Conversational AI – What It Is and Why It Is Important

By Srini Pagidyala

In the last couple of years, the pandemic has transformed every aspect of several industries, changing how people live, shop, communicate, etc., while accelerating digital transformation. There is a new demand for AI and virtual chatbot technologies with new IT imperatives. The recent growth of conversational AI (something that could radically transform customer experience) has coincided with shifting customer expectations.

Conversational AI is described as a “more personal, predictive, and complex than traditional rule-based chatbots.” Such AI enables a more human-like interaction and, thus, “a better consumer experience.” As such, conversational AI may be the key to getting the best of both worlds – personalized customer engagement and user support on a large scale.

The proliferation of conversational AI technologies plays a critical role in developing an efficient “digital-first” experience. To meet the modern-day challenges and changing customer expectations, enterprises look to new technologies, especially AI technologies, to deliver more meaningful customer experiences.

Components of Conversational AI

Conversational AI combines machine learning and natural language processing (NLP). The key components help understand what users say and interact with them intuitively.

Machine Learning – It is a set of algorithms, data sets, and features that help learn how to understand and respond to customers by analyzing the responses of human customer support agents.

Natural Language Processing – It lends the AI the ability to understand and parse the human language text and understand sentence structures.

Integrations – It facilitates the execution of end-to-end action through Application Programming Interface (API) and other operations tools.

Get High Levels of Customer Satisfaction

Research suggests that over 50% of Facebook messenger users prefer shopping with businesses that use chat apps. This demonstrates that customers find conversational AI chatbots easier, more convenient, and more user-friendly. Since such chatbots can be assessed more quickly than other customer support mediums, they allow customers to engage with the brand more easily. The best part for customers with chatbots is that they avoid long wait times, which enhances their overall customer experience. The business will witness better customer loyalty and increased sales with increased customer satisfaction.

With the increase in customer support and satisfaction, there is a reduction in support tickets. This means companies have to spend less on customer care costs. As such, conversational AI improves the overall productivity and efficiency of the business.

The Origins of AI-Based Chatbots

Modern customers do not have patience for lagging online customer experiences that frustrates them. Old artificial intelligence systems were more unsophisticated than they are now, and customers had to deal with glitches in IVR and the limited functionality of chatbots. Though these technological tools were created to improve customer engagement and experience, they created more communication problems for businesses that were trying out digital communication with their customers.

Most of the earlier AI chatbots had limited functionality when it came to understanding conversations and context. They often had additional operational costs and subpar customer experience. With modernization, companies took advantage of new technologies and replaced outdated customer support systems. With such modern technologies, companies could deliver a better consumer experience while adding more self-service features and various conversational offerings.

Evolution of AI-Based Customer Experience 

Companies are navigating through the post-pandemic business landscape to keep up with consumer expectations and offer personalized support. Recently, we have witnessed a proliferation of AI-based chatbots in industries like health, telecommunications, eCommerce, and finance. More and more companies are adopting virtual assistants that understand customer histories and analyze their shopping and spending behavior to deliver a highly personalized customer experience. Such AI chatbots have demonstrated that they play an essential role in building meaningful customer and deeper customer-business relationships and solidifying customer loyalty.

As businesses get more proficient in handling and leveraging conversational AI chatbots, technological advances will empower company representatives to speed up sales cycles, generate better customer interactions, and close sales faster.

The Future of Conversational AI

It is absolutely necessary for organizations and modern businesses to invest in the latest technologies like collaborative business tools, virtual assistants, employee experience management systems based on insights, process apps, office productivity suites, and voice-based conversational channels.

Experts suggest that AI-based chatbots will continue to enhance and transform consumer experiences for companies of all shapes and sizes. Conversational-based AI chatbots will become foundational for all kinds of employee interaction, experience management, and future automation.

Since customer and employee experiences have become central to business growth, several modern companies have started investing heavily in exploring new ways of providing an extraordinary customer experience in every step of their customer journey. They lead to less frustration, faster issue resolution, and increased business value.

Conversational AI provides robust omnichannel, self-service, multi-experience, voice-enabled, and most personalized customer experiences. Companies have to strike a balance between maintaining the human touch and delivering an enhanced customer experience that is highly scalable.Srini

Srini Pagidyala is a seasoned digital transformation entrepreneur with over twenty years of experience in technology entrepreneurship. In 2017, he Co-Founded, a new category “chatbot with a brain” that delivers hyper personalized conversational experiences.

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