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What Is Conversational AI? How To Implement It Right?

conversational AI

Artificial Intelligence (AI) has become the hotshot of almost every industry. This is the software mimicking human intelligence that has made communication super smooth for various service providers through Conversational AI. Conversational AI helps the machines to perform like virtual assistants to understand, process, and finally, respond to text or voice messages. 

In simple words, this system enables successful communication and dialogue between the system and humans in this digital world. This branch of AI is emerging as a key tool to each customer-first centric enterprise to offer the best customer experience. Conversational AI empowers to solve the needs of the customers cost-effectively.

What Is Conversational AI?

Conversational AI comprises technologies like virtual agents, voice assistants, mobile assistants, interactive voice recognition systems, and chatbots; they can talk with the users using a large volume of data, natural language processing, and machine learning. This system can communicate exactly like a human and can allow customers to ask queries, get solutions or support, and perform transactions.

Conversational AI offers a better customer experience, fewer waiting hours, and well-organized human support from the end of marketing or customer service departments. The customers can access a more direct 24/7 way to get timely solutions to their problems in a never-seen-before way. Conversational AI has become a game-changer for various organizations for offering the best customer support during the global pandemic.

Related: How AI Gives The Web Hosting Industry A Winning Edge Over Cybercriminals?

How Does Conversational AI Work?

Conversational AI uses various technologies like machine learning (ML), natural language processing (NLP), automated speech recognition (ASP), and natural language understanding (NLU). Generally, there are 4 steps in Conversational AI – it listens, then comprehends, next forms the response, and finally offers the response.

  • Input Processing: The customer or user asks a question with a text or voice message through a webpage or web application. In the case of a voice, the speech recognition system converts that to text format for computers.
  • Input Analysis: Natural language processing (NLP) is used to understand the meaning and find the proper intention of that message.
  • Output Generation: In the next step, the application uses dialog management and finds a suitable response based on the intention of that message. After that, the natural language generation (NLG), a part of NLP that changes the response in a format that can be easily understood by humans.
  • Reinforcement Learning: AI always learns from experience. Here, machine learning (ML) learns from every experience and becomes sharper for better customer support next time.

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Benefits Of Conversational AI

Conversational AI is technology-enabled with the ability to converse like humans with users. Chatbots – forms of conversational AI are replacing human chat agents very quickly. They can answer frequently asked questions in no time and can offer personalized solutions to their consumers. 

Conversational AI is popular because of these two benefits it offers : 

  • Higher response quality
  • Faster response time

This new form of customer service method also includes other benefits like:

  • Accuracy: Conversational AI offers better accuracy in the whole process. When a user sends a message, it directly goes to the specific desk and there is less chance of human error. 
  • Higher Efficiency: As the specific desk for the solution is found and directly accessed by AI without any delay of human processing, reducing the processing time drastically.
  • Higher Productivity: AI is available 24/7 without quality issues and always offers a seamless experience to its customers.
  • Low Operating Cost: Having a full-fledged customer service desk involves a high operating cost. Instead of employing multiple employees, investing in Conversational AI is an intelligent decision. Without falling sick or taking leave, this AI can handle all requests at a low cost.
  • Better Customer Service: Conversational AI can accept, track, and store messages from customers and then respond to them without fewer chances of error making customer service flawless.

Related5 Ways To Automate Customer Support Without Degrading Service

Why Conversational AI Is Getting Popular?

When we think about AI, we think about highly efficient robots and supercomputers!

Conversational AI has shown that artificial intelligence can be used by smaller enterprises, even SMEs to meet day-to-day customer issues. No doubt, this relatively newer application of AI has just revolutionized the problem-solving desks. Companies are using AI in various ways to deliver a memorable experience to their consumers.

Businesses can offer customers quick resolutions to their customer queries with NLP-enabled conversational AI. Here the system understands the intention quickly and delivers the exact solutions. 

Conversational AI systems add a human touch to their service to offer a superior customer experience. Multilingual functionality is another reason for the popularity of Conversational AI; the chance of misunderstanding reduces a lot as AI can communicate in various languages, not only English. 

After the strike of the COVID pandemic, the customers are not ready to meet company representatives in person. Conversational AI can perform the tasks and offer them the solution to their home without personal interaction. Also, with conversational AI, the workload on the customer service teams can be reduced, and quick and appropriate solutions can be provided.

Related: 7 Brilliant Ways To Stay In Touch With Your Customers During The Lockdown

Conversational AI & Chatbots – What’s The Difference?

You might have seen pop-ups appear when you browse a website. These are just simple chatbots that offer various solutions through chat services. Chatbots are a part of Conversational AI. Proper Conversational AI systems are more complex and can serve the customers in a more sophisticated manner during a time of real distress.

We hear about chatbots everywhere and they are very popular on the web. Unfortunately, they are not very popular with their customers. Why? The reason is: they don’t deliver a great experience. On the contrary, Conversational AI offers a better experience. So what’s the difference? 

There are several things conversational AI can offer and solve, but those are challenges for chatbots. For example, conversational AI can handle human variance in dialogue, chatbots generally cannot do this.

A chatbot is a rule-based bounded system with well-defined categories to solve various problems. Unfortunately, most of the time they are not conversational and interactive; rather they offer one-time responses. But humans need a more interactive system, here conversational AI wins. 

Conversational AI can add variance and human touch to the whole process. Conversational AI can ask multi-turn dialog, answer follow-up questions and compensate the user while the user goes off-topic with unexpected queries.

Best Examples Of Conversational AI

Financial Services: Financial institutions like banks and insurance companies are getting digitized at a faster rate. Conversational AI has enabled them to offer more personalized and engaging services like self-service options, faster solutions through SMS, and phone.

Telecom Industries: The telecom industries are investing more in conversational AI solutions to improve their customer experience. As they receive high volumes of customer queries, conversational bots serve the telecom customers more quickly and efficiently.

Airlines Industry: The passengers have the same type of queries in maximum cases, queries regarding flight status and delay, flight cancellation, flight change request, flight booking detail, etc. Conversational AI bots help to mitigate those issues.

Ecommerce Industry: Customer acquisition, customer activation, and customer retention are big challenges for e-commerce industries and they involve the maximum human employees. Conversational AI has made the job easier in each step of this funnel with the less human workforce.

At present, the companies have adopted the next level of conversational AI – virtual personal assistants to serve a general purpose. Amazon Alexa, Apple’s Siri, and Google Home are the best examples.

The Future Of Conversational AI

The use of conversational AI and its market is growing at a fast rate. In 2021, it had a global market of $6.8 billion and it is expected that it will grow up to $18.4 billion by 2026. Reasons for this phenomenal growth are:

· Customer interactions are being digitized.

· More innovations in the field of AI technology.

· Customer demands are changing.

Some statistics related to the future of conversational AI:

· Gartner – A technology research and consulting company, predicts 70% of white-collar workers will take the benefit of conversational AI.

· The involvement of conversational AI will increase ROI, according to Gartner.

· Prediction of International Data Corporation (IDC) indicates that AI will serve 50% of customer interactions in the future.


Conversational AI and chatbots, sub-domains of artificial intelligence, can smartly deal like humans with customers to deliver the two most sought-after solutions: 

· Visitor engagement

· Customer support

The small and big companies get a better potential to serve better with conversational AI to increase their brand loyalty. Various well-known brands like HDFC, SBI, Nykaa, Amazon, Decathlon, Cleartrip, Jio, and Tata Mutual Fund, have already started to get the benefits of using Conversational AI. The business platforms have understood that conversational AI can be a game-changer and lifeline in the field of customer satisfaction, mostly during the global pandemic era and work-from-home situations. This has enabled customers to resolve their issues more effectively than ever thought before. 

Those days are gone when customers used to wait for a long time in a phone call, or a customer service chats or became irritated with an inefficient support system, or abandoned that brand for poor personalized attention. 

Conversational AI is spreading its roots and branches to address customer service issues in unimaginable ways.

The Author

I believe in creating enriching content that is readable and interesting. I work on content related to web hosting, SEO, Ecommerce and social media. Putting things across with the power of words and crafting useful content are my prime objectives.

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