What are Conversational AI Chatbots And How Do They Work

Do you wanna know what conversational AI chatbots are?
Would you like to know how they work?
All in simple language?

Then this article will help you. Here’s what you’ll learn in this article:

No jargons. No mumbo jumbo. To-the-point and easy-to-understand. Before we begin, promise me you’ll leave a comment about your biggest learning from here. Alright, ready? Let’s dive right in.

What is Conversational AI?

What is Conversational AI?

Imagine you’re the owner of a supermarket. A customer is looking for something specific. He spots a salesperson and asks her about what he’s looking for.

Your sales staff listens to him carefully. She understands his needs and directs him to the right aisle. He gets what he wants. You got a sale. Yay!

Now let’s take the example of your website. Your customer visits your site, likes your product. She has questions; she decides to call your business.

Because of the high call volume, she’s on wait. Few seconds turn into minutes and now she’s tired. Finally, when she speaks to your salesperson, they don’t understand each other’s language. After a few attempts to communicate, she’s frustrated and hangs up.

Have you lost customers like that?

I can imagine the pain.

What if the same customer visited your website and found a chat window popup instead. She typed the query in. Within seconds her questions are all answered, in her language. She’s satisfied with the answers and chose to buy your products. A sale. Yay!

As a customer, she’s happy she got her questions answered and got the product she liked. You’re happy because you got a sale and a delighted customer. It’s a win-win.

Here’s the shocker your customer got her questions answered not by your sales staff but by a machine. A conversational AI, to be precise.

As our world turns more digital, we humans are going to interact more with the machines.

Conversational Artificial Intelligence or Conversational AI enables the communication between humans and computers.

When your customers communicate with computers they don’t want them scripted. They don’t want it to be computer language-like. Because it’s boring.

customer wants conversations

Your customer wants conversations to mimic human interactions. They want to be understood and get accurate answers and in a quick time. Right?

Conversational AI is a set of technologies that makes this possible. It allows your customer interactions with computers to be more human-like. By doing so, it bridges the gap between human and computer language. It makes communication between your customer and the computer natural.

So conversational AI can communicate like humans by recognizing speech and text. It can understand the intent of your customer. Conversational AI can also decipher different languages. By doing all this, it mimics human conversation.

That is awesome, isn’t it?

Okay, now that you’re clear about what conversational AI is all about, let’s move on to the next section. In this section, we’ll discuss the difference between conversational AI and chatbots.

Conversational AI vs. Chatbots

The terms conversational AI and chatbots have the same meaning, yet they’re different. Let’s see what those differences are.

Artificial Intelligence or AI is ever-evolving technology. There are many iterations. The first few iterations of chatbots were first and second-gen chatbots.

Then came the conversational AI. You see, chatbots are text-based communication apps. They work on a concept called keywords.

Chatbots are Keyword-based and Button-focused Interface

Chatbots are Keyword-based and Button-focused Interface

Your customer could type a keyword like ‘price’ and hit the return key on their keyboard. The chatbot would then present a pricelist to them.

They could type the keyword ‘register’ and they’d be a part of your webinar and so on.

If your business has a limited number of pre-defined options to serve then chatbots are great.

You could build a chatbot, from idea to finish, in quick time.

Chatbots can’t learn as conversational AI apps can. And that’s a big drawback.

Conversational AI is Powerful

Your customers could contact you using various channels. They could use your website, a messaging app, or speech-based assistants. Conversational AI can enable communication on all these channels. It can even enable your customers to interact using text, voice, and video in the customer’s language.

Chatbots, as we discussed earlier, are keywords-based. Conversational AI is about having a dialogue with your customer.

It can understand the intent of your customer. It can recognize the language. Conversational AI can also learn on-the-go, in real-time. Wow! Remember I said conversational AI is a set of technologies?

Here’s what I meant…

It uses Natural Language Processing (NLP) and Natural Language Understanding (NLU) technologies.

These technologies help understand your customer’s intentions better.

It uses Machine Learning and Deep Learning technologies to constantly learn. That way it gives responses that’d meet your customers’ expectations.

Here’s a quick snapshot of chatbots vs conversational AI

Conversational AI
Idea to Finish in quick timeIdea to Finish in quick time
Keyword-basedNatural Language Processing & Natural Language Understanding
Cannot LearnDeep Learning
Based on conditions (if this question, then answer that)Pre-trained on thousands of customer intents and responses
Limited Customer IntentsScalable

Compared to chatbots, conversational AI is actually about conversations. And conversations are personal, there’s context to it. There are emotions and personalities involved in a conversation. Conversational AI can help you automate communication, personalize, and do it at scale.

Onto Section Three.

Do you wanna know what’s the future of conversational AI like?

Conversational AI On The Rise

Conversational AI On The Rise

Given a choice between chatbots & conversational AI, I’m sure you’d choose the latter. You know that conversational AI is the future of your business.

Only a couple of years ago, chatbots were the new wave that businesses wanted to ride on. Chatbots worked well for smaller tasks such as booking a table or ordering a pizza, but not for complex tasks.

When chatbots couldn’t meet complex customer demands the noise died down.

Businesses like yours sought conversational AI to solve this problem. Conversational AI could understand the context and personalize responses with emotion. These features go well beyond the predefined flow of the chatbots.

No surprises here, the future of conversational AI looks bright. Here’s some data to back up that conversational AI on the rise.

The Conversational AI market is set to grow to $13.9 billion by 2025
The Conversational AI market is set to grow to $13.9 billion by 2025

Source: https://www.marketsandmarkets.com/Market-Reports/conversational-ai-market-49043506.html

This is the right time for your business to adopt conversational AI and take that crucial first step. Here are some uses for conversational AI in business that could resonate with you.

Uses For Conversational AI / Benefits For You

Conversational AI helps create personalized customer experiences at scale. As a business person, you understand the challenges of being present on ALL the channels. It’s almost impossible to staff people on all the different channels.


Because there’s an exorbitant cost involved in operations.
There’s a high turnover rate in hiring and training. For some businesses, there could be seasonal demand or load. And it poses its own challenges, doesn’t it?

Here are some uses for conversational AI that you and your business could benefit from:

Conversational AI can help generate sales. It can be your personal assistant and of course, strengthen your customer support.

Recap Of The Main Points

Conversational AI is an evolution of chatbots. It helps automate communication with your customers which mimic human interactions.

It is able to automate human-like conversation because of Artificial Intelligence technologies. The cognition comes from Natural Language Processing (NLP), Natural Language Understanding (NLU), Machine Learning, and much more.

Chatbots are different from conversational AI. They can offer support 24/7. You can quickly go from idea to finished product, which is great. This is also called time-to-market or TTM.

The drawbacks of chatbots are they are keyword-based. They are programmed for fewer customer intents. But most of all, their lack of ability to learn is the biggest drawback.

Conversational AI, with its Deep Learning, can understand customer problems. It is capable of understanding and conversing in multiple languages. Conversational AI can understand the context and personalize conversations. It is highly scalable as well.

The future of conversational AI seems bright with the expected market growth to USD 13.9 billion in the next five years.

You learned the key benefits for your business of adopting conversational AI.

Your customers could get all their questions answered almost instantly. With zero wait time and accurate answers, their satisfaction levels will go up.

Your customer service will be more efficient without human-errors.

I hope you’re ready to take your business to the next level using conversational AI. This can be a game-changer for your business. Are you ready?

Remember you promised me something right at the beginning?


What were your biggest learnings from this article? Leave your comments below. Also let us know if you have any questions about conversational AI and benefits you could reap using these technologies.

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