What is the difference between Chatbots and Conversational AI?

What is the difference between Chatbots and Conversational AI?

Artificial intelligence now plays a central role in customer service. As a result, new technologies such as chatbots, Conversational AI or machine learning are constantly coming into the market. But with all these buzzwords, only very few people know what they actually mean. 

Especially with the terms chatbots and Conversational AI, where these words are used more and more frequently in the context of artificial intelligence and customer support and are often used synonymously. However, there are key differences behind the two terms. You can find out what they are in this article.  

What is a chatbot?

A chatbot is typically a rule-based software system designed to automate certain interactions with humans. Since they only serve a specific purpose and are therefore meant to follow a certain flow, they are relatively easy to build. 

However, this also means that a chatbot can only give answers or reactions to a predefined question or instruction. This means that its answers are already pre-determined and there is only limited room for manoeuvre for the course of the conversation.  

In practice, a chatbot gives fixed answers to questions rather than having a real conversation with a human being. A chatbot is primarily suitable as a replacement or supplement to the FAQ section, answering questions about an order, or the accessibility of customer support, for example. 

Conversational AI is more than a simple chatbot

Although many companies see Conversational AI as just another type of chatbot, there is much more behind it. Because Conversational AI goes far beyond a conventional chatbot and ultimately sets the new standard for the customer experience.  

Artificial intelligence research also confirms this trend. A study predicts that the global Conversational AI market will reach $32.62 billion by 2030, seeing that it was previously valued at $5.78 billion back in 2020.  

How is Conversational AI different from a traditional chatbot? 

The answer is simple: Conversational AI allows people to communicate with applications, websites or devices in their own language. Thus, Conversational AI goes far beyond the question-and-answer game of a simple chatbot. While the chatbot is primarily suitable for text-based conversations, Conversational AI can be operated via text as well as via speech.

Natural conversations thanks to Natural Language Processing

This is made possible by so-called Natural Language Processing (NLP). This enables the artificial intelligence to convert a person’s spoken or written input into words or sentences that it can analyse. The AI then formulates the best possible answer based on the available data.

Conversational AI more attractive for customers and companies

In a direct comparison, Conversational AI is, therefore, more powerful than a standard chatbot, even though in the end both are communication assistants. For example, conversational chatbots can process several requests at the same time, whereas a simple chatbot needs two independent messages for this.

The following example illustrates the problem:

Chatbot: “How can I help you?

Customer: “I would like to update my credit card information, but I have locked my account.

A simple chatbot only responds to the first request and ignores the second. A conversational bot, on the other hand, can, in future, process both requests and respond to them simultaneously during the conversation. Since the AI also remembers personal preferences, the result is much more natural conversations that lead to less frustration than traditional chatbots. From the customer’s point of view, Conversational AI is therefore much more attractive. Indeed, exciting times lies ahead of us.

But smart chatbots have also become more useful for companies than their simple variants. This is because they enable real conversations with customers, which can relieve the support team enormously without sacrificing quality.

In addition, the integration of Conversational AI into corporate communication usually works better. All conversational chatbots in the company access the same data sources and thus enable uniform communication on all channels. Whether a customer communicates with the company via Facebook or the website makes no difference, as they receive the same quality everywhere.

Conversational AI brings real added value

Chatbots and conversational AI are therefore not the same things. Rather, Conversational AI is a further development of conventional chatbots that enable authentic conversations between a human and the virtual assistant.

So simple chatbots can be a good start, especially when it comes to text-based communication. Sooner or later, however, you will realise that chatbots can only offer real added value for customers through Conversational AI.

Would you like to learn more about Conversational AI? In this article, you will learn everything you need to know about artificial intelligence.

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