“Chatbot” and “agent” are often used interchangeably, but they solve different problems. Picking the right one decides your budget, timeline and results.
What is an AI chatbot?
An AI chatbot answers questions in conversation. A modern one uses a large language model (LLM) plus retrieval over your content, so it can answer from your policies, FAQs and product data rather than generic knowledge.
What is an AI agent?
An AI agent goes further: it can take actions. It calls your APIs and tools — look up an order, create a ticket, update the CRM, send an email — and can chain several steps to finish a task.
How to choose
- Mostly answering questions from known content → start with a RAG chatbot.
- Needs to change data or complete a process → you need an agent with tool access.
- High-risk actions (payments, refunds) → agent with human approval steps.
- Unsure → run a 2–4 week proof of concept on one workflow and measure it.
What it takes to do it well
Grounding in your data, clear guardrails, an evaluation set of real questions, and a human hand-off path. These matter more than which model you pick.
Coder97 builds both chatbots and agents for businesses in India and abroad. Book a free call to discuss your use case.