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Conversational AI: How Will It Change the Customer Experience?

Applications enabled by conversational AI today are more human-like than ever. How do they operate, and what effect will they have on the current state of the digital world? Most of us have had less-than-ideal online chatbot interactions that forced us to find other solutions to our problems. However, the chatbots of today can carry on full-fledged dialogues that give users the impression that they have just ended a conversation with a real person.

Natural language processing, automatic speech recognition, advanced dialogue management, deep learning, and machine learning are all used in conversational AI, which is more likely to pass the Turing Test than typical chatbots and offer a more lifelike experience.

In a survey conducted by MIT Technology Review, 90% of respondents claimed that their complaint response times had improved noticeably. More than 80% of respondents reported utilizing AI to improve call traffic processing, and the same proportion reported observable gains in service delivery, customer happiness, and contact center efficiency.

39% of IT leaders employ AI or machine learning, according to a Robert Half report titled "The Future of Work" (registration is necessary for the report). A further 33% said they intended to use AI in the following three years.

Uses of Conversational AI

Most of our current conversational AI technologies are constrained to a narrow range of tasks and have weak or narrow AI. According to the University of California, Berkeley, strong AI produces a consciousness like that of a human. It has an intellectual capacity comparable to that of a person and can perform various activities. Despite their limitations, the available conversational AI solutions are useful for companies of all sizes. Many offers improved customer satisfaction, quicker customer responses, and cost savings. They also have a ton of real-world uses.

Online Customer Support

The number of humans required to guarantee a pleasant customer experience can be decreased using conversational AI tools. For a variety of industries, including banking, travel, and internet enterprises, they react to frequently asked inquiries. Conversational AI tools, particularly those used on the internet and in social media, are changing how businesses interact with their customers as their efficiency rises.

Human Resources

Conversational AI technologies may carry out a variety of HR tasks, such as hiring, training, addressing employee inquiries, and updating employee data.

Digital Personal Assistants

The Internet of Things (IoT) is a technology that is used by many individuals, including Alexa, Siri, and Google Assistant. These conversational AI solutions make use of user feedback to enhance responses to a range of inquiries and requests, such as product availability or pricing. Some consumers may own internet-connected appliances like refrigerators, ovens, or lighting systems that may respond to voice instructions. IoT devices will, however, be widely used in houses in the future.


AI in healthcare can enhance healthcare services to make them more inexpensive and accessible. They can improve a number of administrative procedures, including those that assist patients in submitting claims and receiving payments more quickly.

AI and Chatbots Have Evolved

The internet chatbots with which we have all engaged are but one type of "old school" chatbot. Another is the interactive call routing speech systems that are used by many businesses, including medical practices and utility corporations, to direct calls. These systems offer rudimentary and reliable information, such as a company's opening hours, address, or website address. A call center may provide a departmental list and ask callers to choose a number. Anything more than that might be difficult.

Old-school chatbots have also been developed by individuals for private purposes. In 2017, the Wired magazine published a tale about a man who spent months recording chats with his dying father. He made a conversational AI chatbot using his father's voice using the recordings. The plan was to create a robotic type of immortality.

In addition to being tailored and predictive, chatbots can offer more nuanced, fluid responses that are comparable to human judgment. Conversational AI can observe user-specific traits (location, age, mood, and gender), learn conversational styles from previous interactions, and take actions using tools like robotic process automation in addition to having access to a customer's previous interactions through customer relationship management software (RPA).

Customer Experience and AI

Conversational AI According to LivePerson's Chris Radanovic, can make it easier for customers to interact with brands through the channels they prefer. According to him, "intelligent virtual concierges and bots instantaneously greet clients, answer their inquiries, complete transactions, and, if necessary, link them to agents with all of the contextual information they've gathered throughout the discussion."

For many businesses looking to enhance the customer experience, conversational AI is essential. According to Radanovic, conversational AI is being embraced by brands and customers because it can deliver tailored experiences that are quicker and more convenient than conventional methods of connecting with brands. "Imagine having to wait on hold for a call or navigating through a zillion pages to locate the information you need. AI can assist in removing the pain spots in the client journey in addition to providing a more personalized experience."

Decision-Making Efficiency

Decisions based on actionable data can be made with great efficiency thanks to conversational AI and machine learning, according to Erik Duffield, GM of Deloitte Digital's Experience Management Practice. He observed that in digital experiences, there are now a huge number of tiny decisions and interactions. "We are now witnessing a transition in the nature of digital experiences from human to machine interactions, with AI and NLP enabling businesses to execute their objectives at the pace and volume necessary to offer the experiences that customers want."

Predictive analytics is a decision-making tool used by conversational AI tools nowadays. Using statistical modeling, historical data, and machine learning, predictive analytics may determine the likelihood of future outcomes. Predictive analytics is used by conversational AI to identify the following "best step" in the employee or customer journey. AI is also useful for resource management, risk mitigation, and fraud detection in business.

Predictive analytics can be used by hospitality brands, such as restaurants and hotels, to estimate the number of visitors on any given night, allowing them to maximize occupancy and ROI. Retailers may plan their store layout to maximize sales, forecast their inventory needs, and manage shipments using predictive analytics. Airlines can more accurately establish ticket rates by looking at historical travel patterns.

How Does Conversational AI Work?

Conversational AI can hold human-like discussions via voice or chat thanks to several factors:

  • Natural language understanding (NLU)

  • Automatic speech recognition (ASR)

  • Dialogue management Natural language generation (NLG)

  • Text to Speech (TTS)

Even though AI enables apps to quickly make decisions based on useful insights discovered from data, the process involves a number of steps. When a human provides data to the AI application via text or voice input, the first step takes place. The AI programme can understand spoken words and translate them into text by using automatic speech recognition (ASR).

Benefits of Conversational AI

Reducing Costs

For small- to medium-sized firms who are unable to staff a complete customer support department, a conversational AI tool is very helpful. AI can respond to frequent client inquiries and is available around-the-clock. Companies can save on training, salary, and onboarding costs by using a smaller support team for urgent problems.

Engaging Customers and Increasing Sales

Regardless of the time of day, conversational AI solutions give clients access to pertinent information when they need it. As a result, customer response times are quicker and customer satisfaction levels are higher, boosting the possibility that a transaction will be made.


Scaling conversational AI infrastructure is far more cost-effective than recruiting and onboarding additional personnel. AI can help businesses cut costs while expanding into new markets or coping with seasonal demand spikes.

The Challenges of Conversational AI

Applications for conversational AI rely on conversation data. They receive training from programmers on how to employ reinforcement learning or a maximum likelihood estimation aim. Even if there has only been a slight change in the dialogue, retraining is frequently necessary. The process of training and preparing data can get pricey. Additionally, conversational responses are predicated on business logic, which is difficult to define and industry-specific. It is currently almost difficult to decode such logic using only textual information. There are numerous additional difficulties with conversational AI that uses voice.

Interpretation of Nonverbal Cues

Voice is only one means of communication used by people when they speak to one another. AI recognizes changes in volume, hesitancy, and tone and interprets them properly. Without video, AI is unable to recognize nonverbal clues like facial emotions, eye movements, and hand gestures. As a result, vocal interpretation becomes incredibly important.

Users' Knowledge Level

The fact that each person engaging with the AI bot has a different level of knowledge presents another difficulty. Children have limited vocabulary and understanding, so it is important to speak to them in an age-appropriate way. Additionally, adults with varying levels of education or work experience in a certain field must be spoken to in a way that their responses are likely to be understood.

Location, Language, Sentiment

There are issues with location, language, and emotion as well. For instance, when multiple people are speaking or there is background noise, AI finds it challenging to understand speech. There are also difficulties in comprehending dialects, feeling emotions, and recognizing attitudes like sarcasm. AI must not only be able to comprehend spoken language in the same way that humans do, but it must also be able to convey complex or copious amounts of information in a straightforward and understandable manner. However, there isn't a fix that works for everyone.

Privacy Issues

Privacy, security, and user fear are additional difficulties faced by AI applications. Recent years have seen a rise in the frequency of data infiltration attacks, making personal data a prominent topic. People are hesitant to provide information to marketers as a result. Many people think that AI personal assistants like Alexa and Siri constantly listen. And it's understandable why some people are leery given recent reports about private conversations being captured by AI and used as evidence in court. Businesses that decide to deploy AI applications must establish strict security and privacy guidelines. Once created, they ought to let consumers know about those criteria.

In Conclusion

People can converse with machines in natural language thanks to conversational AI. It can be found in a variety of places, including call routing centers, online chatbots that assist customers, cars that can aid drivers, and much more.

Future AI discussions — even ones influenced by tone or body language — are expected to be indistinguishable from human interactions as developers of AI apps advance and obstacles are overcome. To gain access to more of our whitepapers, visit here.

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