Conversational AI: What It Is and How to Make the Most Out of It

Discover everything you need to know about conversational artificial intelligence (AI), see examples, and learn how to use it.

Recently, artificial intelligence (AI) has become a way for businesses of all sizes, and across every industry, to increase efficiency, productivity, and growth. For example, Podium—a conversion and communication platform for small businesses—uses AI to automate time-consuming tasks, personalize communications, ensure you never miss out on business, convert more leads, and re-engage previous customers.

In this article, we’ll explain how conversational AI, specifically, can improve your business processes and give you a competitive advantage.

What is Conversational AI?

Conversational AI uses natural language processing (NLP)—or computers that can understand, process, and engage in human language—to efficiently manage and personalize communication with customers. Conversational AI can do this across various channels including webchat, text, and phone. It’s able to understand queries, provide relevant responses, and learn from previous interactions to improve conversation accuracy over time.

Conversational AI has become a valuable tool for small businesses by enhancing customer support, automating tasks, and delivering personalized user experiences. As a small business owner, embracing conversational AI can be a strategic and competitive advantage, allowing you to efficiently engage with your customers, free up valuable time and resources, and create memorable interactions that foster customer loyalty and growth.

How to Leverage Conversational AI

Podium is a powerful tool that leverages conversational AI to improve customer communication, conversions, retention, and more. By integrating Podium, businesses like yours can manage, respond to, and consolidate all of your leads in one place. You can then send them automatic, personalized responses. All of your conversations with leads—no matter which channel they happen on—will be stored in Podium.

One of the standout advantages of Podium’s AI is its ability to provide detailed call summaries. This eliminates the need for manual note-taking, ensuring you have the context you need to deliver exceptional customer experiences. Additionally, it enables businesses to respond to leads swiftly while maintaining a human touch, leading to higher conversion rates.

Additionally, Podium’s Webchat tool enhances customer engagement on your website. By offering a text-based communication channel, businesses can generate more inbound leads. This ensures that interactions continue even after visitors navigate away from the site, resulting in a seamless customer experience. With Podium Webchat, customers are assured they’re conversing with a real person, adding a personal touch to interactions.

Incorporating response automation further enables businesses to engage with leads beyond regular hours, ensuring no opportunity is missed. Your business can save time by automating responses to frequently asked questions, such as operational hours and accepted payment methods.

Conversational AI Use Cases

Businesses across all industries are leveraging conversational AI technology in numerous ways to optimize their processes and increase revenue. A few examples include:

Online Customer Support

More companies are using website chatbots instead of human customer service representatives for support along the entire customer journey. Chatbots work 24/7 answering FAQs, tracking orders, providing personalized recommendations for up-selling, and more. Unlike human agents, chatbots can work on multiple requests simultaneously to resolve customer issues faster and improve customer satisfaction.

Accessibility

Conversational AI tech reduces entry barriers for those using assistive technology, offering text-to-speech and translating language to increase accessibility on websites, social media channels, and more.

HR Processes

Businesses can optimize human resources (HR) workflows using conversational AI, including employee onboarding, ongoing training, or updating worker information. Automating these repetitive tasks saves your HR team time, letting them focus on more important work.

Health Care

Conversational intelligence AI increases operational efficiency in healthcare settings by automating administrative tasks, including appointment scheduling and claims processing. Streamlining processes can also benefit patients, making care more affordable and accessible.

Internet of Things (IoT) Devices

Most households have at least one IoT device—things like smartwatches, phones, or speakers—that use conversational AI technology. Applications like Alexa and Siri use automated speech recognition to communicate and complete tasks for users.

Computer Software

Conversational AI isn’t limited to chatbots. Many software applications use this technology to simplify tasks. Take Google for example, which offers autocomplete and a spelling and grammar checker in their suite of programs.

Components of Conversational AI and How Does It Work

Conversational AI tech, the driving force behind many of today’s chatbots and virtual assistants, combines two components: machine learning and natural language processing (NLP). These components work together so AI systems can have meaningful conversations with users.

Let’s dive into each of these components and explore how they contribute to the functionality of conversational AI.

1. Machine Learning

Machine learning (ML) is an important component of conversational AI. It empowers chatbots and virtual assistants to learn from data and user interactions, enabling them to continuously improve their performance. ML algorithms analyze vast datasets of past conversations to understand user intent, context, and preferences. They use this knowledge to predict appropriate responses to user queries and adapt to evolving conversation dynamics.

For example, if a customer asks a retail chatbot about product recommendations, the ML component of conversational AI analyzes the user’s past browsing and purchase history, as well as the current context of the conversation, to suggest relevant products. This adaptability and personalization make conversational AI more effective and user-friendly.

2. Natural Language Processing

Natural language processing (NLP) is the second crucial component of conversational AI. It equips AI systems with the ability to understand, interpret, and generate human language. NLP algorithms break down text or voice inputs into meaningful entities, such as words, phrases, and sentiments. They then use these insights to construct coherent responses that align with user queries.

When a user interacts with a virtual assistant, the NLP component breaks down the user’s input, identifies the intent behind the message, and extracts essential information. For instance, if a user asks a banking chatbot to check their account balance, NLP identifies the intent as a balance inquiry, extracts the account number, and fetches the relevant information to provide an accurate response.

Conversational intelligence AI brings these components together to create an interactive and human-like user experience. It begins with a user initiating a conversation, either through text or voice. The AI system processes the input using NLP to understand the user’s request or query.

Next, the AI leverages ML to determine the most appropriate response. This response can take different forms such as answering questions, providing recommendations, or executing tasks (like scheduling appointments and sending reminders).

As the conversation progresses, the AI continues to learn from user interactions, refining its understanding and responses. Over time, it becomes better at predicting user needs and delivering tailored experiences.

Conversational AI is applicable to all industries including auto, HVAC, healthcare, med spas, jewelry, and retail. Its ability to provide instant assistance, handle repetitive tasks, and offer personalized recommendations makes it a powerful tool for businesses looking to enhance customer engagement and efficiency.

Benefits of Conversational AI

Embracing conversational AI technology can improve your customer communications, lower customer support costs, influence purchase decisions, improve accessibility, ensure consistent responses, and unlock invaluable data-driven insights. These benefits are pivotal in enhancing your customer engagement and overall efficiency.

1. Cost Savings

Conversational AI can help businesses reduce costs by automating routine customer interactions. It eliminates the need for hiring and training additional customer support agents, saving on labor expenses. Additionally, AI-powered chatbots can handle multiple customer inquiries simultaneously, further increasing cost efficiency.

2. Extended Business Hours

With conversational AI tech, businesses can provide 24/7 customer support, even outside of regular working hours. This ensures that customers can get assistance and information whenever they need it, leading to increased customer satisfaction and loyalty.

3. Influence Customer Purchase Decisions

Conversational AI can act as a virtual sales assistant, guiding customers through the purchase process. By offering personalized product recommendations, answering questions, and providing relevant information, AI-powered chatbots can help influence customers’ purchasing decisions and increase sales conversion rates.

4. Improved Accessibility and Engagement

Conversational AI enhances accessibility for customers with different needs and preferences. It can communicate in multiple languages, offer text-to-speech capabilities for those with visual impairments, and adapt to various communication channels, including messaging apps and websites. This broadens the customer base and improves engagement by meeting users where they are.

5. Consistency in Responses

Conversational AI technology also provides consistent and accurate responses to customer inquiries. Unlike human agents who may provide varying information or levels of service, AI-powered systems follow already defined guidelines and offer uniform assistance. This consistency builds trust and credibility with your customers.

6. Data-driven Insights

Natural language processing (NLP) applications gather and analyze vast amounts of customer interaction data. This data can provide valuable insights into customer preferences and behavior. Businesses can use these insights to refine their products, services, and marketing strategies, ultimately leading to better customer experiences and increased competitiveness.

By leveraging conversational AI, your business can enhance its customer communications, reduce costs, and create more personalized and efficient interactions, all while gaining valuable insights to drive continuous improvement.

Conversational AI Examples

Below are some of today’s most successful examples of conversational AI. These may inspire the various ways your small business thinks about implementing conversational AI.

1. Amazon

Amazon’s Echo devices, powered by its virtual assistant Alexa, have transformed the way people interact with technology in their homes. Users can simply speak to Alexa to control smart home devices, play music, get weather updates, or even make online purchases. Amazon has successfully integrated conversational AI into households worldwide, enhancing convenience and user engagement.

2. Uber

Uber uses conversational AI tech in its mobile app to facilitate ride bookings and provide customer support. Users can chat with an AI-powered virtual assistant to request rides, track their drivers, and get assistance with common queries. This strategy streamlines the user experience, making it easy for riders to access transportation services.

3. Bank of America

Bank of America utilizes Erica, an AI-driven virtual financial assistant. Erica helps customers with tasks such as checking account balances, setting up savings goals, and making payments. By offering personalized financial advice and support 24/7, Bank of America enhances customer engagement and promotes financial wellness.

4. Google

Google Assistant is an example of conversational AI used across various devices, including smartphones and smart speakers. Users can ask questions, set reminders, and control their devices through natural language conversations. Google’s conversational AI technology is a prime example of providing a seamless and intuitive user experience.

5. Sephora

Sephora employs a chatbot called Sephora Virtual Artist. This chatbot assists customers with product recommendations, makeup tutorials, and finding the right products based on their preferences. Sephora’s conversational AI enhances the shopping experience by providing personalized beauty advice.

These companies demonstrate effective strategies for leveraging conversational AI to enhance customer experiences, streamline operations, and provide valuable services. By adopting similar approaches, your business can improve customer engagement, increase efficiency, and stay competitive in the digital era.

FAQs

Q: What is the best conversational AI?

A: The “best” conversational AI can vary depending on specific business needs and goals. There are several excellent conversational AI platforms available, including those from tech giants like Google, Microsoft, and Amazon, as well as specialized providers like IBM Watson and chatbot platforms like Dialogflow and Rasa.

For small businesses across every industry, including auto, jewelers, retail, med spas, home services, and more, Podium is a top-choice tool with conversational AI capabilities.

Q: What is the difference between chatbots and conversational AI?

A: Chatbots and conversational AI are closely related but different. Chatbots are a subset of conversational AI. Chatbots are typically rule-based and handle specific tasks or answer predefined questions.

In contrast, conversational AI systems are more advanced and employ natural language processing (NLP) and machine learning to engage in natural and human-like conversations. Conversational AI technology can understand context, and remember previous interactions, and offer more personalized and interactive experiences. So, while all chatbots are conversational AI, not all conversational AI systems are limited to chatbot functionality.

Q: Why is conversational AI a preferred use of AI?

A: Conversational AI is preferred by businesses for several reasons. It significantly enhances customer interactions by providing immediate responses and personalized assistance. This leads to improved customer satisfaction and loyalty.

Conversational AI also automates routine tasks which saves you time and reduces operational costs for businesses.

Additionally, it extends customer service availability to 24/7, ensuring customers can get assistance whenever they need it.

Lastly, conversational AI is scalable, allowing you to handle a high volume of inquiries simultaneously. Overall, conversational AI provides a customizable and effective way to improve customer communications and streamline your business’s operations.