Conversational AI: What is it and Its Importance

Conversational AI: What is it and Its Importance

Computer engineers have been working towards making artificial intelligence (AI) capable of holding conversations that are as human-like as possible. From the first chatbot ELIZA to virtual assistants such as Siri and Alexa, conversational AI has come a long way. This advancement resulted in the growing prevalence of conversational AI in every industry, most especially in entertainment and business. 


From the perspective of business owners, conversational AI is a powerful tool that can transform almost every aspect of a business. But what exactly is conversational AI? And how is it going to fulfill a major role in industries from this point forward?

Conversational AI, and its difference from chatbots

Conversational AI is a form of AI that can facilitate a human-like conversation between a human and a computer. By speaking to humans, it aims to help the end-user complete a task. In businesses, they are valued for they can be used in engaging customers in a wide array of services.


Furthermore, conversational AI is different from the aforementioned chatbot. Chatbots are a lot simpler as they typically use minimal AI, and in some cases, they don’t use any AI at all. A chatbot can be powered by a conversational AI, and in that case, the chatbot is merely the shell while the AI is the brain. Siri, Alexa, and Google Assistant are prime examples of conversational AI today, and they’re a lot more complex than any chatbot. 


It’s important to understand that conversational AI isn’t just one thing. Its complexity and power come from various technologies such as natural language processing (NLP), natural language understanding (NLP), machine and deep learning, and contextual awareness. 

The importance of conversational AI

In a general sense, industries need conversational AI to grow. It’s already clear the path forward for every industry is digital, and failing to harness the power of AI in a digital world is synonymous with handicapping oneself. 


For businesses, conversational AI will play a big role in almost everything. Sales, marketing, customer service, and customer experience will all be enhanced by conversational AI. Unlike rule-based chatbots, conversational AI doesn’t depend on scripts to function. This means they can allow organizations to provide automated customer service with a degree of personalization never seen before. Consequently, customers’ interactions with the business will feel one-of-a-kind, timely, and relevant, ultimately providing them with higher satisfaction levels. Furthermore, advanced forms of conversational AI allow businesses to address customer issues and needs before they even reach out through a combination of analysis and identification. 


As mentioned, conversational AI is a major player in customer experience. It’s one of the most popular applications of the technology and for obvious reasons. The ability to engage with customers just like real customer representatives makes conversational AI an invaluable tool for various customer service channels such as chat, voice, and email. 


The digitization of businesses has made systems and processes more complex. It will be the job of conversational AI to allow non-technical users to navigate this complexity without the assistance of an expert. Chatbots are already fulfilling this role, but since industries are focused on improving customer service, they will eventually be fully replaced by superior conversational AI.

The top applications of conversational AI

It’s clear that conversational AI is highly versatile and powerful, but what specific applications will businesses primarily use them for? 


Personalizing support - Businesses that have a large customer base will find it easier to provide personalized support through the use of conversational AI. Through conversational AI, companies can deliver prompt and accurate information to customers’ FAQs without having to rely on limited customer service representatives. 


Increasing customer engagement - Conversational AI can determine when best to approach customers during their customer journey. They can proactively engage with customers in various key points along the customer journey, increasing customer engagement in an effective manner. Being able to provide customers with relevant information at the time they need it can have a positive impact on profit, customer retention, and satisfaction.


Improving accessibility - Components such as NLP and NLU allow conversational AI to help customers access products and services in the presence of language barriers, as they can automatically translate text. Also, conversational AI can eliminate the obstacle presented by time zones as it can answer customer inquiries at any time of the day. On the business side, it allows them to sell products and services even outside working hours.


Assisting employees - Conversational AI can become digital assistants for company employees. It can help boost productivity and employee satisfaction by assisting in meetings, reminders, communication, and more. This increase in productivity may also translate into better cost-efficiency for internal operations.


Improving data and analytics - Conversational AI can gain a better understanding of customer behavior and predict future needs using their access to a large volume of data collected from frequent customer interactions. A company can use the data gathered by conversational AI to get insights that can lead to improved sales and customer service. 

Best practices for conversational AI

Know the right time to use them - Conversational AI has come a long way, but there are still things they can’t do that a human can. Not all customers will have an issue that conversational AI can handle properly. One of the best practices for conversational AI is to know when to let conversational AI deal with customers and when to get humans involved. It’s advisable always to have a customer service representative ready to take over a conversation when necessary.


Educate customers - You need to manage your customer’s expectations regarding conversational AI. During onboarding, make sure the AI makes it clear to the customer what it is, what it can do, and what they can expect from it.

In summary

Conversational AI is a necessary tool for business growth. It’s highly versatile and its application across industries is sure to grow even further. It’s a tool that is beneficial to both businesses and consumers, and we should expect it to become more prevalent in the future.