What is Conversational AI?

Conversational AI is an umbrella term that covers a range of technologies that enable computers to understand, process, and react to voice or text inputs in a natural way. Examples include chatbots, with which people interact on a website, as well as social media messenger apps or other types of voice assistants. The technology therefore can be used by companies for customer support. By now, conversational AI has matured enough to provide additional benefits in customer support such as information gathering, product advice, and recommendations. This not only relieves customer support from having to carry out repetitive tasks, but also saves important resources that can then be used elsewhere.

It goes without saying that this type of AI is not intended to replace people. It is an additional support which can help companies to actively engage with their potential customers and start sales talks. Furthermore, Conversational AI also generates valuable expertise as the technology can access datasets that contain more information than human support ever could. Additionally, the technology not only allows for constant interaction with customers but solutions can be also used outside of support as well — for example, in sales and marketing —, transforming website chatbots into flexible consultants. Not only are valuable and loyal customer relationships forged, but this also generates valuable data for the company. These data can then be used to make improvements to the sales cycle — and ultimately increase company revenue.

How does Conversational AI work?

Conversational AI uses a combination of Natural Language Processing (NLP), Machine Learning (ML), Natural Language Understanding (NLU), and other linguistic technologies that process and exploit language. These technologies make language processing and subsequent decision-making possible — beyond a mere yes or no answer. Human language is made up of more than a plurality of complex meanings of words, but rather also comprises colloquial expressions, which might fundamentally alter the meaning of customer statements. For the bot to still be able to respond to questions, Conversational AI makes it possible to venture beyond a series of predefined and linear solution paths. An important element, seeing as how conversations often have many twists and turns. A customer might ask several questions at once, for example. Dialogue-oriented AI therefore makes sure that customer communication can be both complex and dynamic.

Natural Language Processing

Natural Language Processing (NLP) plays an important role in Conversational AI applications. The technology breaks sentences down to their roots. The many peculiarities of human language are analyzed, and information or commands extracted. NLP describes the process that allows Conversational AI to understand the human language. The technology aims to identify statistically significant patterns by taking factors such as synonyms, word forms, and grammar into account. This helps identify the intention and entity of a user inquiry. Entity refers to the data required to answer the question of the user. This is why the system is also referred to as intention identification, assigning the intention of the user to a predefined task or question, for example a search for a product. As soon as Conversational AI understands an intention, entity recognition can extract the relevant information and respond to the request of a user.

Benefits of using Conversational AI

Conversational AI provides a diverse variety of benefits. It can take over repetitive support tasks and relieve staff, while the technology simultaneously massively improves the customer experience and therefore, customer satisfaction. Companies that offer products and receive a lot of simple but important questions about their use, need to be able to respond quickly. Thanks to Conversational AI, they can answer these questions at any time. At the same time, Conversational AI ensures active interaction by answering any other questions that might arise. These virtual consulting sessions not only improve customer satisfaction, but also boost revenue. What's more, it should always be kept in mind that a well-trained bot can provide more data — and with that more knowledge and answers — than any average human could remember. Last but not least, immensely important customer data are generated by using the technology, which can in turn be put to profitable use. Conversational AI is:

  1. Quick

Customers receive an answer in a matter of seconds. The waits that are part of traditional e-mail conversations with support are eliminated. This ensures quick, precise, and bespoke communication with the customer.

2.  Cost-effective

Conversational AI requires a minimal up-front investment, can be used quickly, and lowers support costs.

3.  Revenue-boosting

The technology creates more interaction and loyalty through personal engagement. Consulting sessions can be offered around the clock, creating a perfect customer experience, which in turn leads to higher revenues.

4. Data-based

Conversational AI provides data on customer behavior, language, and engagement. This data can be monetized by reconstructing the “voice of the customer”.

5.  Productive

The technology automates and rationalizes processes to carry out supporting functions. This gives employees time to focus on more complex problems.

6.  Asynchronous

Conversational AI is available 24/7 — and can therefore always meet the demands of customers.

7.  Flexible

The technology is highly scalable. It can be integrated seamlessly and used in any language. The underlying reason why Conversational AI can be used “language-independently” is because the system is usually trained based on customer language data.

Adapting it to specific needs

To ensure a company can fully benefit from Conversational AI, the company first needs to develop an understanding of its processes and the goals that can be achieved with the technology. In a next step, a strategy must be defined: where and how should customers benefit? What is the advantage for the company? Should improvements be made to marketing, sales, or support? Then, a company must identify which questions customers often ask and decide to which extent the Conversational AI should be working interactively. Predefining the requirements the company has makes the search for the right service provider much easier. Conversational AI is not a one-size-fits-all solution and should not be considered as a small extra for optimal use of resources. It is crucial to find a service provider who understands the needs of the company to ensure the best-possible customer brand and user experience. Only very few companies have the capacities and specialists available to design a Conversational AI solution in-house. Therefore, an external service provider is necessary to help set up the technology quickly, profitably, and with the lowest possible effort.

Defining the brand voice

One aspect in the implementation of AI that should never be underestimated is the integration of the brand voice. Every company communicates with its highly specific tone of voice. This is crucial to the brand experience and ensures customer loyalty. Before a company can implement Conversational AI in the first place, they should specify the type of brand experience customers should have. Should they have the impression of speaking to a specialist? Should the brand be seen as “cool”? Or should they just have a straightforward and friendly conversation? This can all be realized by adjusting the programming of Conversational AI accordingly.

Conversational AI comes with a variety of benefits and profitable aspects. Conversational AI cut costs by automating repetitive tasks, giving employees the opportunity to focus on other tasks. Round-the-clock availability creates a new type of brand experience. Customers benefit from having all their questions answered at any time which leaves them satisfied. Companies in turn benefit because the technology makes it possible to have more sales talks, at any time of day — which is reflected in higher revenues.