By now, you’ve probably already heard about artificial intelligence (AI)—the thinking machines that pilot self-driving cars, for example, or play chess at a master’s level.
As you might have guessed, conversational AI is artificial intelligence that we can talk to. While the idea of talking with a robot might seem futuristic, there’s a good chance that you’ve already chatted with an AI: some of the chatbots you encounter online (think the “How may I help you?” pop-ups on websites) are powered behind-the-scenes by AI.
But even as conversational technology becomes more common, many people still aren’t sure how this form of AI can benefit brands. Leave that to us. In this article we’ll explain what conversational AI is, dig into how AI-powered chatbots work, and detail how these talkative little robots can help brands lower costs and boost sales.
Ready to get chatty? Let’s go!
What is conversational AI?
As mentioned above, conversational AI is artificial intelligence that we can talk to.
Most chatbots you encounter online are not powered by AI. They are simple programs that use pre-programmed (or “canned”) answers to reply to common questions.
Conversational AI is different. It uses advanced forms of computing to learn how people speak and type, and remembers what it learns to become better at chatting with humans. Over time, the AI becomes an expert at figuring out what people are saying in a chat.
The forms of computing used by conversational AI are:
- Machine learning. This is when a computer program (or algorithm) automatically practices tasks again and again in order to get better at that task.
- Natural Language Processing (NLP). This is an area of machine learning focused on interpreting how people use language, with the goal of learning how to communicate the way humans do.
Conversational AI uses machine learning and NLP to interpret and understand language, then puts those skills to work via an interface (such as a chatbot) to talk with people. Pretty neat.
How does conversational AI work?
For a conversational AI chatbot to know how to respond to a question from a human user, several steps need to happen.
Step 1: Input and Analysis
First, the input—in this case, the question being asked—must be handled using Natural Language Processing and Natural Language Understanding (NLU).
The job of NLP is to check that the input makes sense (i.e. words are spelled correctly), while NLU handles the heavy lifting of understanding what those words mean.
Step 2: Create a response
Once the AI has an understanding of what the human user is asking, another form of computing, Natural Language Generation, or NLG (you probably noticed there’s a lot of emphasis on “natural language” with conversational AI) gets to work crafting an answer to the question.
Step 3: Personalize the response
This is where AI-powered chatbots really get to shine. By using the computing power of NLU, NLP and NLG together, a conversational AI chatbot can create personalized responses to questions that reflect a user’s intent, preferences and tone.
Chatbots that don’t use AI simply can’t pull this off.
Step 4: Analyze the response
After sending a response to a user, the AI takes a second look at the original input and the answer it provided to be sure that the response made sense.
Over time, conversational AI learns from this process and becomes smarter—i.e., able to deliver ever-more personalized answers to increasingly complex questions.
The benefits of conversational AI
Brands of any size can reap big-time benefits with a conversational AI chatbot. From providing memorable (and automated) customer care experiences, to creating new sales opportunities, nearly every aspect of engagement can be enhanced with AI.
Save time
With a tireless AI to handle simple queries and FAQs, human customer care teammates can focus on high-value interactions—think upsells, or complex care requests. Freeing up resources and eliminating repetitive work leads to bottom-line benefits.
Help your customers make purchasing decisions
The deep personalization delivered by AI enables chatbots to suggest relevant products to users directly in chat, making it easy to click and buy. Far from intrusive, product recommendations curated by conversational AI are meaningful, targeted and contextual.
Sell outside of business hours
Conversational AI acts as a 24/7 storefront, creating an always-on experience for online customers. Instead of a potential customer getting a dreaded “We are currently offline” message, AI-powered chatbots are always ready to answer simple questions, help solve issues and make timely recommendations.
Generate helpful data
The reports and metrics generated by a conversational AI platform provide deep insight into what customers are looking for and how they engage with a brand. This valuable data can be used to inform CX, UX, and product decisions, among others.
Conversational AI examples and best practices
Many brands use conversational AI to improve CX and drive sales on social platforms like Facebook Messenger or Instagram Messaging. Others choose to integrate an AI chatbot on their website or ecommerce store.
So what does a conversational AI chatbot look like “in the wild” and which brands are using them effectively? Let’s look at an example.
Below is an example of a chat between a prospective customer and an AI chatbot used by retailer Simons.
In the chat, we can see the customer asks the conversational AI about the status of their orders. The AI responds helpfully and requests the customer’s email address to check the orders.
Once the AI connects the email address to multiple order numbers, it provides the status for each to the customer. It’s that easy—the customer is satisfied and customer care teammates have one less query to answer.
By ensuring that customer FAQs can be answered by conversational AI any time of day or night, Simons has improved the customer experience and created a first line of defense for teammates. This represents a perfect example of how an AI chatbot can be used to provide always-on CX.
Conversational AI by industry
Top brands across a range of industries are using conversational AI to improve CX and drive sales. Which ones are the most mature?
Fashion & Apparel 
Fashion retailers benefit big-time from AI-powered automation features. From automating responses for up to 80% of customer FAQs to curating personalized product recommendations directly within chat, AI chatbots take care of the simple stuff. Retailers know that helping is the new selling—and value is created by freeing up human teammates to focus on more-complex transactions.
Food & Beverage
AI enables grocers and food brands to deliver memorable shopping experiences at scale without losing the personal touch. Always-on automation takes care of the most common inquiries, while online grocery shopping is even easier with a helpful virtual assistant at the ready.
Even for high-ticket items, conversational AI makes it simple to bring in-store engagements online. Digital shoppers benefit from virtual consultations and automated product recommendations, while furniture retailers enjoy strong lead capture capabilities and lower costs with 24/7 AI-powered customer care.
Sporting goods
Sports retailers know that winning the e-commerce game is that much easier with AI chat. Supporting customer care and sales teams with a virtual assistant creates an always-on shopping experience for online visitors, no matter what channel they use: messaging, social apps or website.
Beauty and Cosmetics
Beauty brands can put on their best face for online customers any time of day or night with conversational AI. Engaging features like video consultation and personalized recommendations create stellar CX in a high-touch sector, bringing warmth to the digital shopping experience.
Conversational AI and your brand
There’s no doubt that conversational AI will be at the forefront of customer experience in 2022 and beyond. As people increasingly use social and messaging channels to connect with their favorite brands at scale, automating responses to simple queries becomes essential.
The brands that will thrive in the era of social commerce will rely equally on AI chatbots and human teammates to triage, engage and resolve issues. Not only that—conversational AI will continue to help drive sales and create always-on CX at any scale, ensuring that as brands grow, they can keep the human touch.
Here’s to happy AI chatting in 2022!
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