how to calculate chatbot roi

The most potent invention of the modern era is artificial intelligence or AI. It changes how corporations are managed as a whole and how human life is enabled. According to Gartner, by 2027, around a quarter (25%) of businesses would primarily use chatbots for customer assistance. According to Gartner, a variety of AI technologies will enable support agents to react more quickly and effectively. Furthermore, AI digital assistants will take over as service desk front-liners.

Businesses can gain from chatbots in a variety of ways, such as lower expenses for customer service, higher revenue, and higher customer happiness. To make sure it is a wise investment, it is crucial to calculate your chatbot’s return on investment (ROI).

The financial benefit or cost-effectiveness of deploying a chatbot in a customer service or corporate setting is measured by chatbot ROI (Return on Investment). It evaluates the chatbot’s worth in relation to the original outlay of funds and continuous expenses for development, implementation, and maintenance.

ROI, or return on investment, is an essential indicator for companies of all kinds. It calculates the return on investment and expresses it as a percentage of the initial investment. ROI is a useful metric for comparing various investment possibilities, assessing the efficacy of various investments, and helping decision-makers allocate resources wisely. It makes sense for your business to do a preliminary analysis of the return on investment before designing and deploying a chatbot.  Chatbots and conversational agents driven by NLP and AI are more intelligent, more user-friendly, and can provide a higher return on investment.

The ratio of your net profit to your total investment is known as ROI. You must deduct all of your expenses from all of your revenue to determine your net profit. The costs associated with creating, managing, and advertising your chatbot campaigns are included in your overall expenditures. The money you make from your chatbot campaigns—whether directly or indirectly—is included in your overall revenue. You must divide your net profit by the whole amount of your costs, then multiply the result by 100 to find your ROI. For instance, your ROI is 200% if your net profit is $10,000 and your total expenses are $5,000.

3-Step Formula for Calculating Chatbot ROI

Step 1: Identify Eligible Queries

When determining the return on investment (ROI) of chatbots, “eligible queries” denote the particular categories of user interactions deemed pertinent to gauging the efficacy of the chatbot. These inquiries usually relate to the main objectives of the chatbot, which could include customer service, product assistance, or transaction facilitation.  You may isolate the chatbot’s effect on particular business goals and prevent irrelevant interactions from distorting ROI calculations by concentrating on qualifying queries.  Eligible query analysis can assist in identifying areas where the chatbot needs to be modified in order to better satisfy users’ requirements by revealing patterns in user behaviour. By concentrating on qualifying inquiries, you can highlight the chatbot’s capacity to manage particular jobs and advance organizational objectives.

Determining the return on investment (ROI) of a chatbot requires analyzing and classifying the questions that are currently being asked. You may learn a lot about your chatbot’s efficacy and pinpoint areas for development by comprehending the kinds of questions it is responding to.

To assess and classify existing queries in the process of determining ROI:

  • For a predetermined amount of time, you must gather and examine samples of chatbot conversations. and make use of its analytics tools or go over transcripts by hand to find recurring themes and kinds of queries.
  • Next, define query categories that support the main aims and objectives of your chatbot.
  • Order tracking, technical support concerns, product information queries, and customer support inquiries are a few examples.
  • You must Sort Questions Into Groups Whether by hand or with the use of automated tools, make sure that classifications are consistent to preserve data integrity.
  •  Next, Determine the most common inquiry types and the percentage of queries that fit into each category to gain insight into user demands and chatbot usage trends.
  • Additionally, evaluate how well the chatbot answers questions within each category and track metrics like customer satisfaction scores, average handling time, and resolution rate.
  • The next step is to examine inquiry trends and success rates to identify areas where the chatbot may be made better. taking into account elements like user comments, chatbot responses, and the difficulty of the query.
  • You must allocate resources and development efforts to solve the areas for improvement that have been identified while prioritizing improvements to address popular inquiry types and boost chatbot performance.
  • In addition to continuously refining query classification and improvement tactics based on data and insights, you must regularly analyze query distribution, resolution rates, and user feedback.

Start by looking at the questions that your business now gets via live chat. Next, determine which are the most common questions that a chatbot could answer.

Determine the proportion of basic questions (that a bot could answer) versus complicated questions (that an agent should answer) in your chats. Keep in mind that, in most cases, the 80:20 rule holds true: 20% of searches account for 80% of query traffic.

Step 2: Calculate Time Saved with a Chatbot

When evaluating the return on investment (ROI) of chatbots, time savings are a critical consideration. Chatbots can free up important time that can be used for more sophisticated duties, strategic planning, and customer relationship building by automating repetitive jobs and decreasing the workload for human agents.

One of the most important metrics for assessing the effectiveness of customer service operations and figuring out the return on investment (ROI) of chatbots is average handling time (AHT). Businesses can evaluate the efficacy of chatbots in lowering customer support expenses and enhancing overall efficiency by knowing the AHT of human agents and contrasting it with the AHT of chatbots.

Businesses can find opportunities for improvement in chatbot and human-agent customer service, as well as cost savings and higher customer satisfaction, by analyzing AHT data. This helps ensure that chatbot investments yield a profit.

Calculating the time saved using average chatbot handling time (CHT) involves comparing the CHT to the average handling time (AHT) of human agents. This comparison provides an estimate of the time savings achieved by implementing chatbots.


Time Saved per Inquiry = (AHT – CHT)

Determine the approximate handling time for these kinds of straightforward queries.

Multiply the number of hours your agent spends on these types of interactions by their hourly wage. Multiply your monthly cost by 12 to find your annual cost.

To see how much you could save, compare your quoted Chatbot cost with your annual cost.

Step 3: Calculate Money Saved from Using a Chatbot

Calculating the money saved from using a chatbot involves estimating the cost savings achieved by reducing the workload for human agents and streamlining customer support operations. The return on investment (ROI) of chatbots is heavily influenced by cost savings. Chatbots can save money in a number of ways, such as by lowering labour expenses, enhancing effectiveness, lowering training expenses, lowering costs for infrastructure, Lower rates of errors, a rise in client satisfaction, decreasing rate of turnover, and increasing renown for the brand.

Determining the monthly savings by comparing chatbot costs with support agent salaries involves estimating the difference in labor expenses associated with using chatbots versus human agents.

For this,

  • Estimate the monthly chatbot costs
  • Calculate the monthly support agent salaries
  •  Determine the number of chatbot-handled inquiries
  • Calculate the average hourly wage of customer support agents Estimate the average chatbot handling time (CHT)
  • Calculate the potential labor cost savings per month
  • Adjust for chatbot-unhandled inquiries
  •  Calculate the adjusted potential labor cost savings
  • Add the adjusted potential labor cost savings to the monthly cost savings
  • To make our chatbot cost-effective, Choosing a chatbot provider and estimating the associated costs involved is essential. For this, you must consider
  •  To Identify Your Chatbot Goals and its Objectives:
  • To Evaluate Chatbot Provider Features and Functionality
  • Its Deployment and Integration Options
  • Comparing Pricing and Cost Structure
  • to  Request Demos and Reviews
  • Understanding Support and Maintenance Options available
  • Negotiating Terms and Conditions
  • It’s Future Growth and Scalability
  • provider’s roadmap and plans for future chatbot development and feature enhancements.


Chatbots have become a potent tool in today’s digital landscape for companies looking to improve customer service, save expenses, and streamline operations. A chatbot’s financial sustainability and capacity to impress stakeholders with its worth can be ascertained by calculating its return on investment (ROI).

An easy way to assess how successful chatbot installation is is to use the three-step procedure for determining chatbot ROI:

  • Determine the reductions in costs. To calculate this, multiply the amount of hours the chatbot saved by the hourly wage of an employee.
  • Determine the amount of money made by multiplying the number of leads the chatbot produced by the average sale price.
  • Divide the income from the cost reductions. This will provide you with the ROI of your chatbot.

Putting in place a chatbot can result in significant cost savings.  Additionally, a chatbot can assist in lowering client attrition, which may result in higher sales. We advise you to determine your chatbot’s return on investment if you are thinking about putting one into use. This will assist you in deciding if investing in a chatbot for your company is worthwhile.

As with any project, not only software or chatbot projects, figuring out the projected return on investment is essential. The case for moving forward with the project is typically weak if a high return on investment cannot be expected. Calculating the ROI can, at the absolute least, disprove project assumptions and result in a more focused use case and implementation.

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