Workativ Logo
  • Pricing

Chatbots vs. Conversational AI - Major Differences – Workativ
21 Jan 20258 Mins
Deepa Majumder
Senior content writer

If you have used the terms Chatbots and Conversational AI interchangeably, then you are wrong. But fret not, you are in the majority as most people make this mistake.

Let us look at each of these technologies individually.

What are chatbots?

Chatbots use rule-based programming to match queries with potential answers. They are limited in their capacity. If they receive a request that hasn’t been defined previously, it will revert with a “I did not understand.” In other words, it isn’t smart, per se.

The global chatbot market is expected to reach $1.3 billion by 2025, and the interest in it has increased 5X in the last 10 years. According to Deloiette, chatbots are projected to save almost $8 billion for businesses by 2022.

What is a conversational AI?

It is an advanced communication software which learns with time to improve interactions. As the name suggests, it uses a myriad of artificial intelligence technologies to converse ‘intelligently’. It is expected that more than 95% of customer interactions will be taken over by AI by 2025.

The difference between chatbots and conversational AI chatbot is that the latter provides far more flexibility, personalization options, helps build and automate simple complex conversations and use cases.

What separates conversational AI from chatbots?

The technologies and the use cases of both chatbots and conversational AI chatbots are world’s apart, although there are certain common aspects to them.

Before that, here’s an overview of chatbots and conversational AI.

Chatbots are of two types: supervised and unsupervised. Supervised chatbots follow a predefined set of conversations or script while unsupervised chatbots is a machine learning-driven chatbot that requires tonnes of data to train itself to get better.

Conversational AI automates highly-personalized resolutions at scale by understanding intent, decoding language and context to offer human-like responses.

Let us look at the main differences which govern these technologies.

1 Conversational AI understands:

It understands complex sentences the same way humans do. Conversations between real humans are not always straightforward, and it uses a variety of elements such as slang, jargons, even mispronounced words. The conversational AI chatbot can even comprehend these types of interactions.

2 Supports transactions:

Conversational AI chatbot goes beyond mere rule-based tasks, and can complete complex transactions that will help even enterprises. From processing healthcare claims to loan processing, they can act as a major fillip to your business.

3 Available on voice, text and web:

They are available across a number of channels and can be easily accessed without any hiccups. From being available on an enterprise portal to a voice-based system like Siri or Alexa, it accommodates omnichannel interactions.

4 Uses previous interactions:

Conversational AI integrates with your enterprise’s existing system to go through the previous interactions to understand how everything works. It uses the previous history to improve the future interactions to troubleshoot issues or improve processes.

Chatbots vs Conversational AI: Which one to choose?

Let us look at why businesses should choose these technologies and how it can help them.

Reasons to choose Chatbots:

Chatbots are conversational robots which mostly appear as a pop-up in the bottom right of your screen when you are on a website. Let us look at what it offers to your customers, employees, executives, and businesses.

1. Generates more conversations:

Millennials prefer interacting with chatbots over a customer support executive, says a survey conducted by MobileMarketer. Why? Because chatbots’ responses are precise and don't take time. Customers also believe that they can ask any question without being judged for it.

When you implement chatbots into your business, you can expect a lot more conversations to happen with customers. You can use this opportunity to bring them deeper into your sales funnel.

The banking, retail and healthcare sectors will save more than $11 billion a year by using chatbots in customer service.

2. Handles multiple customers:

Unlike humans, it is easy for chatbots to handle multiple customers at the same time. By answering multiple queries at the same time, thanks to automation, chatbots save your employees’ time. It lets the employees concentrate on higher value tasks. 5 billion hours are expected to be saved because of chatbots, by 2023.

3. They can analyse data:

Once you have a chatbot to answer business queries, you can even create reports at the end of a month or a specific period. Using this report, you can see which are the most popular questions, how customers are using them and so on. These insights can help you create better business strategies.

4. Speak multiple languages:

Imagine you are catering to the European community, you will require more than just English speaking agents. Hiring multiple customer support executives for chats can be expensive. Thankfully, chatbots can handle multiple languages. All it requires is that they be programmed to speak the languages of your choice.

5. Easy deployment:

If you are of the opinion that company-specific chatbot can be deployed only on your website, you couldn't be more wrong. Create your chatbot and deploy it on as many channels as you want- Facebook, Slack, Whatsapp, you name it.

Reasons to choose Conversational AI:

Before we delve into the reasons to choose conversational AI, you need to know that the features of chatbot such as the ability to generate more conversations, handle multiple customers, answer in multiple languages and data analysis capability is something that conversational AI can do as well.

An MIT Technology Review report says that more than 90% reported that they have seen significant improvements in complaint resolution, call processing, customer and employee satisfaction after using conversational AI. Let us look at some of the reasons why it makes sense to use conversational AI for your business.

1. Adds a human touch:

One of the biggest advantages of conversational AI chatbot is that it mimics human interaction. If you want your customers to feel more welcome, conversational tones are something that they will appreciate you for, and conversational AI chatbot does that with elan.

2. Omnichannel:

It provides omnichannel conversation as they are available on different platforms and can even sync the conversations across each of these platforms. The quality of conversations across all the platforms are the same, whether it be Whatsapp audio or Facebook Messenger. It lets you offer personalized and complete service for every interaction while staying true to your brand voice and tone.

3. Leverages NLP & NLU:

Conversational AI chatbot leverages Natural Language Processing and Natural Language Understanding (NLU) to create advanced dialog systems which use memory, preferences, and context to deliver an intelligent natural language interface. It uses tonnes of data, machine learning and the NLP/NLU technologies to recognize speech and text inputs and translate their meanings in different languages.

4. Greater personalization:

Personalization is one of the most powerful benefits of conversational AI. When you know your customer persona, have details about their likes and preferences, and have a layer of intelligence such as conversational AI, you will be able to recommend the right products and services to them. With better personalization, the chances of converting visitors into customers will be high.

Use Cases: Chatbots & Conversational AI

We are going to take use cases from four specific industries: Healthcare, Banking, Retail and HR to show how chatbots and conversational AI chatbot can help them. You will notice the difference in the use cases of chatbots vis-a-vis conversational AI.

Finance and Banking:

Chatbots: From reducing the line in queues to reducing bank’s expenses, chatbots can do a lot. It can answer basic questions from customers, which can reduce the workload of your employees. Information about the different types of loans available at the bank to queries on online services can be accessed with ease. You can register a fraudulent transaction on your account as soon as you notice it, instead of having to go through the IVR system to reach an agent.

Conversational AI: Providing digitalized customer experiences for customers is a game-changer in the banking and finance sector. These AI bots can check user balances and process transactions across all bank accounts. The bots detect phrases or keywords that could indicate fraudulent activity. It prevents fraud using speech recognition and by looking for anomalies in normal behaviour.

Retail:

Chatbots: With chatbots, customers can search for products based on a customer’s preference such as rating, price range, features, discounts, and so on. You can even order via chatbot, locate the nearest stores, track packages, and send return information.

Conversational AI: It can make product recommendations based on user interactions. Conversational AI chatbot can analyze the search queries to derive insights into how the business is operating. By pulling old conversations, it can offer better and insightful customer service. You can even track inventory using conversational AI. Over 70% of chatbot conversations are expected to be with retail conversational AI systems by 2023.

HR:

Chatbots: For HR employees, chatbots help them complete their daily tasks with speed and ease. For applicants, chatbots provide a better user experience by simplifying information gathering and associated processes.

Chatbots can be used to automate repetitive enquiries. It can collect important applicant data and integrate it with your existing systems. You can create an internal chatbot to provide a great onboarding experience as it is the same set of processes and policies that you need to educate each new recruit.

Conversational AI: Conversational AI chatbot provides instant feedback exchange and performance insights which makes superior performance management possible. Employee training using conversational AI chatbot facilitates greater interaction with the employees. It can easily converge siloed systems so that there is easy information access.

IT Helpdesk:

Chatbots: For the IT Helpdesk, chatbots categorize the ticket and send it to the right agent. It helps with password resets, automates access provisioning and de-provisioning, automates workflow, and so on.

Conversational AI: It has the potential to analyze service requests and generate reports, offers personalized assistance to customers, enhances engagement and experience, deflects complex queries to an agent, and so on.

Sales:

Chatbots: It analyzes user behaviour on the site and provides personalized recommendations. The chatbot can be programmed to subscribe visitors to newsletters, events, webinars, etc. They even have the capacity to connect visitors to salespeople automatically and even help book demo appointments.

Conversational AI: Since conversational AI is great at parsing large data sets, the sales team can use it to automate cold outreach and lead generation. Thanks to its natural speech abilities, it can nurture leads and guide them through the sales funnel until they can be converted. It can even send rewards, discount offers and other types of incentives when the AI realizes that the customer is losing interest.

Customer Support:

Chatbots: Customers can get instant support from chatbots instead of having to wait for an agent. There are some questions that are often asked by customers, and chatbots are great for this purpose. It can help with navigating specific pages, discover certain information or receive instructions about tasks. It can also help customers make payments, and can act as a conversationalist by entertaining the customers on topics such as weather, cinema, etc.

Conversational AI: It can efficiently understand customer’s requirements and nudge visitors to go further into the buyer’s journey. An intent-based recommendation engine helps match user requirements with your products, descriptions, customer reviews, and use past data to recommend more accurately, thereby increasing the conversions. Uses previous data to predict a customer’s future set of actions. Allows customers to get support just by using voice commands.

There are many more areas and use cases in different verticals for chatbots and conversational AI. IoT devices, public sector, construction, education, and many more, which are being revolutionized by these technologies.

If you look at the use cases of chatbots and conversational AI, there is a small but significant difference. Every conversational AI-based use case looks as if it has a layer of intelligence which makes it possible to do complex tasks such as the following- salary enquiries, processing leave applications, expense claims, policy education, employee onboarding, employee offboarding, and more.

For example, in the banking use cases that we saw, chatbots let customers register frauds with ease, while conversational AI chatbots can even help banks detect frauds. Do you see the stark difference between the offerings of both these new-age technologies?

Conclusion

While it might look as if these two technologies are sparring with each other, that is certainly not the case. Conversational AI chatbot is immensely advanced and its use cases will only increase with time, but with chatbots, there are limitations to what it can do. The demand for both these technologies will always be there, albeit for different reasons. Conversational AI chatbot is going to be a trusted form of communication and it will be a far cry from the antiquated chatbots that we have been witness to.

If you are looking to empower your business with an intelligent automation platform, try out Workativ’s Conversational AI Chatbot here.

Supercharge enterprise support with AI agents
Deliver faster, smarter, and cost-efficient support for your enterprise.
logos
Auto-resolve 60% of Your Employee Queries With Generative AI Chatbot & Automation.
cta

About the Author

Deepa Majumder

Deepa Majumder

Senior content writer

Deepa Majumder is a writer who nails the art of crafting bespoke thought leadership articles to help business leaders tap into rich insights in their journey of organization-wide digital transformation. Over the years, she has dedicatedly engaged herself in the process of continuous learning and development across business continuity management and organizational resilience.

Her pieces intricately highlight the best ways to transform employee and customer experience. When not writing, she spends time on leisure activities.