Hackernoon logoUnderstanding Conversational AI: As Chat Enabled Customer Service by@kritagyapandey04

Understanding Conversational AI: As Chat Enabled Customer Service

Kritagya Pandey Hacker Noon profile picture

@kritagyapandey04Kritagya Pandey

Kritagya is a technical as well as a creative content writer at CallCenterHosting.

Technological innovations are necessary to cope up with the customer demands. Customers nowadays use multiple channels to access the services from a business. Thus, they expect multiple channel customer service from companies. 

"Conversational AI is a programmatic and intelligent way of offering conversational experience to mimic conversations with real people, through digital and telecommunications technologies."

In the midst of new emerging technologies, AI powered solutions have created a wave of chat enabled customer service. AI-based solutions have become an underlying aspect of any industry that plays a significant role in delivering personalized services. 

Conversational artificial intelligence is being used by businesses to facilitate communication between computers and humans. It has significantly changed the way industries interact with the customers, that is, in a frictionless and convenient manner. 

According to a report, the Conversational AI is estimated to grow into a $15.7 billion market by 2024.

Its power can be measured by its ability to carry out personalized
interactions with a large number of individual customers. 

Before moving ahead, let us understand what Conversational AI is.

Defining Conversational AI

Conversational AI refers to the set of technologies behind automated messaging and speech-enabled applications that offer human like interactions between computers and humans.

The conversational AI brings together eight technology components –

Natural language processing

It is the ability to read or parse human language text.

• Intent recognition 

It is the ability to understand the intent of the user; that is what he is
expecting even if phrased unexpectedly. It is also important to
differentiate between good and bad user intent. 

• Voice optimized responses 

It is the ability to engage in a human like conversation with the use of
emotions to deliver an optimized experience.

• Dynamic text to speech

It converts text to speech in natural voice and accent, allows for the emphasis of capital letters and tonal inflection.

• Entity recognition 

Understand that some text refers to informative abstract categories (entities) such as "February 2" = Date - Necessary for more complex commands and analysis.

• Machine learning 

Learn how to respond to users by analyzing human-agent conversations.

• Fulfillment 

The ability to pull data from web services or databases using APIs, run conditions, and inform the Dialog Manager.

• Contextual awareness 

Ability to follow conversation history, translate, recall, and memorize
information over conversations - necessary for natural, human like back
and forth communication.

Many businesses are incentivized to continuously deliver excellent customer experience in order to keep customers happy.

Therefore, businesses are increasingly plugging conversational AI into their customer support for faster customer on boarding, better retention rates, and shorter claims cycle. 

Best Customer Services Use Cases:


The number one use case for conversational AI is customer engagement. Companies can achieve frictionless customer interactions by deploying chatbots and virtual assistants to solve customer queries. 

According to Gallup, customer engagement represents a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth.

Understanding Conversations

Conversational AI's second-best utility is understanding conversations. At a narrative level, businesses get to know their customers through the insights they derive from thousands of messages. 

While at the magnitude level, AI-enhanced solutions can convert hundreds of calls to text, parse through thousands of emails, and route them to the right departments. 

How Are Customers And Businesses Reaping The Benefits Of Conversational AI?

1) Improve Customer Acquisition 

Conversational AI makes it easy for the customers to find information about products and services and make a purchase anytime, anywhere. It also facilitates the purchasing process by offering customers personalized products and recommendations according to their buying history.

 AI-powered chatbots can even be scaled up and down to
serve new customers in a cost-efficient way. 

For Example, the cosmetic giant Sephora uses Facebook messenger bots to book appointments to reserve a makeover at Sephora stores.

The Sephora reservation assistant,

  • Converts natural language
  • The bot has seen an 11% higher conversion rate versus any other channel for booking in-store makeover appointments.

Image Credit: Google

2) Increase Personalization

Delivering personalized customer service is more than just addressing the customer by their names. Instead, it is a way to capture customers’ attention and create a relevant experience for the customers’ journey. Businesses practice tailor messaging their customers at an individual level based on their interests, purchasing behavior, and past responses. 

AI-enhanced solutions like virtual assistants and chatbots can be used for mass personalization. These AI elements harness a massive amount of data from data sources and uncover the patterns in human behavior. 

For instance, the online fitness firm Verve Health's fitness bot Ziggy
helps users to set individual fitness goals. Ziggy guides the users to customize goal-setting process and comes up with a measurable fitness goal. 

Image Credit:Google

3) Reduce Cost and Increase the Efficiency

Conversational AI-enabled channels allow a reduction in costs for the customer interaction channels. The algorithms in AI assistants are trained organically, which enables cost-efficient improvement continuously.

Also, the AI assistants increase the efficiency of the sales teams by freeing up human power that can be used for other significant tasks.  

The conversational AI assistants are available to the customers at any time of the day. This feature reduces the need for human resources and the operating costs significantly.

4) Help Drive Sales 

Since conversational AI performs the regular customer interactions, this provides the opportunity to the agents to sell more products and services. Leveraging it to power customer conversations can enable sales by making the whole process of buying contextual, personalized, and simpler.

To leverage conversational AI to improve sales performance, businesses must build a digital sales ecosystem. In such an ecosystem, the conversational AI drives interactions on its own and also enables the sales specialists to focus more on value-added work.  

The Key Takeaway

An overwhelming number of enterprises have already adopted
conversational AI. One of the primary reasons is the large number of benefits that this technology offers businesses, which ultimately yields increased efficiency, cost savings, and improved ROI.

Also, the customers have embraced AI-enhanced solutions as they
are reliable, easy to talk, and stay available for 24*7.

Conversational AI will undoubtedly bring a lot of improvements and advancements in the industry. Industry leaders should consider incorporating more technologies that leverage conversational AI within their business strategies to stay competitive and provide an exceptional customer experience.


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