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How Conversational AI Help Businesses Improve Customer Service? | by Megha Verma | May, 2021

Conversational AI is the next wave of satisfactory customer experiences. It is the linchpin for any customer-oriented business nowadays. It, indeed, is the core objective of companies nowadays that needs to be prioritized.

The mantra of keeping the customer happy rests in the idea of being completely available to them and being highly responsive to solve their queries and concerns.

Simply put, intelligent AI tools can help evolve the complete customer experience and deliver modern-day enterprise solutions.


For example, a company’s decision to outsource their call center service will probably save money. However, the fact is that until the chatbots are indulged in the process, the firm will barely be able to deliver a satisfactory customer experience.

Eventually, employees alone (without AI tools) will fail to do many tasks like storing all important mails, important voice messages not recorded, and not interpreting the data or information as it originally was.

In a report, Gartner predicted that almost 40% of the users would majorly rely on the new apps that support conversational UI with AI. By 2022, more than 20% of customer service will primarily be handled and managed by conversational agents.

These numbers are shocking, and it is an alert siren for all the companies and managers who did not introduce themselves to Conversational AI. It is advisable to roll out your conversational AI strategy soon within three to six months to keep going in this market.

In fact, by 2025, as many as 95 percent of all customer interactions will be through channels supported by artificial intelligence (AI) technology, according to Servion Global Solutions. And AI-powered chatbots will be a crucial component in helping the next generation of customer experience. — Source

It is a programmatic, innovative, and intelligent approach to deploy a conversational experience to mimic conversations with real people using telecommunication and digital technologies.

The whole idea of bringing in AI and its tools in interaction with customers is that businesses have started to understand the importance of communication in the organization.

Conversational AI refers to technologies, like:

(that can help chatbots to enhance their customer experience further talk to the users in replacement of the human)


Conversational AI uses massive data, natural language processing, and machine learning to imitate the interactions, identify the speech patterns, and send text messages in different languages.

Related Read: Emerging Artificial Intelligence and Machine Learning Trends [Updated]

The significant role of NLP is to flow into the constant feedback loop with ML processes for improving the algorithms of Artificial Intelligence. Together these processes allow Conversational AI to understand the process and generate an intelligent response in the most natural way.

1.Chatbot Trends Report 2021

2. 4 DO’s and 3 DON’Ts for Training a Chatbot NLP Model

3. Concierge Bot: Handle Multiple Chatbots from One Chat Screen

4. An expert system: Conversational AI Vs Chatbots

1. Natural Language Processing or NLP

Usually popular as NLP, it is an intelligent method to analyze the language (using ML) in conversational AI. Deep learning is believed to be advancing NLP in the future, allowing businesses to experience much more advanced NLP for better customer service.

NLP or Natural Language Processing involves four significant steps:

  1. Input generation — Users provide particular input and the format of which can either be text or voice.
  2. Input Analysis — In the case of text messages, conversational AI will use NLU or Natural Language Understanding to interpret the meaning of the input. If it is voice-based, then NLU and ASR or automatic speech recognition will generate the natural reply to the user.
  3. Output generation — Natural language generation (a component of NLP) generates a response to send to the user.
  4. Reinforcement learning — ML algorithms refine the responses to ensure accuracy in the replies.

The entire process is about transforming the unstructured data into an accessible format quickly understood and readable by the machines/ computers. The machine learning algorithms prevailing in the algorithms enhance the quality of response, with time, as it learns the process. It completely supports the idea of automated conversations and responses for any business using cloud telephony.

2. Machine Learning

It is a sub-field of AI, an innovative and intelligent combination of algorithms, data sets, and features bound to grow and improve with time. With time and capacity of input, recognizing machine learning patterns better deploy chatbots much smarter predictions for intelligent customer service.


Conversational AI is a cost-effective solution for improving the customer service of your business. There are considerable benefits that any business can experience if they incorporate effective business communication solutions like Conversational AI in their processes.

1. Cost-Effectiveness

A customer-oriented business will always find new ways to improve the results for their customers. And, staffing a customer service department is nothing new that companies won’t think of. However, the cost, in this case, would be pretty unpredictable and definitely on the higher side.

On the other hand, if you opt for Conversational AI, it is easier for you to reduce the business costs that would otherwise have gone into training the staff. Besides, their salaries become a significant constraint for the company too. Conversational AI saves all these costs while delivering much more intelligent and quick responses to the customers.

Take chatbots, for example — they will be available 24×7 to your potential customers, without needing you to be there all the time. Besides, chatbots ensure the response is quick so that your customers don’t have to waste time waiting for the replies.

With a projected worldwide market size of more than $1.3 billion by 2024, chatbots will be a driving force for business communications. (Intellectyx, 2019)

2. Higher Customer Engagement

Customers are constantly engaging over their mobile phones nowadays. Hence, businesses need to prepare themselves to provide real-time information for the customers. Conversational AI allows the customers to engage with the brand using AI tools using mobiles easily.

With conversational AI, businesses establish a quick connection with customers so that the users don’t keep waiting for hours. It is a good sign for your business, as you are not letting your customers wait for a response from your end. You have a great chance to promote your products or let them know about your brand.

3. Scalability

Conversational AI gives you complete access to add infrastructure to support it at a much affordable cost and quickly. That’s not the case when you hire a staff to do so. One example of it could be expanding your product market in another country or a geographical area within the shortest possible time. Conversational AI can be a helpful tool to do so without adding to your budget or time.

4. Optimal Collection of Data

AI is an intelligent and innovative tool that helps you collect data. It analyzes the favorite products by your customers for future purchases to improve marketing and sales practices.

You can easily connect with customers and offer them more information about the products of interest. Conversational AI can even help you determine the best way to connect and engage with your customers to deliver satisfactory customer service within time. With optimal utilization of data, you can efficiently have a sufficient customer service experience for the users.

5. Reduce Churn

Conversational AI delivers instant support to customers for solving their problems almost instantly. Since customer’s issues are resolved immediately, it is easy to keep the customers for longer. Besides, this benefit of Conversational AI enhances customer satisfaction.

6. Unlimited Stream of Patience

Customer queries can sometimes be silly and repetitive, which can visibly irritate customer service agents. The constant similar questions and complaints can make customer service reps bothered sometimes. However, when you use Conversational AI, you can avoid such situations. Unlike humans, AI tools like chatbots and virtual assistants offer an unlimited stream of patience.

7. Multilingual Support

Customers prefer speaking their native language when possible. They expect a response from you in the same language to establish a good connection with your brand. So, even if businesses consider the English language as the lingua franca of today, it will not always serve your customers.

With Conversational Tools, you can convey your message in multiple languages, allowing you to better communicate with them. Besides, there is barely any need to hire a translator or interpreter to conversate with customers in their language.

AI tools use multilingual chatbots or voice assistants to show the customers that you are trying to connect with them in their language. Hence, customers will count those extra efforts.

67% of millennials in the US reported that they would likely purchase products and services from brands with chatbots. (Chatbot Magazine, 2018)

Conversational AI, undoubtedly, is beneficial for your business. However, it still is a technology, and every technology has some advantages and disadvantages.

Here are some challenges that Conversational AI brings in:

1. Language Input

That can be a pain point for Conversational AI where the input from the user is voice or text. Text messages (to a certain extent) are acceptable to address. The issue is faced when the voice inputs are taken care of. AI can have difficulty understanding the voice input in terms of dialects, accents, and background noises, which can impact the quality of the input.

Besides, the biggest challenge for Conversational AI tools is to bring human value and emotions into the conversation. The emotions, tone, and that human connection will probably not be that strong when such tools are used.

2. Security/Privacy

Conversational AI highly relies on collecting massive user data to give proper responses to customer queries. The security and privacy of user data are at stake, and it can even be exposed to security breaches sometimes. Hence, a conversational AI that supports high security and confidentiality should be invested in. So that both the customer data and their privacy are entirely secured.

3. Data Sharing Constraints

Users can be apprehensive about sharing their sensitive data with businesses. They may doubt sharing personal data with machines too. Hence, it is difficult for people to share information with conversational AI. Data sharing constraints will exist until a robust security system is designed for the technologies and tools.

Hence, there is a strong need to educate customers before expecting them to share their data with you. Once they understand what you (as a business) are trying to share with them, it would be much easier for them to trust you. Plus, they won’t hesitate to share their data to enhance their customer experience further.

Honestly, conversational AI is a reliable technology for improving customer service. However, it is time we bust the misconception that AI alone can handle all incoming inquiries from the customers.

Without human support, it is quite a slippery slope to handle or improve customer experience. So, your business needs to identify a balance between conversational AI and human help to enhance your customers’ overall experience.

AI can optimize the workflow of your business. However, it can not understand the emotions of a human. Hence, a healthy balance between both machines and humans is required.

So, go ahead, strategize your business accordingly using your staff and conversational AI for optimum customer satisfaction.

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