Chatbots vs Conversational AI: Is There Any Difference?

As our research revealed, 61% of support leaders who have incorporated AI and automation into their operations have seen better results in their customer experience over the past year. Essentially, conversational AI strives to make interactions with machines more natural, intuitive, and human-like through the power of modern artificial intelligence. Based on Grand View Research, the global market size for chatbots in 2022 was estimated to be over $5 billion. Further, it’s projected to experience an annual growth rate (CAGR) of 23.3% from 2023 to 2030. For example, if a customer wants to know if their order has been shipped as well how long it will take to deliver their particular order. A rule-based bot may only answer one of those questions and the customer will have to repeat themselves again.

As we mentioned earlier, rule-based chatbots can answer simple questions, such as those about store opening hours or return policies. They can do so by pulling in information you get from your order management software. AI-powered chatbots have a robust mechanism to resolve complex queries and later administer them. The chatbot’s ability to understand the user’s inquiry is typically based on pre-written prompts that it was programmed with prior. In this scenario, if the user’s inquiry falls outside of one of the pre-programmed prompts, the chatbot may not be able to understand the user or resolve their problem. Callers can speak naturally and the AI will detect their intent, even with slang and accent variations.

Define Chatbot with Artificial Intelligence – Conversational AI

Although chatbots and conversational AI differ, they are closely related technologies, with chatbots being a subset of conversational AI. A chatbot is a software application designed to mimic human conversation and assist with customer inquiries. After you’ve spent some time on a website, you might have chat or voice messaging prompt appearing on the screen – that’s a chatbot in action. The biggest of this system’s use cases is customer service and sales assistance. You can spot this conversation AI technology on an ecommerce website providing assistance to visitors and upselling the company’s products. And if you have your own store, this software is easy to use and learns by itself, so you can implement it and get it to work for you in no time.

As well as context, conversational AI systems pick up on nuances in user queries. This is because they’re trained on huge sets of data, such as the large language models that power ChatGPT. Thanks to NLP (a type of machine learning technology), conversational AIs can actually understand the context of a conversation.

How Chatbots Reduce the Customer Support Costs?

With conversational AI, the training process is accelerated by unsupervised NLU, allowing applications to better comprehend inputs from users and generate much more qualitative responses. Having learned from previous customer interactions, an AI-driven chatbot is empowered with the capability to deliver multi-iterated responses. What’s more, a conversational AI chatbot can detect and mitigate preconceptions in training data. It may help you prevent misleading that is, for example, related to unsatisfied customers when what is said is not true. A chatbot aims to help customers with elementary queries and helps them answer frequently asked questions. But it does not mean that they are not capable of generating qualified leads or planning an online meeting via an integrated calendar.

For this reason, they are used in big companies with large volumes of interactions/customers. The goal is to automate repetitive processes and frequent questions, leaving only the most complex and particular ones to the contact center assistants. You might have noticed that some bots communicate like automatons while others offer more human-like responses.

Artificial Intelligence is an almost infinite technology that allows systems to mimic human actions. This technology consists of different areas, and one of them is Conversational AI, which, as the name implies, focuses on a system’s ability to communicate with humans. Mostly, they automate communications between stakeholders (companies and customers) in Customer Care services. Conversational AI may be able to resolve a more complex query without having to bring in a human, although in some cases, this kind of intervention is necessary. If this happens, you could consider integrating your conversational AI solution with your time and expense management software.

For instance, an airline chatbot can retrieve a traveler’s upcoming flights and offer real-time updates on departure gates or delays, making the experience more convenient and personalized. There are several common scenarios where chatbots and conversational AI are used to enhance customer interactions and streamline business processes. In fact, about one in four companies is planning to implement their own AI agent in the foreseeable future. Training a conversational AI is time-consuming, AI chatbots require a lot of time to train and test the algorithms. Machine learning algorithms without proper training can misinterpret conversations to get around this Human in the Loop is used to avoid ML pitfalls and speed up the training time. Conversing with the rule-based chatbots might be frustrating for customers since rule-based bots don’t have Artificial intelligence behind them to understand every question.

This makes chatbots powered by artificial intelligence much more flexible than rule-based chatbots. Both rule-based chatbots and conversational AI help the brand connect with its customers. While there is also an increased chance of miscommunication with chatbots, AI chatbots with machine learning technology can tackle complex questions. However, chatbots have their limitations – they çan only serve a specific purpose and conversations are based on predefined templates, eliminating the human conversation feel. Also, chatbots are only as intelligent as they are programmed – they have no understanding or learning capabilities.

• Chatbots operate according to the predefined conversation flows or use artificial intelligence to identify user intent and provide appropriate answers.
• Chatbots help this second group by providing a set of questions (with answers and new information), and thus, visitors learn more about the product.
• E-commerce businesses need to understand their customers’ questions when purchasing products online.
• It represents the integration of artificial intelligence (AI) technologies, including natural language processing (NLP), machine learning, and neural networks, into digital conversational systems.

They can handle more complex queries, provide recommendations, and even make decisions autonomously in certain contexts. As AI technology continues to advance, Conversational AI is poised to play a pivotal role in shaping the future of human-computer interactions. Conversational AI refers to technologies that can recognize and respond to speech and text inputs.

According to data from various conversational AI vendors, the number of conversations conducted by conversational AI has grown by as much as 250% in a variety of industries. At the same time, the global chatbot market is constantly evolving and is predicted to reach $452,8 million in revenue, up from $65.5 million in 2020. Nowadays, businesses are in dire need to implement customizable AI-powered chatbots.

The main difference between a basic chatbot and conversational AI is the use of natural language processing (NLP) and machine learning (ML) to take the conversation to the next level — and break free from the pre-set flow. This allows conversational AI to better understand and process human language and power more intelligent automated conversations with humans. Think of traditional chatbots as following a strict rulebook, while conversational AI learns and grows, offering more dynamic and contextually relevant conversations.

Conversational AI requires more extensive training, as it continuously learns from interactions and necessitates periodic updates to enhance its understanding and performance. Chatbots may be more suitable for industries where interactions are more standardized and require quick responses, like customer support, manufacturing and retail. For instance, Sprinklr conversational AI can be implemented to handle customer inquiries. Customers have the option to interact with the AI-powered system through messaging platforms or social media channels. However, conversational AI elevates these shared technologies by integrating more advanced algorithms and models that enable a deeper understanding and retention of context throughout conversations. However, conversational AI, a more intricate counterpart, delves deeper into understanding human language nuances, enabling more sophisticated interactions.

In turn, this will enable you to offer better, faster, and more personalized service, thus boosting the overall experience and satisfaction of your customers. It provides personalized product recommendations based on preferences and purchase history. Conversational AI also responds to queries in a natural way, sounding more human than machine. There is some overlap when it comes to chatbots vs conversational AI, but there are also some important distinctions between them. So it would be wrong to say that conversational AI will replace humans in their jobs. But instead, they’ll be a great helping hand and ensure the support that humans need.

• AI-based chatbots can answer complex questions with machine learning technology.
• Chatbots are a class of digital agents that use simple technologies to interact with customers through a digital interface.
• Conversational AI brings a host of business-driven benefits that prioritize customer satisfaction, optimize operations, and drive growth.
• “Right now, certain companies control the way everyone thinks and what information is distributed to whom and how information is prioritized,” says Hough, 21.
• And it’s true that building a conversational artificial intelligence chatbot requires a significant investment of time and resources.
• Chatbots and conversational AI are often used interchangeably, but they’re not quite the same thing.

Read more about Chatbot vs conversational to choose? here.