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Chatbots vs. Conversational AI: What Makes Them So Different?

Illustrator: Adan Augusto
chatbots vs conversational ai

Businesses are always looking for ways to communicate better with their customers. Whether it’s providing customer service, generating leads, or securing sales, both chatbots and conversational AI can provide a great way to do this.

Although they’re similar concepts, chatbots and conversational AI differ in some key ways. We’re going to take a look at the basics of chatbots and conversational AI, what makes them different, and how each can be deployed to help businesses.

What is a Chatbot?

A chatbot is a program designed to simulate human conversation. Users can interact with a chatbot, which will interpret the information it is given and attempt to give a relevant response. 

Many chatbots are used to perform simple tasks, such as scheduling appointments or providing basic customer service. They work best when paired with menu-based systems, enabling them to direct users to specific, predetermined responses.

Chatbots appear on many websites, often as a pop-up window in the bottom corner of a webpage. Here, they can communicate with visitors through text-based interactions and perform tasks such as recommending products, highlighting special offers, or answering simple customer queries.

Source: Intercom

There are two main types of chatbots.

Rule-Based Chatbots

Rule-based chatbots use predetermined responses to interact with users. These are triggered by detecting specific keywords and phrases. Rule-based chatbots don’t learn from their interactions and struggle when posed with questions they don’t understand.

AI-Based Chatbots

AI-based chatbots use artificial intelligence to learn from their interactions. This allows them to improve over time, understanding more queries and providing more relevant responses. They are more adaptive than rule-based chatbots and can be deployed in more complex situations.

What is Conversational AI?

Conversational AI is the technology that allows chatbots to speak back to you in a natural way. It uses a variety of technologies, such as speech recognition, natural language understanding, sentiment analysis, and machine learning, to understand the context of a conversation and provide relevant responses.

The main aim of conversational AI is to replicate interactions with living, breathing humans, providing a conversational experience. 

There are three main types of conversational AI applications.

  • Chatbots: AI-based chatbots utilize conversational AI to better replicate genuine human conversations. They often provide more relevant outputs than rule-based chatbots and offer a more natural customer experience.
  • Voice Assistants: Voice assistants are software programs that react to voice commands to perform tasks. Using voice recognition and language processing, they can perform tasks such as giving updates on the weather, adding items to a shopping list, or fetching information from the internet. Popular voice assistants include Microsoft’s Cortana, Apple’s Siri, and Amazon’s Alexa. 
  • Virtual Assistants: Virtual assistants are context-aware and, as such, can help users to perform specific tasks. Natural language understanding (NLU) models are used to train virtual assistants to understand more complex requests and respond in a more relevant manner.

What are the Main Differences Between Chatbots and Conversational AI?

The main difference between chatbots and conversational AI is that the former are computer programs, whereas the latter is a technology. Some chatbots use conversational AI to provide a more natural conversational experience for their users, but not all do.

Conversational AI uses technologies such as natural language processing (NLP) and natural language understanding (NLU) to understand what is being asked of them and respond accordingly. 

Basic chatbots, on the other hand, use if/then statements and decision trees to determine what they are being asked and provide a response. The result is that chatbots have a more limited understanding of the tasks they have to perform, and can provide less relevant responses as a result.

Take a scenario where a customer has had their order canceled by an e-commerce website as an example. They may ask a chatbot, “why has my order been canceled?”

A simple chatbot might detect the words “order” and “canceled” and confirm that the order in question has indeed been canceled.

However, a chatbot using conversational AI would detect the context of the question and understand that the customer wants to know why the order has been canceled. It can then attempt to obtain this information to relay to the customer.

What Can Chatbots Do?

While often only able to perform simple tasks, chatbots still have a range of uses, including:

  • Assist with administrative tasks, such as employee onboarding.
  • Generate leads by capturing the information of website visitors.
  • Search databases for information and relay this to users.
  • Route users to the relevant department of a contact center using interactive voice response (IVR) technology.

Source: Intercom

What Can Conversational AI Do?

Because conversational AI uses different technologies to provide a more natural conversational experience, it can achieve much more than a basic, rule-based chatbot. 

Learn at Scale

Conversational AI draws from various sources, including websites, databases, and APIs. Whenever these resources are updated, the conversational AI interface automatically applies the modifications, keeping it up to date.

Adapt to Different Situations

Because it has access to various resources, including knowledge bases and supply chain databases, conversational AI has the flexibility to answer a variety of queries. 

Speak Different Languages

If a conversational AI system has been trained using multilingual data, it will be able to understand and respond in various languages to the same high standard. This makes them a valuable tool for multinational businesses with customers and employees around the world.

Personalize Answers

Conversational AI can draw on customer data from customer relationship management (CRM) databases and previous interactions with that customer to provide more personalized interactions. 

This can include picking up where previous conversations left off, which saves the customer time and provides a more fluid and cohesive customer service experience.

Chatbot vs. Conversational AI: Which is Better For What?

Both simple chatbots and conversational AI have a variety of uses for businesses to take advantage of. Here are some of the key areas of comparison between the two.

Customer Experience

When it comes to customer experience, chatbots can help to facilitate self-service features, direct users to the relevant departments, and can be used to answer simple queries.

Conversational AI, on the other hand, can understand more complex queries with a greater degree of accuracy, and can therefore relay more relevant information. 

Ease of Implementation

Rule-based chatbots are much simpler to implement than conversational AI. Because they often use a simple query-and-response interface, they can often be installed and customized by a single operator following guided instructions.

Conversational AI needs to be trained, so the setup process is often more involved, requiring more expert input.

Sales

Chatbots can be used to automate sales processes. They can answer common questions about products, offer discount codes, and perform other similar tasks that can help to boost sales. 

Conversational AI can also be used to perform these tasks, with the added benefit of better understanding customer interactions, allowing it to recommend products based on a customer’s specific needs.

In fact, artificial intelligence has numerous applications in marketing beyond this, which can help to increase traffic and boost sales.

Wait Times

Both chatbots and conversational AI help to reduce wait times in contact centers by taking the burden of dealing with simple requests away from human agents, allowing them to focus on more complex issues.

Conversational AI is capable of handling a wider variety of requests with more accuracy, and so can help to reduce wait times significantly more than basic chatbots.

Source: Spiceworks

Multichannel

Rule-based chatbots can only operate using text commands, which limits their use compared to conversational AI, which can be communicated through voice. 

This means that conversational AI can be deployed in more ways than rule-based chatbots, such as through smart speakers, as a voice assistant, or as a virtual call center agent.

Therefore, one conversational AI can be installed by a company and used across a variety of mediums and digital channels. 

Why are Companies Switching to Conversational AI?

Businesses will always look for the latest technologies to help reduce their operating costs and provide a better customer experience. Just as many companies have abandoned traditional telephony infrastructure in favor of Voice over IP (VoIP) technology, they are also moving increasingly away from simple chatbots and towards conversational AI. 

This is because conversational AI offers many benefits that regular chatbots simply cannot provide. 

And with the development of large language models like GPT-3, it is becoming easier for businesses to reap those benefits. In fact, they are revolutionizing and speeding up the adoption of conversational AI across the board, making it more effective and user-friendly.

By providing a more natural, human-like conversational experience, conversational AI can be used to great effect in a customer service environment. This helps to provide a better customer experience, offering a more fulfilling customer experience.

Conversational AI can be used to better automate a variety of tasks, such as scheduling appointments or providing self-service customer support. This frees up time for customer support agents, helping to reduce waiting times.

Chatbots can sometimes be repetitive, asking the same questions in succession if they haven’t understood a query. They can also provide irrelevant or inaccurate information in this scenario, which can lead to users leaving an interaction feeling frustrated. 

Source: Spiceworks

Because conversational AI can more easily understand complex queries, it can offer more relevant solutions quickly. This helps to improve customer satisfaction.

The Future is Conversational

While chatbots and conversational AI are similar concepts, the two aren’t interchangeable. It’s important to know the differences between chatbot vs. conversational AI, so you can make an informed decision about which is the right choice for your business.

Chatbots can provide automated, text-based communication between you and your customers. This can assist you in providing faster customer service, generating leads, and boosting sales. 

Conversational AI can do all of this and more. The ability to better understand sentiment and context enables it to provide more relevant, accurate information to customers. It can offer customers a more satisfactory, human-like experience and can be deployed across all communication channels, including webchat, instant messaging, and telecommunications.

Grace Lau
Director of Growth Content, Dialpad

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