Conversational AI: Everything You Need To Know

Artificial intelligence is booming, with different software, interfaces, and use cases emerging daily. But nothing has made an impact quite like conversational AI.

From AI-powered chatbots to voice assistants built into our phones, there are now conversational AI platforms everywhere. What's more, the use of this revolutionary technology is still evolving at a rapid pace, with an incredible amount of potential to completely transform ecommerce as we know it.

Here’s everything you need to know about conversational AI, how it works, and what your business can do to embrace the new frontier of AI-powered ecommerce.

What Is Conversational AI?

Conversational AI is a type of artificial intelligence that can simulate human conversation, offering an interactive dialogue and dynamic exchange with its users.

This incredible tool combines natural language processing (NLP) and machine learning (ML) processes and merges them with an interactive interface that can interpret and respond to user queries, commands, and requests.

What Is NLP?

For a technology that boils down to ones and zeros, it’s no small feat for AI to understand human language. Natural language processing does just that — it’s the next step in computational linguistics, applying computer science techniques to the analysis of human language and speech. 

Using techniques like named entity recognition, sentiment analysis, text summarization, aspect mining, and topic modeling, natural language processing can analyze and grasp human intent in the prompts it receives, even when faced with colloquialisms, slang, or a lack of greater context. 

Plus, not only does it understand what a user is saying, it can also generate responses that are appropriate and relevant to the conversation. It can mimic back-and-forth communication, creating a dialogue with users that feels organic.

Combined with machine learning, which gives AI the capability to learn and broaden its understanding through further data input, conversational AI has everything it needs to have real-time interactions, offer relevant information, and engage with users in a valuable and meaningful way.

Read This Next: How Natural Language Processing Can Help Product Discovery

How Do AI Conversations Work?

The effectiveness of conversational AI lies in its ability to process vast amounts of data, learn from interactions, and continuously improve. Let’s take a closer look at what powers these conversational AI capabilities:

AI Needs Vast Amounts of Data

Conversational AI systems are trained on massive datasets containing a wide range of human language examples. These datasets help the system understand the nuances of language, including context, sentiment, and intent.

And when we say massive, we mean truly massive. ChatGPT alone has learned from 570GB of data sourced from media on the internet, with approximately 300 billion words already fed into the system. 

It’s a staggering amount of information, but it’s the necessary fuel that conversational AI needs to comprehend language on a high level, facilitate customer interactions, and formulate an appropriate response.

Data Informs the System

With all this data, AI creates models that recognize patterns and extract meaning from user input. 

This structuring process is crucial for conversational AI — to fully grasp the function of each word in a sentence, it all has to be analyzed, organized, and deciphered by the system.

Through data analysis and natural language processing, the system gains the ability to understand a query and generate relevant responses. It’s the process by which it comprehends context, syntax, and semantics, and ultimately determines the user's intended meaning for more human interactions.

The System Learns From Every Interaction

Data input and analysis isn’t a one-and-done process. A conversational AI system is designed to learn and improve over time, using every exchange it has with a user to broaden its dataset, deepen its natural language understanding, and fine-tune its ability to pinpoint user intent. 

This iterative learning process enables the system to provide increasingly accurate and personalized conversations, making sure that future interactions are always improving. 

The Benefits of Conversational AI

Conversational AI is more than just a mind-blowing technological achievement. It offers several compelling benefits for businesses, including:

Improved Customer Acquisition

Conversational AI technology provides a seamless and intuitive way for customers to interact with your business, helping to attract and engage customers more effectively. You’re giving your customers the ability to truly converse with your brand, which can build trust, increase customer satisfaction, and ultimately drive higher conversion rates.

And, with more and more consumers recognizing conversational AI as a helpful, everyday tool, it’s important to offer this personalized connection from the start of your relationship with customers. 

Reduced Costs

One of the biggest benefits that conversational AI tools offer is the ability to automate tedious aspects of everyday business. Automation through conversational AI can significantly reduce costs associated with expensive and time-consuming tasks, especially when it comes to customer support and service. 

By handling repetitive queries and addressing frequently asked questions using conversational AI, businesses can alleviate some of the stress put on support teams. Additionally, as conversational AI gets better and better at meeting the needs of your customers, it can free up more human resources and improve operational efficiency.

Enhanced Customer Experience

Conversational AI is designed to offer more tailored and valuable interactions with its users. This is its ultimate goal, and it’s the game-changing value that makes it so attractive for businesses.

Two-way communication with an audience is something that ecommerce brands have always aimed for, trying to replicate the experience of speaking with an in-store sales associate who can help customers with their specific needs. Now, conversational AI makes that dream a reality. 

With natural language processing, machine learning, and intuitive conversational interfaces, businesses can tailor the customer journey and offer real-time, targeted solutions to any question their audience might have. Using conversational AI tools for your customer interactions is a great way to improve your conversions, retention, and overall customer experience.

Read This Next: What Is Conversational Commerce?

How Conversational AI Differs From Previous Chatbots

Up until recently, most people considered chatbots to be simple, superficial tools. That’s because rule-based chatbots were the only available option, and there was no hiding what they were: auto-response machines that worked off a limited number of answers for a narrow scope of possible queries. 

We’ve all had to deal with rule-based chatbots before. These systems are reminiscent of automated phone menus, communicating through preset rules that function like a decision tree. They gave users a series of choices to help guide them to the answer they were looking for and were primarily used to handle simple conversations like communicating business hours and processing basic customer service requests. 

This was before advanced conversational AI technologies took the world by storm and changed the way we think about AI. Now, conversational AI chatbots can play the role of virtual assistants to users, with the ability to understand text or human speech with responses that go way beyond a basic script.

Searching for products, placing orders, tracking delivery times, and helping customers resolve issues — it’s all possible with conversational artificial intelligence. It’s a level of online service that was previously unreachable, but it’s quickly becoming the new standard for modern customer experiences.

Examples of Conversational AI

Conversational AI is being widely adopted across various industries. Some notable examples include:

• Virtual assistants like Siri, Alexa, and Google Assistant, which use conversational AI to understand and respond to user commands and queries. Accessible through smart speakers and mobile devices, these are the most popular conversational AI tools and have quickly become a part of everyday life in recent years.
• Customer support chatbots that provide efficient and personalized assistance to customers, resolving common issues and escalating complex problems to human agents when necessary. You’ll often interact with these types of conversational AI applications via online banking apps, customer service portals, and messaging platforms.
• Conversational AI-powered marketing solutions that engage with users, gather information, and recommend products or services based on individual preferences. This type of conversational AI is the new frontier of ecommerce, where customers can interact with AI to curate their entire shopping experience with a brand.

How To Incorporate Conversational AI Into Your Business Strategy

With so many use cases for conversational AI and growing pressure for businesses to adopt artificial intelligence into their everyday workings, it can be intimidating to know where to start. 

To effectively incorporate conversational AI into your business strategy, be sure to focus on these key ideas:

Know What Your Customers Want

Conversational AI solutions are for your customer’s benefit first and foremost. Adopting any type of AI needs to start with a deep understanding of your customers' needs, pain points, and preferences. 

By keeping your customers in mind, you can more easily identify areas where conversational AI can add real value. 

Build a Meaningful Experience

The goal of conversational AI is to craft compelling and personalized conversations that align with your brand voice and values. To make sure AI chatbots achieve this, businesses need to focus on providing valuable information, solving relevant problems for their audience, and delivering exceptional customer service.

Are there conversations that virtual agents can take on that will benefit a customer’s journey? What channels are your AI chatbots using, and what capabilities do they offer? What about questions or queries that would be best transferred to human agents? 

These are all questions that factor into a successful conversational AI strategy. 

Use a Conversational AI Platform That Suits Your Needs

To make conversational AI work for your business, you need to choose a conversational AI platform that meets your specific brand requirements.

Features like NLP capabilities and machine learning are a must, but it’s just as important to choose a solution with the right integration options, scalability, and analytics to ensure seamless implementation and ongoing optimization.

With the right conversational AI platform, there’s no limit to what AI can do for your customer journeys — and your business’s bottom line. It can ingest all the important information on your specific audience and unique brand offerings, combine it with deep machine learning and natural language generation, and create hyper-relevant customer experiences that reach a level of personalization that has never been achievable before the age of AI. 

To achieve this level of personalization, you need a solution that can:

• Connect seamlessly with your customer and product data
• Craft knowledgeable and meaningful conversations
• Communicate across multiple channels
• Help shoppers answer questions and make the right purchase
• Provide relevant recommendations naturally

Bloomreach Clarity: The Next-Gen Conversational AI Solution

Conversational AI is on the cusp of becoming the most innovative technology in ecommerce. To make sure your business stays ahead of the curve, you need a tool that does more than what’s expected from a conversational AI solution — you need Bloomreach Clarity, a revolutionary conversational shopping AI tool built for a new world of ecommerce.

Bloomreach Clarity is trained on real-time customer data, your product catalogs, and our 14+ years of data on how customers shop and search, offering every customer the most personalized and relevant experience whenever they interact with your brand. 

It goes beyond the current scope of AI chatbots to serve as a product expert, engaging shoppers in conversations that are authentic and specific to your business. It can help your customers find the product they’re looking for, guide shoppers who don’t have a specific product in mind, make personalized recommendations based on every customer’s unique needs and preferences, and much more. 

And these conversations connect across every channel, always picking up right where customers left off. Conversations can start anywhere, continue everywhere, and offer limitless possibilities. 

Interested in learning more about Bloomreach Clarity and exploring new ways that conversational AI can revolutionize your business? Sign up for the waitlist to join the conversation before it begins.