Conversational AI – What Is It?

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What is the primary method of online communication today? Surely, it’s social media, right? Everyone and his and her granny has a Facebook account. The number of Instagram users is skyrocketing. Twitter remains as popular as ever. LinkedIn connects more and more professionals around the globe every year. Actually, the primary method is instant messaging apps and services, such as WhatsApp, Messenger, WeChat and Viber. In fact, this has been the case for some time – in terms of global usage, messaging apps surpassed social networks during 2015. Billions of people are using messaging platforms to communicate with friends, family and businesses every day. Millions more are also experimenting with voice-activated assistants, such as Google Home and Amazon Alexa. As a result, instant messaging and speech-based platforms are rapidly displacing traditional Web and mobile apps as the new medium for interactive conversations. The facilitator is conversational AI – and it has enormous implications for today’s businesses.

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What Is Conversational AI?

Conversational artificial intelligence – or conversational AI – refers to a set of technologies that enable computers to simulate human-like conversations with people. It allows us to use everyday language – in either voice or text form – to interact with intelligent assistants, chatbots and smart speakers. For businesses, the technology makes it possible to automate conversations with customers via text or voice using the most convenient and intuitive communication method available to them – natural language.

The beauty of conversational AI systems is that they offer customers an immediate and direct channel through which they can converse naturally with a business. Through text or voice, customers can ask questions, find answers to problems, have their concerns addressed and achieve personal goals. Unlike interactions between customers and businesses on social media – in which a customer leaves a query and then must wait for a human agent to become available and type a response – conversational AI systems enable immediate responses around the clock and calendar. What’s more, through the use of automation and artificial intelligence, these systems can simultaneously support engaging and personalized two-way interactions with any number of individual customers at a potentially limitless scale.

What’s Fueling the Use of Conversational AI?

It’s the increasing popularity of chat platforms and smart speakers. According to data compiled by Statista, as of July 2019, the top three most popular messaging apps – WhatsApp, Facebook Messenger and WeChat – had raked in more than four billion active monthly users, combined.

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A recent report from Voicebot revealed the progress of the voice trend. It shows almost three-quarters (70%) of smartphone owners have used the voice assistant on their mobile devices – compared to 56% one year earlier. What’s more notable, however, is 64.8% have made voice-assistant use on smartphones a monthly habit while 58.9% use the function daily.

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As you can see from the chart above, smart speaker owners are more likely (10% more likely, in fact) to use smartphone voice assistants. How many people own smart speakers? Smart-speaker adoption has continued to increase among US adults. As of January 2019, 66.4 million – or 26.2% of the US adult population – owned a smart speaker, representing 39.8% year-over-year growth.

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Why Business Leaders Must Pay Attention to Conversational AI

It’s clear that vast numbers of consumers are already using conversational AI platforms – and they are increasingly expecting to be able to communicate with businesses using these methods, too. Why? Because it’s easier, quicker and more convenient than other communication channels.

As the authors of the Voicebot report expressed it: “The continued upward trend in adoption cannot be overlooked by brands any longer. The significance of effort and investment by Amazon and Google is supported by user adoption and purchase. Smart speakers are quickly becoming a dominant tool in everyday life.”

So too, of course, are messaging apps and platforms. Consumers are already using these services instead of social media, email, phone calls and face-to-face communication to talk with friends and family. Consumers also want to use natural language to converse on their favorite chat platforms with the brands and companies with which they do business.

The problem, of course, is when a consumer communicates with a brand via an instant messaging service – either through a dedicated messaging app, such as Facebook Messenger, or a chat box pop-up on a Website – he or she expects an instant reply (the clue’s in the name). A business may receive thousands of such messages every day, however, making it practically impossible to employ a human workforce large enough to handle all these queries that must be answered instantly.

Conversational AI is the answer. With sophisticated AI in the form of machine learning, natural language understanding (NLU), natural language processing (NLP), and natural language generation (NLG) technology-powering communications, it’s possible for businesses to use conversational AI platforms to have natural, personalized and seamless conversations with multiple consumers across multiple channels at once. This isn’t limited to text-based chat either. As automated voice platforms are adopted in larger numbers, chat will increasingly become a dominant channel for business-to-consumer communications in both text and voice formats – and conversational AI is the catalyst.

According to research from Gartner, 25% of customer service and support operations will integrate conversational AI virtual customer assistant (VCA) or chatbot technology across engagement channels by 2020 – an increase from less than 2% during 2017.

“As more customers engage on digital channels, VCAs are being implemented for handling customer requests on websites, mobile apps, consumer messaging apps and social networks,” said Gene Alvarez, Distinguished VP Analyst, Chief of Research, Applications, at Gartner. “This is underpinned by improvements in natural-language processing, machine learning and intent-matching capabilities. A great VCA offers more than just information. It should enrich the customer experience, help the customer throughout the interaction and process transactions on behalf of the customer.”

Eighty-eight percent of organizations report a reduction in call, chat or email queries; 75% report cost savings; and 71% report an increase in customer satisfaction after implementing AI-powered chatbots, according to Forrester.

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The future of voice is the topic of Capgemini’s 2018 Conversational Commerce. According to the study, consumers will be more willing to use voice assistants instead of Websites, mobile apps or physical shops. During 2018, approximately one-quarter (24%) said they would use a voice assistant rather than an app or Website. Forty-percent, however, said they would be willing to do so within three years, and almost one-third (31%) would prefer to use a voice assistant instead of visiting a shop or bank branch.

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To serve this demand, the global conversational AI market is expected to increase from $3.27 billion during 2019 to an estimated value of $27.08 billion by 2026, registering an impressive CAGR of 30.25% during the forecast period. Increasing demand for AI-powered customer support services is the primary factor driving the growth of this market.

Conversational AI Benefits and Use Cases

One of the primary benefits of implementing a conversational AI platform is providing real-time customer service 24/7. Millennials and Baby Boomers cited this as the top benefit of chatbots, at 66% and 58%, respectively,  according to Drift’s 2018 State of Chatbots report.

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Providing real-time customer service 24/7 solves a growing problem highlighted in Drift’s 2019 State of Conversational Marketing report. It finds that from 2018 to 2019, customers were increasingly frustrated because they were unable to obtain immediate answers to problems online and on mobile apps, and not 24/7.

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Conversational AI solutions can enhance customer-facing activities, such as product support, onboarding, customer service and troubleshooting. For example, an e-commerce company could deploy a chatbot with knowledge of its products and the shipping status of orders to answer customer queries at any time. The implementation could also include both voice- and text-based chats.

Even sales can be made directly through chatbots and voice assistants, opening new revenue streams for businesses. Capgemini finds more than one-third (35%) of US consumers have already bought products, such as groceries, homecare and clothes via voice assistants – and the level of interest is high across many more product and service categories, including ordering meals, booking taxis and banking.

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Analyzing figures from Voicebot, finds US consumers like hands-free shopping the most when using voice assistants. “Voice has established itself as the next major frontier in commerce,” said Cas Parton, Managing Director at “This study certainly shows that Americans are already using voice to research and purchase goods from several product and service categories. With the technology only set to improve, voice search will gradually evolve to provide a seamless experience and become a reliable shopping avenue for consumers.”

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Final Thoughts

Text-based messaging platforms have already attracted billions of users, and voice is quickly increasing its user base too. Conversational AI technology allows organizations to deliver highly-personalized and immediately convenient interactions with customers throughout all stages of the customer journey. Why is this important? Because personalization delivers a more relevant customer experience, convenience delivers a more comprehensive one and immediacy improves customer satisfaction levels to very high levels. Innovative applications can be developed using conversational AI – from personal concierge services (such as The Cosmopolitan of Las Vegas’s chatbot named Rose) to payment processing tools (such as Cleo) to enhanced brand engagement experiences (such as Talisker’s whiskey tasting experiences). Be it for customer service, marketing, sales or fresh and original applications, the real power of conversational AI is it enables businesses to have simultaneous and continuous conversations with potentially thousands (or even millions!) of customers at once.

Conversational commerce is now a mainstream technology, so organizations must start investigating how they can leverage conversational AI technologies to reach customers through chat platforms across both voice and text. The benefits are many, and the competition is becoming hotter – the time to act is now.

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Terry Brown

Terry is an experienced product management and marketing professional having worked for technology based companies for over 30 years, in different industries including; Telecoms, IT Service Management (ITSM), Managed Service Providers (MSP), Enterprise Security, Business Intelligence (BI) and Healthcare. He has extensive experience defining and driving marketing strategy to align and support the sales process. He is also a fan of craft beer and Lotus cars.

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