availability factor (that’s where software programs are better than humans) and offer prompt customer support.

Single chatbot can handle huge volumes of requests without any delay, unlike human agents who can chat with a limited number of customers at a time. 

Live chat on the other hand can integrate with different channels like social media, ecommerce, CMS, team collaboration apps like Slack, CRM, thereby handling requests from various platforms.

Problem-solving skills

Chatbots are mere machines; they don’t panic, nor get stressed, but on the flip side, they cannot understand how to tackle sarcasm, humor, or complicated or not well-explained queries. 

Live chat is a better tool when it comes to complex issues and troubleshooting them, and it’s best to have chatbots for FAQs and answer some self-service questions that would require the customers to read very long articles.

Cost Efficiency

Chatbots have a one-time installation cost. Researchers predict that by 2025, more than 90% of the B2C interactions will be accomplished by chatbots. Also, bots can cut operational costs for businesses by more than $8 billion per year in the next three years.

Live chat agents need to be paid salaries. Live chat cost can be calculated by the total number of chat requests raised per month, and the number of agents involved to find the average price per chat. Data from Help Desk Institute states that the average cost per chat session is $16.80. Assuming an organization handles 5,000 chats in a month, the cost incurred sums up to $84,000/month.

Chatbot ROI, on the other hand can be computed by the gains through the bot(due to time and effort saved on FAQs) and subtracting the installation costs and maintenance cost of the bot.

The cost of installing a bot might vary based on the types of bots used for different use-cases. But the bottomline is that Chatbots can save you a lot of time and money if implemented effectively.

Training Time

Bots need a lot of training to understand the natural language of the customer. Every human interaction is a new learning experience for an AI-powered chatbot. There are separate teams for training the bot and providing continuous feedback to the bot to improve. Thus we shouldn’t neglect the training cost for bots.

We should also be prepared for the bots to fail in the beginning and ensure that we minimize the damage. Microsoft’s Tay bot is an example of how bots can learn inappropriate phrases and ideologies.

However once trained AI bots can beat human interactions like how Deep Blue AI defeated World’s #1 Chess player Kasparov. Machines can store and retrieve huge volumes of information compared to humans.

In the live chat scenario, we have to train real humans. Training chat support agents about live chat etiquette and product knowledge is sufficient thereby reducing training time. But live chat is prone to human errors.

Engagement Rate

Chatbots provide a very interactive chat experience to customers, which surprises them, delights them, and thus proves to be better at customer engagement. A report by Gartner says that interest in chatbots increased by 160% in 2018.

Live chat also has a good engagement rate than phone and email simply because the younger generation prefers chatting more than other modes of communication. However, the ‘wow’ factor which excites you while seeing a chatbot is missing in live chat.

Chatbot vs Live chat: Choose wisely

Understanding the pros and cons of chatbots and live chat will provide better insights on which is the ideal fit for your business.

If you are evaluating chatbots and live chat for your business, you can create a checklist based on the key factors mentioned in this post. You could also have a look at customer interactions and classify them as FAQs or complex questions that require human touch.

For most use-cases bots can be an effective technology and can handle huge volumes of requests single handedly. In the current scenario where automation has become the new normal, chatbots are ideal fit for your business. But if you really have the budget for live chat agents, you can balance using both the technologies to deliver a better customer service experience. 

For more information on AI Chatbots, check out our free guide and see how we can help you get started with chatbots or live chat software for your business.