What is Conversational AI?

Three people on the subway using their mobile phones.

Learn what conversational AI is and why it’s becoming a game-changer for customer support.

What exactly is conversational AI?

Conversational AI is a set of technologies that allows humans and machines to have human-like interactions, mainly through voice assistants such as Siri and Alexa, and messaging services like chatbots and virtual agents. Essentially, conversational AI is what makes these virtual assistants seem “intelligent” and able to process, understand, and generate responses during human to bot conversations.  

How does conversational AI  work?

Conversational AI works using a combination of a few principle technologies: 

  • Machine learning, which is a type of technology that collects information from its interactions to learn and grow as time goes on
  • Natural Language Processing (NLP), which is artificial intelligence that can understand and respond to human language

NLP has two sub-components, Natural Language Understanding (NLU), which makes sense of a text and its intent, and Natural Language Generation (NLG), which converts text into a format humans can understand. 

Essentially, this is the way an AI-powered virtual agent would work: input — that is, voice or text — is fed into the conversational AI software, then the NLP deciphers what the user’s intent is and generates an appropriate response. Over time, the machine learning capabilities automatically improve the quality of the responses and make them more accurate. 

What is conversational AI good for?

Conversational AI is a key component powering intelligent virtual agents for customer support. And it has already entered the early mainstream phase, with 79% of contact center leaders planning to invest in greater AI capabilities in the next two years. 

Overall, conversational AI revolutionizes the customer service experience, making customer support faster and more effective, recommendations more accurate, and the overall relationship more tailored. 

And it works: 99% of organizations reported increased customer satisfaction by integrating virtual agents, according to IBM.

Conversational AI also enthuses companies: the same report found that 96% of businesses surveyed exceeded, achieved, or expect to achieve their anticipated return on investment for their virtual agent technology implementation.

And a recent MIT Global survey found that around 90% of companies mentioned faster complaint resolution and over 80% reported increased call volume processing using conversational AI technology. 

Conversational AI-powered virtual agents are clearly a key enabler of customer engagement strategy and help reduce customer service costs, while improving both operations and customer experience.

Conversational AI for customer support 

With the shift to digital becoming ubiquitous for companies of all types, having some sort of virtual assistant or agent is a no-brainer. And those without a complex solution that’s powered by conversational AI will get left behind. 

Not only does sophisticated AI technology allow for better, more efficient customer service, it also helps to upskill customer service teams across the board. Some agents can become bot managers — non-technical experts in conversational AI — and the rest can focus on more complex cases, raising the overall profile of customer service within the company. Conversational AI companies — including Ultimate's virtual agent platformtruly allows your business to scale intelligently without scaling your customer support team.

Scale your support with conversational AI