by : Zahwah Jameel
December 9th 2022

What is Conversational AI?

Conversational artificial intelligence (AI) is a set of technologies empowering advanced chatbots, virtual agents, voice assistants, speech-enabled apps, and automated messaging systems to create human-like interaction between humans and computers.

Conversational AI

Conversational AI uses large data volumes, natural language processing (NLP), and machine learning to understand intent, text, and speech, mimic human interactions, and decipher different languages.

The technologies used in conversational AI are still embryonic but rapidly advancing and expanding. A conversational AI chatbot can troubleshoot issues, answer FAQs, and make small talk through text, audio, and video.

What are the Components of Conversational AI?

Conversational AI is powered by cutting-edge artificial intelligence, machine learning, NLP, text and sentiment analysis, speech recognition, computer vision, and intent prediction technologies.

Together, these elements promote interaction, enhance the client and agent experience, shorten the resolution time, and increase company value.

Natural Language Processing (NLP)

NLP describes a computer’s ability to understand spoken language and respond in a human-like manner. It is made possible by machine learning, which teaches computers to interpret language. NLP systems examine massive data sets to identify connections between words and the contexts in which they are used.

Most conversational AI utilizes Natural language understanding (NLU) to compare user inputs to various models, allowing a bot to respond to non-transactional journeys more like a human. The technology is trained to mimic multiple tones using AI-powered speech synthesis to comprehend slang, regional subtleties, and colloquial speech.

Sentiment Analysis

Sentiment detection enables conversational AI to understand customers’ emotions and recognize if the user needs specialized assistance by immediately directing frustrated users to agents or prioritizing unhappy customers to receive special treatment.

Conversational AI Benefits & Features

Machine Learning (ML)

ML is a branch of Artificial Intelligence that enables computers to understand data without explicit programming. ML algorithms can become more effective with high data exposure. Using machine learning, computers can be taught to comprehend language and spot data patterns.

Computer vision

A machine’s capability to comprehend and interpret digital images is computer vision. This entails recognizing the many items in a photo and their positions and angles.

The contents of a picture and the connections between its several items are both determined using computer vision. It also deciphers the emotions depicted in photographs and comprehends the context of a scene.

Intent Prediction

Conversational AI solutions can decipher the true intent underlying each customer’s request through behavioral analysis and tagging operations. Knowing intent enables businesses to send the appropriate response via automated bots and human operators at the appropriate time.

Support for numerous use cases, demands across multiple domains and verticals, and explainable AI is all on the future agenda for conversational AI platforms.

Text analysis

The technique of removing information from textual data is called text analysis. This entails recognizing the many components of a sentence, including the verbs, subject, verb, and object. It also entails recognizing the many word categories in a phrase, including verbs, nouns, and adjectives.

Text analysis is performed to comprehend the relationships between the words in a phrase and their meanings. Additionally, it’s employed to determine a text’s theme and mood (positive/negative).

Speech recognition

It refers to a computer’s capacity to comprehend spoken language. This entails understanding the syntax and grammar of the sentence and the various sounds that make up a spoken sentence.

Speech recognition is employed to translate words into text and decipher their meaning. The context of a conversation can also be understood as well as the emotions of the speakers in a video.

How does Conversational AI work?

Natural Language Processing (NLP), Advanced Dialog Management, Automatic Speech Recognition (ASR), and Machine Learning (ML) understand and react to each interaction in a conversational AI.

Conversational AI work

  •  A user interface that transforms speech to text enables Automatic Speech Recognition (ASR) or allows the user to feed text into the system.
  •  Natural language processing (NLP) converts text into structured data by extracting the user’s intent from the text or audio input.
  •  Natural Language Understanding (NLU) to process the data following grammar, meaning, and context; to understand intent and entity, and to serve as a conversation management unit for developing suitable responses.
  •  An AI model that, using the user’s intent and the model’s training data, predicts the optimum answer for the user. The foregoing processes are inferred by Natural Language Generation (NLG), creating a suitable response to communicate with people.

A conversational AI platform supplier frequently offers several instances of the user interface, AI model, and NLP. However, It is possible to utilize other providers for each component.

How is Conversational AI created?

The ideal technique to develop conversational AI depends upon your firm’s unique requirements and use cases. Hence there is no universally applicable answer to this topic. However, the following are some pointers for developing conversational AI:

Use the FAQs list to determine prerequisites and use cases

FAQs form the foundation of conversational AI development by defining the major user concerns and needs. and alleviating some call volumes for your support team. 

This FAQ list enables you to determine use cases and prerequisites. Defining these requirements will help you determine the best approach to creating your chatbot.

Select the right toolkit and platform

To construct conversational AI, you can use various tools. You must select the platform that best meets your demands because every platform has different advantages and disadvantages. Popular platforms include Google Dialogflow, Amazon Lex, IBM Watson,  and Microsoft Bot Framework.

Design a prototype

The time has come to begin developing your prototype after you have specified your needs and selected a platform. Before releasing your chatbot to your users, you may test it and work out any issues by creating a prototype.

Test and Deploy your chatbot

When your chatbot prototype is complete, it’s time to launch and test it. A small group of people should test it first so that you can gather feedback and make the necessary improvements. 

Enhance and Optimize your chatbot

The final stage is to improve and optimize your chatbot continuously. You can achieve this by changing the algorithms, soliciting user input, and including new features.

Why do Businesses Invest in Conversational AI?


Today’s clients demand top-notch service, even from the smallest businesses. Personalized client conversations are made possible at scale across numerous channels with the aid of conversational AI. 

Therefore, when a consumer switches from a messaging app to either live chatting or social networks, their customer journey will be seamless and highly tailored.

Manage customer calls in high volumes

Higher call counts are a part of the new post-pandemic reality for customer service teams. During abrupt call spikes, chatbots, conversational AI, and voice assistants can help resolve lower-value calls and relieve overworked customer care employees.

Calls can be categorized using conversational AI based on the customer’s needs, previous company experiences, emotions, attitudes, and intents. Routine transactional encounters can be forwarded to an artificially intelligent virtual assistant (IVR), which lowers the expense of high-touch engagements and frees up human agents to concentrate on more valuable interactions.

Deliver the customer service promise

Customer experience is becoming the most important brand differentiator, surpassing both products and prices. 82% of customers, according to Forbes, discontinue business with a company following a negative customer experience.

By fostering a more customer-centric experience, conversational AI can aid businesses in maximizing their commitment to providing excellent customer service. Conversational AI can improve first contact resolution and client satisfaction scores by enhancing self-service—and live agent assistance—with emotion, intent, and sentiment analysis.

Advantages of Adopting Conversational AI

Conversational AI benefits for companies

Businesses can gain from conversational AI in various ways, including lead and demand creation, customer service, and more. These AI-based solutions are widely used in businesses to improve the effectiveness of sales teams’ cross- and up-selling. 

New apps will help and/or automate more operational areas as technology develops and advances. Here are some examples of conversational AI’s value now helping businesses create.

Cost Efficiency

The cost of staffing a customer care department can be high, especially if you want to respond to inquiries outside of typical business hours. Providing customer service via chatbots can lower business costs for small to medium-sized businesses. Virtual assistants and chatbots can answer immediately, making themselves available to potential clients around the clock.

Additionally, contradictory reactions to potential clients can come from human conversations. Businesses can develop conversational AI to handle various use cases, assuring comprehensiveness and consistency since most contacts with support are information-seeking and repeated. 

This maintains consistency in the customer experience and makes valuable human resources accessible for handling more complicated inquiries.

Automating Processes

Not every task needs human involvement. Customer support agents can concentrate on more complex interactions by using conversational AI to address low-effort emails and calls swiftly. Conversational AI can significantly lower contact center operating costs and errors related to human data entry by automating the majority of these processes. The technology can also reveal information that human representatives might not otherwise be able to notice.


Conversational AI offers high scalability since adding infrastructure for conversational AI is swifter and cheaper than hiring a workforce. This proves helpful in expanding products to new markets or during unforeseen spikes in the holiday season.

Enhanced Sales and User Engagement

Since smartphones have become an integral part of users’ lives, businesses should stay prepared to provide real-time data to users. As Conversational AI technology is more readily accessible than agents, it enables frequent and quick user interactions.

The immediate response and support enhance customer satisfaction and improve the brand image with enhanced loyalty and added referrals.

Also, since conversational AI supports personalization, it enables chatbots to give recommendations to users, enabling organizations to cross-sell products that users might not have considered.

What are the Challenges of Conversational AI?

Challenges of Conversational AI

Conversational AI is still young. Although it is being adopted by businesses widely, it poses a few challenges regarding its transition.

Language Input

Whether voice or text, language input is a pain point of conversational AI. Different accents and dialects, slang, unscripted language, and background noises generate issues in understanding and processing raw input.

Another painstaking challenge in language input is the human factor. Tone, emotion, and sarcasm make it quite tough to interpret the meaning and respond correctly.

Security and Privacy

Conversational AI depends on assembling data to respond to user queries, exposing it to security and privacy breaches. So, it becomes vital to design conversational AI applications with enhanced security and privacy to ensure trust with users and to augment usage with time.

User Apprehension

Sometimes, users detest sharing sensitive and personal data, especially while interacting with machines. This can, in turn, create negative experiences and affect conversational AI’s performance.

So, it becomes essential to educate your target users about the safety and benefits of the technology to improve customer experience.

Other Challenges

Chatbots are often not designed to cover extensive queries, which can impact user experience with incomplete answers and unresolved queries. This creates the need to provide alternative communication channels, like a human representative, to help resolve complex issues to maintain a smooth user experience.

Also, while optimizing business workflow, conversational AI can also reduce the workforce for a certain job function, triggering socio-economic activism and hurting the business image.

How is Conversational AI Being Used Today?

How is Conversational AI Being Used Today

Several industries are currently utilizing conversational AI applications. These intelligent applications assist organizations in connecting with consumers and employees in previously unheard-of ways, whether through customer service, marketing, or security, emerging as the core of digital transformation for several businesses.

Conversational AI is growing and providing benefits to a wide range of businesses, including, but not limited to, the following:

Banking: Bank employees can reduce their workload by letting AI chatbots answer complex queries that traditional chatbots might struggle with.

Healthcare: By asking questions designed to reduce wait times, conversational AI assists patients while describing their conditions online. The time-consuming practice of manually reviewing candidate credentials can be automated using conversational AI.

Retail: AI-powered chatbots handle consumer requests 24×7, even on holidays, without traditional customer support employees. Previously, the only way for user communication was through call centers and in-person visits. Because AI chatbots are now accessible through various channels and mediums, including email and websites, customer service is no longer only available during business hours.

IoT:  Conversational AI features are available on popular home appliances like Apple’s Siri and Amazon Echo. Even smart home gadgets can be used to connect with conversational AI agents.

Implementing Conversational AI

Conversational AI can be implemented in a variety of ways. NLP is the most popular method for converting text to machine-readable data. This information can subsequently be utilized to run a chatbot or another type of conversational AI system.

As was already said, NLP is a method that translates text to a format that computers can understand by comprehending human language. This procedure is being used to decipher user inquiries and orders and to review and react to user comments.

NLP can be done in a variety of ways. A computer can be instructed to comprehend natural language using some techniques that use machine learning. Others employ a rules-based strategy, in which a human editor develops a set of guidelines outlining how the machine must process and react to user input.

The computer can utilize this knowledge to fuel a chatbot or similar AI system once it has been trained or given a set of rules. This system may manage customer service requests, respond to queries, and do other duties that require human involvement.

How to Pick the Right Conversational AI For Your Business

To help you select the right conversational AI solution, you can consider these few points:

  • Evaluate your business needs first like analyzing the workflow areas where you can integrate automation and tasks where your users need help. 
  • Evaluate various conversational AI capabilities since some platforms might suit better for your business depending on your industry.
  • Analyze the complexity and cost of integrating different solutions since some solutions are more complex and expensive and might need technical expertise for setting up and use.
  • After applying the above three steps, narrow down the options to choose the right platform.

Conversational AI vendors now provide advanced functionalities to support entity detection and automated intent, conversational design, annotation tools, no-code or low-code paradigm, and compact training datasets to enable non-technical industry professionals to design intelligent solutions like virtual assistants and chatbots.


Zahwah Jameel

A software engineer with a deep interest in writing blogs and web content on various tech stacks.

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