What Is Conversational AI? A Guide to Conversational AI Chatbots

A conversational AI Chatbot is an intelligent computer program that mimics real-life human interactions. This is made feasible by the solid basis of machine learning (ML) and natural language processing (NLP).

Siri, Alexa, and Google Assistant exemplify the concept of conversational AI. Unlike traditional first-generation bots that deliver canned answers to a set of questions, conversational AI bots are more complex and intelligent. These advanced chatbots are configured to be more humanlike, delivering more natural answers aligned with genuine multi-turn human conversations and able to make smart decisions.

Artificial intelligence-powered conversational software, which has resulted in an explosion in the number of voice and text chatbots worldwide, has made it possible. But how can these sophisticated bots interpret human instructions and perform a wide range of tasks? Let's investigate

Natural language processing (NLP), intent and entity recognition, machine learning (ML), Natural Language Generation (NLG), and dynamic text to speech capabilities are some of key ingredients to deliver conversational AI.Here’s a tour of how these linguistic capabilities complement conversational AI to become real.

Conversational AI uses a set of backend algorithms and processes. This begins when a person submits a request at the start of the conversation.The AI solution recognizes synonyms, canonical word forms, grammar, and slang and responds logically using NLP. Moreover, NLU (Natural Language Understanding) enables it to interpret the user's query while eliminating any flaws in the language. All that it keeps in mind is the context of the query put. This empowers AI solutions to interact and engage with humans naturally.

So, when the NLP has processed the user’s query, bots use ML to learn and improve their performance by relying on patterns, inferences, human-agent communications, and past encounters. ML is intended to assist the AI bot in learning with each human interaction, implying that its responses to consumers would improve with time.Finally, after determining the user's intent, the conversational AI chatbot employs NLG to react in written or voice output that the user can understand.

The advantages of chatbots are not limited to their availability 24 hours a day, seven days a week. Here’s how introducing conversational AI into company operations can go a long way in boosting your business.

Benefits of Conversational AI

1. Excellent Customer Service

Chatbots are often regarded as the AI customer service superstars, and for a good reason. These bots can support clients with a wide range of demands, from product research, support, to purchase. They are, thus, superb agent helpersFor example, when users have complex support problems to discuss, chatbots can start the conversation and then pass the scenario to the most skilled agents. This guarantees that agents provide the most exemplary service possible in their areas of expertise. Moreover, consumers benefit from the time saved thanks to automated assistance mixed with the human touch.

2. Boost Employee Productivity

Conversational AI boosts employee satisfaction and motivation in various ways. The virtual agents can execute mundane, routine activities, allowing agents to focus on vital and high-value work.The AI bot can retrieve data from enterprise systems such as Helpdesk, CRM etc. allowing human agents to assist users more swiftly. Employees may readily have access to critical data insights from analytics systems, allowing them to make better data-driven decisions.

3. Generation, Qualification, and Nurturing of Leads

The chatbots collect customer information throughout the user interaction and send in personalized responses. A bot can ask pertinent questions, persuade the user, and generate a lead for you. Chatbots ensure that the flow is going in the right direction, resulting in improved conversion rates.Moreover, you can determine your unqualified leads based on factors like resources, relevancy, budget, timeframe, and so on. Thus, you can avoid spending time behind chasing tedious leads and invest the same in converting new customers.

4. Reduce the Cost Per Contact While Increasing Revenue

You may lower contact costs by redirecting human-agent calls to conversational AI-powered channels, enhancing service resolution and human agent usage and productivity.With conversational AI, you can enhance your customers’ experience (CX) with your brand. Wondering how? Well, it lets you utilize a plethora of its capabilities, including:

• Reaching out to your audience

• Engaging with them efficiently

• Creating personalized buyer journey

• Recommending the right products/services

• Notifying them about offers and discounts

• Upselling and cross-selling

5. Data-Driven Insights

As conversational AI actively engages with users, it provides your company with rich data that can be leveraged to propel your company ahead. This can give organizations a competitive advantage as well as unearth new prospects.

Like we have already seen, conversational AI chatbots mimic human-like conversations. In addition, FAQ-based chatbots are used to automate frequently asked questions with predefined inputs and outputs. For example, it helps you ask the FAQ-bot for leave policy, and it will pull out a pre-configured answer with a link to the policy. But conversational ai bots can handle much more. Think of better dialog management, better intelligence in understanding queries, context management, interacting with apps and so much more.

The use of conversational chatbots is rapidly increasing. According to an Accenture poll, 60 percent of CEOs plan to use conversational bots for after-sales, workplace operations, customer support etc.

Confused between NLU and NLP? Or do you consider both the same?Well, many do. But there’s a thin line of difference between the two. Here, we will help you get acquainted with the same.

1. NLP or Natural Language Processing

It refers to a machine's ability to process on input or user text. That is, it understands the query we put, analyzes, process it for grammar, and determines its meaning, decides the right response to it, and replies to us in the most intelligible way.

2. NLU or Natural Language Understanding

You can call it a subset of NLP. Though it serves a smaller purpose than NLP, it is equally significant. What does it do? It structures the query we put in so that the machine can easily understand it.For instance, if you put “bet palces in the UK”, it will structure it to “best places in the UK.” While humans can easily deal with such errors, machines are less adept to it. Thus, NLU bridges this gap to help conversational AI respond aptly.

Intelligent chatbots have become an essential tool for companies undergoing digital transformation. In the past, companies had little options in terms of chatbot development and management but with no code, things have changed. In fact, businesses can escape the difficulties of designing and developing chatbots from scratch with the help of no-code chatbot building platforms.Let's look at a few of the most important advantages

• Save Costs - Chatbots provide significant cost savings. Businesses can roll out solutions more quickly using no-code chatbots.

• Improve Business Agility – Using no-code platforms, you can create chatbots faster than you would have if you coded them from the start.

• Better Strategic Alignment – It aligns business needs with its outputs to benefit significantly.

• Increase Security – “No-code” ability of such platforms make the chatbots even more secure and safe.

• Citizen Development - you don’t need developers to build chatbot.

Chatbots have seen extraordinary demand from various industries worldwide over the last few years and growing exponentially driven by the new hybrid workplace model due to covid-19 pandemic. By 2024, the market for chatbots will have grown to $1.34 billion, owing to the incorporation of disruptive technologies like Machine Learning (ML) and Artificial Intelligence (AI).

First, let's dive deep to know the types of chatbots and the development cost of chatbots.

Types Of Chatbots

When looking for chatbots, don’t forget to look at their Superset and Subset insights. Both comprise of elements that help you develop an interactive chatbot.

1. The Superset

The Superset is further classified into two types. Let’s look.

• Bots that work in standalone apps

As the name suggests, these chatbots operate within a mobile app. They help automate the interactions, i.e., when a user sends a message, the bot within the app engages and takes the conversation forward. These bots are most suited for consumer or customer facing.

• Bots that work within chat apps like MS Teams, Slack etc

  These chatbots remain in chat messengers to allow bot interaction. These are best suited for companies that do not have a standalone app or prefer to maintain their chat channels at the forefront of their business. Also, these bots are most suited for employee facing at workplace.

2. The Subset

The Subset comprises a plethora of different chatbots that might interest you. Here’s an overview of them.

• FAQ Bot

This chatbot is built to answer frequently asked questions by end-users. Though it provides automated answers, it appears human-like to the users.

• Conversational ai chatbot

As the name suggests, conversational chatbots induce a natural-flowing conversation with end-users. They can understand human language and capture user information, execute tasks etc. Thus, users can engage with the bot till their issue or request is completely and autonomously resolved.

• Transactional chatbots

Transactional chatbots assist users to purchase and pay within the app. These bots eliminate the need of interacting with a human agent.

• Predictive Chatbots

These chatbots help companies predict consumer behavior, i.e., how will the users respond. Predictive chatbots are thus designed on a case-by-case basis

We have acquired all the required information now – right from the demand of chatbots in the market to their types – so, let’s determine how much it will cost. Cost of chatbot depends on whether you are developing from scratch or using a no-code platform. There is a big difference.The chatbot development cost may vary from USD 25,000 to USD 30,000. However, it depends on the type, design, components, and the time that goes into its development, and managing the Lifecyle as well.If you are using a no-code platform to build bots, then you can start as low as USD$300 per month which makes it extremely affordable to majority of customers. More on prices here.Whichever way you take, having a chatbot should be seen as an investment for the betterment of the business. According to a Juniper Research estimate, the cost of developing a chatbot will be substantially lower in comparison to the expenses that chatbots are expected to reduce – $8 billion per year – by the time we reach 2022.

As the name just, conversational ai platform is system (typically cloud based) that provides user with the right tools to help automate user interactions or conversations with the help of NLP and NLU.Businesses are increasing using conversational platforms to provide a more personalized experience to their customers and employees, owing to the numerous benefits of boosting productivity, saving costs, and delivering modern user experience.The following is a list of conversational AI platforms that help organizations produce cost-effective and optimized solutions that value their operations.

• Workativ - A conversational AI platform that enables businesses to automate workplace support and workflows for employees by providing both chatbot and workflow automation in a single platform.

• Avaamo - A deep-learning software firm specializing in conversational interfaces to solve unique, high-impact enterprise problems.

• BOT360 - A chatbot designed on a microservices architecture for easy interaction with current ERP, CRM, or other software

• Claritaz Techlabs - Offers a chatbot that was designed to provide clients with a straightforward user experience.

• CoRover - A Chatbot as a Service (CaaS) bot based on AI and machine learning to boost customer satisfaction and assist businesses in gaining a competitive advantage.

1. Employee Experience and Workplace

This is also a place where chatbots have done very well. A chatbot can answer employee IT or HR query, resolve issues, and able to automate service requests. Chatbot-based employee support can be used in all industries to perform several functions:

• Automatic Frequently Asked Questions: It is not effective for your HR or Helpdesk team to spend your time answering common questions; however, you can prioritize your team to focus on high value functions.

• Resolve employee support Issues: Imagine you are working on your project and suddenly you find yourself locked out of your account. In such a case, you can chat with your workplace support IT chatbot and unlock your account without calling your IT team.

• Conversational RPA: Chatbot can automate more than just conversations. You can now automate your employee service requests or workflows too. Conversational platforms are able to provide seamless integrations with multiple apps that can help automate a simple or complex workflow like employee onboarding.

2. Customer Service

A place where chatbots have done very well. A chatbot can answer customer questions, resolve issues and able to sell where needed. Chatbot-based customer service can be used in all industries to perform several functions:

• Automatic Frequently Asked Questions: It is not effective to spend your time answering common questions; however, you can spend the best time with a chatbot.

• Resolve customer Issues: Image you bought a pair of shoes online on amazon and turns out that you received a wrong size. In this scenario, it is possible that you simply chat with chatbot, share your issues, and have it resolved without speaking to your support staff.

• Conversational Commerce: More e-commerce and direct to consumer business have realized that selling can be part of contextual conversations. So, a chatbot can not only chat, but as well bring to you a store experience with end-to-end payment so you never have to step out of your chatbot.

3. Financial Services and Banking

Banks utilize AI chatbots to take their customer services to the next level. Right from customer retention to enriching customer experience, it helps do it all. Some of the use cases include the following:

• Account alerts and notifications: In the event of an oddity, the chatbot will notify you of its presence.

• Cost-cutting suggestions: Chatbots can allow customers to see the most effective way to spend money based on their previous spending history.

• Customer service: Chatbots can answer customer inquiries day and night and are always polite and informative.

• Individualized finance management: Chatbots can also offer as a virtual financial advisor and manager based on your investment portfolio.

4. Retail Industry

Retailers, from those new to digital commerce to those that rely on a retail analytics platform, use instant chat AI to improve consumer information. The following are some cases of commercial use.

• Fix for multiple emails: You can simply engage with your customers instead of sending out hundreds of cold emails.

• Sales funnel activity: Bots can determine whether clients are part of the sales parameters. This helps your company to choose the best way to transform it.

• Adding interaction: It can make users feel like you know their choices. You can generate their interest in buying things they have already seen and liked.

• Builds customer relationship: This can transform the chat process into a real, almost personal, customer-centered conversation, which can improve their product engagement.

• Recover abandoned carts: Bots can send a friendly reminder message to your customers to remind them to resume their abandoned purchase.

5. Healthcare

Promoting a healthy lifestyle and helping patients identify several important issues related to their health, chatbot technology can become a true lifesaver. Chatbots can direct people to emergencies, provide step-by-step CPR instructions, or assist people with diabetes and perform many other tasks.

• Self-care support: It can monitor the health of patients. It offers to schedule a doctor’s appointment in case it detects serious and potentially adverse variations in the parameters.

• Friendly reminder: Chatbots can be good for reminding about taking medications, adding health information, exercise, drinking water, etc.

• Provide reliable medical information: Chatbots can provide patients with appropriate medical advice and provide strategies for understanding their illnesses.

• Get important patient information: Chatbots can request important patient information and record and analyze it.

• Enable automatic appointment tracking: After the treatment, it is important to follow up with the patient. Chatbots can do this by asking people how they feel and finding out if they need an appointment.

• Display electronic medical records: This will greatly help physicians to obtain information from patients by simply entering the patient's ID number.

Conversational AI bots are essentially a third-generation bots that can do much more than your first-generation FAQ bots. Here are the key differences to summarize.

• NLP is used to comprehend consumer requirements.

• Every discussion is understood in its context and subtleties.

• Instead of acting as a search tool, it solves the problem autonomously

• Through tailored dialogues and multi-turn dialog management, it engages and interacts with users in more advanced way.

• Bridges process gaps by utilizing workflow automation capabilities.

Conversational AI will power the next generation of customer and employee communication.Looking for a great conversational ai chatbot for your business? Sign up for Wa great chatbot for your business? Sign up for Workativ’s Trial today!