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Conversational AI has become one of the most transformative technologies in recent years, reshaping our approaches and routines both professionally and personally.
This is particularly true in the wake of the ChatGPT, the first generative AI model, which elevated conversational AI to a new level by making the technology widely available.
It is surprising how conversational AI revolutionizes the way humans interact with machines.
But,
What is conversational AI? How does conversational AI work? What is the difference between Gen AI and conversational AI? We’ll cover all in this blog.
Let’s get started
Table of contents
What is Conversational AI?
Conversational AI is a form of Artificial Intelligence designed to understand, process, and respond to questions in natural human language.
Conversational AI is mostly used in chatbots that use NLP (Natural Language Processing) to interpret user inputs and respond in natural human language.
Siri, Alexa, and Google Assistant are famous examples of conversational AI.
Conversational AI vs. Generative AI: What’s The Difference?
| Aspects | Conversational AI | Generative AI |
| Objective | Natural language interaction between humans and machines | Content generation, such as text, audio, and images |
| Functionality | Understands user queries and responds to them in natural human like language | Creates original content with prompts |
| Applications | Customer support chatbots, virtual assistants, voice-activated devices | Text generation, content creation, storytelling |
| Focus | Focuses on dialogue and information management | Focuses on creating new content |
| User Engagement | Highly engaging with different and creative responses | Consistent and reliable user engagement |
| Examples | Siri, Alexa, Customer service bots, Virtual assistants, Google assistants | Deepfakes, Chat GPT, Midjourney, Bard |
| Challenges | Understanding different user intents, maintaining context, handling ambiguity in language | Ensuring content coherence, avoiding harmful outputs, maintaining ethical standards |
Leveraging existing organizational knowledge to power AI for CX success
Use Cases of Conversational AI Across Industries
Here are some top industry use cases of Conversational AI:
1. Banking Industry
Conversational AI helps the banking industry by reducing operating costs, automating functions, and improving overall customer experience.
Many banks have implemented chatbots on their websites and mobile apps to assist customers with basic banking tasks.
For example, Bank of America’s virtual assistant, Erica, helps customers check account balances, transfer funds, pay bills, and provide insights into spending habits.
2. Customer Service Industry
Conversational AI is used extensively in the customer service industry to deliver personalized assistance to users. Many businesses use chatbots on their websites and messaging platforms to handle frequently asked questions (FAQs).
These chatbots provide instant responses to common inquiries about products, services, pricing, and policies, freeing up human agents to focus on more complex issues.
For example, Amazon enhances customer experience by offering multilingual support, with dedicated units that address queries in various languages, adding a personalized touch to their service.
3. Hospitality Industry
Conversational AI greatly helps the hospitality industry. Virtual assistants can now assist with booking flights, hotels, and providing customer support during travel.
For example, hotel chains like Marriott International use conversational AI to enhance guest experiences. Marriott’s chatbot (MC) assists guests with booking rooms, checking hotel amenities, making restaurant reservations, and providing local area information.
4. Retail Industry
Many retail businesses deploy chatbots or virtual assistants to provide personalized shopping experiences to customers.
Virtual assistants interact with customers through messaging platforms, websites, and mobile apps to understand their preferences, recommend products, and assist with purchases.
In the retail industry, conversational AI is employed in various ways to enhance customer engagement, streamline operations, and drive sales.
For example, Retailers like Sephora use chatbots to offer personalized beauty advice and product recommendations. Sephora’s chatbot helps customers to find the right makeup products, provides tips on skincare routines, and even schedules appointments for beauty services.
What are the Benefits of Conversational AI?
1. Enhanced User Experience
73% of customers expect companies to understand their unique needs and preferences. To meet customer expectations, companies are turning to Artificial Intelligence.
Customers do not need to wait in queues to get their queries solved. With the help of conversational AI, they get personalized interactions and quick responses that enhance user satisfaction and experience.
2. Increased Scalability
Conversational AI helps scale your business. With the right setup, conversational AI can integrate with CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), and helpdesk software, allowing you to easily handle multiple customer queries simultaneously without a proportional increase in cost.
3. 24/7 Availability
Unlike human agents, conversational AI systems operate around the clock, assisting users across time zones and holidays.
Self service via conversational AI bots saves you time and money while providing users with an engaging and helpful experience.
4. Multilingual Support
Whether you live in Scotland or Africa or have a different language background, conversational AI can support multiple languages, making it accessible to a global audience and breaking down language barriers.
How Does Conversational AI Work?
Conversational AI works:
- By interpreting user inputs, determining the user’s intent, managing the dialogue effectively, generating appropriate responses, and continuously learning and improving from user’s interactions.
- With the combination of advanced algorithms, NLP (natural language processing), and ML (machine learning) techniques, conversational AI enables interactions between the users and computer systems.
- By integrating with other tools like CRM, Helpdesk software, ERP (enterprise resource planning), conversational AI enables seamless data flow and improved resolutions.
- By fetching information from multiple sources, conversational AI upgrades the knowledge base for users with appropriate and up-to-date information.
Conversational AI: A Recap
Conversational AI will keep improving as more interactions among humans and machines take place.
Conversational AI offers enormous and promising growth potential across a wide range of industries, including healthcare, human resources, and food.
Conversational AI is rapidly evolving, and its potential to transform how we interact with technology is limitless. As these technologies continue to develop, we can expect to see even more natural and engaging conversational experiences to emerge.
