What Is Conversational AI?

True conversational AI chatbots go far beyond the bots to which you've grown accustomed. They help businesses engage deeply with customers—24/7.

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Graphic of Voice AI waves

While the term “conversational AI” does carry some weight, it ultimately boils down to the practical difference it can make to your business. So, we think it’s worth taking the time to explain the concept and what it means for you—the business, the market you’re in and most importantly, your customer.

Here’s everything we’ll be discussing. Feel free to skip the definition if you’re familiar with the term and domain:
Customer Engagement in the Age of Messengers
Defining Conversational AI
Why Conversational AI Works to Engage Customers
How Businesses Can Use Conversational AI
Approaching the Customer: Picking the Platform
The Technology Behind a Solid Conversational AI Platform
What it Means for Businesses

Customer Engagement in the Age of Messengers

If you ask any marketing expert, customer engagement is simply about talking to the customer and reeling them in when the time’s right. This means being there for the user whenever they look for you throughout their lifecycle and therein lies the trick: How can you be sure you’re there at all times and especially when it matters most to the customer?

Today, this entails being present through a chat platform. But this isn’t a sudden development.

The paradigm shift to utility bots has been unfolding since the 2008 smartphone wave. 

Customer Engagement in the age of Messengers
Image Credit: Dublino

Defining Conversational AI

Conversational Artificial Intelligence or Conversational AI is a set of technologies that enable computers to simulate real conversations.

Businesses can use conversational AI to automate customer-facing touchpoints everywhere—on social media platforms like Facebook and Twitter, on their website, their app or even on voice assistants like Google Home.

Conversational AI systems offer a more straightforward and direct pipeline for customers sort problems out, address concerns and reach goals.

Both the terms ‘Chatbot’ and ‘Conversational AI’ have more or less the same meaning. ‘Conversational AI’, however, is more inclusive of all the technology that falls under the bot umbrella like voice bots and voice + text assistants, whereas ‘chatbots’ have a more limited ‘text-only’ connotation.

Take a look at our chatbot dictionary for a more detailed primer.

Conversational AI: Pipeline
Image Credit: Haptik

Three questions arise here:
1. Why does Conversational AI work for customers?
2. How can your business put Conversational AI to use?
3. Which platform should you pick?

Why Conversational AI Works to Engage Customers

1) It’s Timely, 24/7

The biggest benefit of having a conversational AI solution is the instant response rate. Answering queries within an hour translates into 7X increase in the likelihood of converting a lead. Customers are more likely to talk about a negative experience than a positive one. So nipping a negative review right in the bud is going to help improve your product’s brand standing.

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2) Customers Prefer Messaging

The market shapes customer behavior. Gartner predicts that “40% of mobile interactions will be managed by smart agents by 2020.” Every single business out there today either has a chatbot already or is considering one. 30% of customers expect to see a live chat option on your website. Three out of 10 consumers would give up phone calls to use messaging. As more and more customers begin expecting your company to have a direct way to contact you, it makes sense to have a touch point on a messenger.

3) It’s Engaging and Conversational

We’ve already extolled the benefits of having a direct hotline for customers to reach you. However, the conversational aspect is what differentiates this method from any other. Chatbots make for great engagement tools. Engagement drives stickiness, which drives retention — and that, in turn, drives growth.

4) Scalability: Infinite

Conversational AI bots can instantly and easily handle a large volume of user queries without requiring any increase in team size. This is especially useful if you expect or suddenly see a massive spike in user queries. A spike like this is a recipe for disaster if you’re completely dependent on a small team of human agents.

With a bot that can handle massive scale, you can breathe easy even when your footfall turns into a stampede. Fun fact: Dream11 handled a massive spike of over 1 million queries during IPL 2018 with a team of just 30 people. 

How Businesses Can Use Conversational AI

Your business is communicating with a user throughout the time they’re using your product.

In our experience delivering conversational AI solutions to enterprises, we’ve noticed that some use cases are able to leverage such technology better than others.

Our list of the best performing use cases is below: 

  • Ushering in a customer (Lead Generation): Some lead generation bots have seen conversion rates ten times that of static web forms.
  • Keeping a current customer happy (Customer Engagement): Conversational AI agents can run circles around human customer service agents who aren’t easily scalable and can’t be everywhere all the time.
  • Answering questions and handling complaints as soon as they come in (Customer Support): Gartner predicts that by 2021, 25% of enterprises across the globe will have a virtual assistant to handle support issues.
  • Learning from customers to improve your products (Feedback and Insights): Based on our research, customers are three times more likely to share their feedback with a bot than fill survey forms.

Approaching the Customer: Picking the Platform

Today, more than ever, instant availability and approachability matter. Which is why your presence should be dictated by your customer’s preference or the type of message your business wants to convey. Keep in mind that these can overlap or change depending on your demographic you wish to acquire or cater to. There are very few set-in-stone rules when it comes to new customers.

Here’s how you would plan your strategy dividing by the type of message:

  • To handle app complaints, these platforms are probably Twitter and Facebook since they’re the most convenient. So deploy bots there.
  • To send updates and acquire customers, deploy a custom bot on your website through a platform like WhatsApp.
  • To handle a massive volume of customer service queries for time-sensitive industries like e-commerce, banks, and airlines, deploy a custom voicebot, a website bot, or an in-app bot.

The choice is similar to deciding whether a strong Facebook presence or a LinkedIn presence is right for you. Decide this on the basis of the customer your business is trying to serve and find. Similar customers will congregate on one particular type of platform.

The Technology Behind Conversational AI 

Simply put, the AI in Conversational AI is what gives it the ‘brains’ necessary to converse like a human.

The AI behind the conversational functionality of such a platform can range from complex techniques like Machine Learning and Deep Learning to surface “layers” of the platform that rely on simple if-else chains to guide users through a flowchart.

For example, one could break down an effective platform as follows:

Layer 1: Handle simpler exchanges through pre-built conversational flows that anticipate numerous possible cases. This layer by itself resembles a classic “chatbot.” Techniques used here include Natural Language Processing (NLP) to process incoming user messages and Information Extraction to understand their intents.

Layer 2: A generative and “neural conversation model” that we use helps us cater to queries which the bot is usually not trained on. The bot goes back to ask the user a variation of their query if it doesn’t understand a particular part of the request.

Layer 3: Default to a Small Talk module that can handle random open-ended queries about the weather, etc. Here, the bot would pick up the context to understand where the conversation is heading, generating an appropriate response based on the information provided and deliver an appropriate response to the user response.

2. Conversational AI Still Needs Humans 

Conversational chatbots are here to stay, but they can only function optimally with both skilled teams behind them and also implementers who understand how best to use these technologies

The Conversational AI Trifecta

To build and successfully leverage conversational AI to achieve business objectives, you need three co-dependent elements:

Trifecta of Conversational AI - Bot Buildeer, Analysis Tool and human Agen Dashboard
Image Credit: Haptik

Conversational AI’s Impact on Business 

“I see a natural progression from knobs and dials to clicks and taps, to swipes and gestures, to voice and emotion,” says Imran Chaudhri, the iPhone’s original UI designer.

Businesses are no exception to this rule. As more and more users now expect and prefer chat as a primary mode of communication, we’ll begin to see more and more businesses leveraging conversational AI to achieve business goals—just as Gartner predicts. It’s not just for the customer; your business can reduce operational costs and scale operations as well.

By ensuring that you’re available to listen and talk to your customer at any time of the day, conversation-capable chatbots can ensure that your business always wins top marks for engagement and availability.