AI Chatbots: How Natural Language Processing (NLP) Works

Last Updated on April 4, 2023

NLP chatbots

Everything from placing an online order to giving a weather forecast can be done by an AI chatbot with a natural language processing (NLP) engine. There is a reason why chatbots are among the most potent tools for technical intelligence.

With the help of chatbots, you can communicate with people to complete tasks like text-based automatic online purchasing or voice recognition on your car’s phone.

But how does a chatbot understand the message, translate it into its language, and carry out the task that the user has given it? The answer to these problems is natural language processing.

In this blog post, we’ll explore what NLP is, how it works in AI chatbots, and its benefits, challenges, and prospects.

What is Natural Language Processing (NLP)?

Natural Language Processing

Humans interact with one another through natural language. However, programming languages were created so that people could communicate with machines in a language they could comprehend. For instance, Python is a computer language, whereas English is a natural language. 

Natural Language Processing enables machines to gather and process data from written or verbal user inputs, facilitating human-to-machine communication without the need for humans to “speak” Python or any other computer language.

A chatbot creator builds NLP models that let computers understand and even imitate human communication.

Contrary to conventional word processing techniques, NLP does not simply interpret speech or text as a series of symbols. It also takes into account the natural language’s hierarchical organization, in which words make phrases, which then lead to sentences, which then lead to coherent ideas.

To put it another way, NLP software searches for more than just terms. To interpret meaning and intent from elements like sentence structure, context, idioms, etc., it employs pre-programmed or acquired information.

For instance, effective NLP software should be able to determine whether the user is agreeing or asking a question that needs an answer when they say, “Why not?”

Natural Language Processing Techniques


Tokenization is the process of breaking text into smaller pieces called tokens. These tokens can be words, phrases, or even individual characters. Tokenization is a crucial step in natural language processing because it allows the computer to understand the structure of a sentence and analyze it in a more meaningful way.

For example, consider the sentence “The quick brown fox jumped over the lazy dog.” Tokenization of this sentence would result in the following tokens:

  • The
  • quick
  • brown
  • fox
  • jumped
  • over
  • the
  • lazy
  • dog

These tokens can then be used for further analysis, such as part-of-speech tagging or sentiment analysis.

Part-of-speech tagging

Part-of-speech (POS) tagging is the process of labelling each token in a sentence with its corresponding part of speech, such as noun, verb, adjective, adverb, etc. POS tagging is essential for natural language processing because it allows the computer to understand the grammatical structure of a sentence and how each word relates to the others.

For example, consider the sentence “I have a black cat.” POS tagging of this sentence would result in the following:

  • I (pronoun)
  • have (verb)
  • a (determiner)
  • black (adjective)
  • cat (noun)

This information can be used for further analysis, such as named entity recognition or sentiment analysis.

Named entity recognition

Named entity recognition (NER) is the process of identifying entities such as people, places, and organizations in a sentence. NER is important for natural language processing because it allows the computer to understand the context of a sentence and how different entities relate to each other.

For example, consider the sentence “I went to New York City last week.” NER of this sentence would recognize “New York City” as a place and provide additional information, such as its location, population, or other relevant details.

Sentiment analysis

Sentiment analysis is the process of determining the emotional tone of a text. Sentiment analysis is important for natural language processing because it allows the computer to understand the emotional state of a person and provide appropriate responses.

For example, consider the sentence “I am really happy with my new phone.” Sentiment analysis of this sentence would recognize the positive emotional tone and provide an appropriate response, such as “Glad to hear that you’re enjoying your new phone!”

Language modelling

Language modelling is the process of predicting the probability of the next word in a sentence. Language modelling is important for natural language processing because it allows the computer to generate more accurate responses and anticipate the user’s needs.

For example, consider the sentence “I am going to the ___.” Language modelling can predict the most likely word to follow based on the context, such as “store,” “beach,” or “park.”


Parsing is the process of analyzing the grammatical structure of a sentence. Parsing is important for natural language processing because it allows the computer to understand how different parts of a sentence relate to each other and how they contribute to the overall meaning.

For example, consider the sentence “The cat sat on the mat.” Parsing of this sentence would identify the subject (cat), verb (sat), and object (mat), and how they relate to each other in the sentence. This information can be used for further analysis, such as sentiment analysis or dialogue management.

How Natural Language Processing Works in AI Chatbots

The AI chatbot must convert free-form human language into structured, machine-readable data to understand the user’s message. The chatbot must use algorithms to extract context and meaning from each sentence when a user sends a message to collect data.

You can refer to it as the subfield of natural language processing known as natural language understanding (NLU). It involves analysing the user’s message to extract useful and precise information.

One technique for identifying the essential components of a statement is to distinguish between individuals and purpose. The target of a remark is the sentence’s intention. What do the clients hope to achieve specifically? If the communication asks, “What time does the KFC on 24th Street close?” for instance.

The goal of the communication is to learn the time that the restaurant closes. Something that modifies or supports the meaning is referred to as a sentence entity.

For instance, Tuesday and closing hours are the things in the question, “What are your closing hours on Tuesday?” Anything that can be given a name is an object. (like the place, person, name, or object). In essence, the chatbot would be aware of the subjects and purposes of the user’s communications.

Other than the understanding of user intent and entity recognition, NLP helps the chatbot recognize the sentiment in user inputs. Sentiment analysis involves determining the user’s emotional state based on the language they use. For example, if a user says “I’m frustrated because my package hasn’t arrived yet,” the chatbot can respond with empathy and provide an estimated delivery date.

Why Adopt an AI Chatbot Powered by NLP?

Benefits of NLP chatbots
Enhanced user experience

NLP enables chatbots to provide personalized and accurate responses to user queries, improving the overall user experience. Chatbots can understand the user’s intent and tailor their responses accordingly, reducing frustration and improving satisfaction.

Increased efficiency

Chatbots can handle multiple conversations at once, reducing the workload on human agents. This increases efficiency and allows businesses to respond to customer queries faster.

Better scalability

Chatbots can handle a large volume of conversations simultaneously, making them scalable and cost-effective. Businesses can easily add more chatbots to handle increased demand without incurring additional costs.

Improved customer satisfaction

Chatbots can provide instant and accurate responses to customer queries, improving satisfaction levels. This can lead to increased customer loyalty and repeat business.

The Challenges of NLP Chatbot Development

NLP robots are still an emerging technology, so there is a tonne of room for improvement and advancement. Here are some things to remember as you begin using NLP robots.

  1. They’re not perfect
    NLP chatbots aren’t ideal because they use artificial intelligence as their power source. They might misunderstand what you’re stating or make mistakes. The accuracy of AI apps will increase as this technology advances, though.

  2. They need to be trained
    NLP robots require training, just like any other artificial intelligence technology. For them to learn how to understand human words, they must be fed a lot of data. They will become more adept at comprehending natural English as you provide them with more information.

  3. They’re not cheap
    The creation and upkeep of an NLP chatbot can be costly. However, the prices will probably decrease as technology develops. Use a pre-trained model or a well-known chatbot tool if you’re trying to build an NLP chatbot on a tight budget. It significantly lowers the typical expense of building a chatbot.

  4. They need a user interface
    A user-friendly UI is necessary for NLP chatbots so that users can communicate with them. It may be a straightforward text-based interface or a more intricate pictorial interface. Your requirements and preferences will determine everything. But creating an effective chatbot UI can be just as crucial as controlling NLP and organising your discussion flows.

  5. They require regular maintenance
    Like all software, chatbots require routine maintenance. This entails updating the chatbot with the most recent alterations in your industry, fixing bugs, and introducing new content. This can take a lot of effort, depending on the size and complexity of your chatbot.


The use of natural language processing is extremely important when building robots. The Chatbot’s main method for accurately and consistently determining the user’s meaning is NLP. It has changed how we interact with technology and will do so going forward.

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