Chatbots vs. conversational AI: What are they and how do they differ?

Updated on
September 14, 2023
September 15, 2023

Chatbots and conversational AI are often used interchangeably, but they are not the same. Understanding the differences between them can help you decide which technology is best for your customer service experience.

Chatbots are computer programs that simulate human conversations to provide better experiences for customers. Some work based on predefined conversation flows, while others use artificial intelligence and natural language processing (NLP) to interpret user questions and send automated responses in real-time.

Conversational AI is a broader term that refers to AI-driven communication technology such as chatbots, virtual assistants (e.g., Siri or Bixby), and generative AI(e.g., Chat GPT or Google Bard). Conversational AI platforms use data, machine learning (ML), and NLP to recognize vocal and text inputs, mimic human interactions, and facilitate conversational flow. As you know, the unveiling of ChatGPT by OpenAI in December 2022 has garnered significant interest. These generative AI, known as large language models (LLMs), possess the ability to generate text across an extensive array of subjects. Gaining an understanding of LLMs is crucial to comprehending the functionality of ChatGPT.


What is a chatbot?

image source: OMQ

Chatbots in the modern era can be broadly classified into two types: rule-based chatbots and AI chatbots.

Rule-based chatbots, also known as decision-tree bots, operate based on a series of predefined rules. These rules form the basis for the types of problems the chatbot is familiar with and can provide solutions for. Like a flowchart, rule-based chatbots map out conversations in anticipation of what a customer might ask, and how the chatbot should respond. However, they cannot answer any questions outside of the defined rules. These chatbots do not learn through interactions and only perform and work with the scenarios you train them for.

On the other hand, AI chatbots use machine learning and natural language processing to understand the context and intent of a question before formulating a response. These chatbots generate their own answers to more complicated questions using natural-language responses. The more you use and train these bots, the more they learn and the better they operate with the user.

While rule-based bots have a less flexible conversational flow, these guard rails are also an advantage. You can better guarantee the experience they will deliver, whereas chatbots that rely on machine learning are a bit less predictable. Some other advantages of a rule-based chatbot are that they are generally faster to train (less expensive), integrate easily with legacy systems, streamline the handover to a human agent, are highly accountable and secure, can include interactive elements and media, and are not restricted to text interactions.

AI chatbots, on the other hand, work well for companies that will have a lot of data. Although they take longer to train initially, AI chatbots save a lot of time in the long run. AI chatbots learn from information gathered continuously, improve as more data comes in, understand patterns of behavior, have a broader range of decision-making skills, and can understand many languages.


What is conversational AI?

Conversational AI refers to technologies that can recognize and respond to speech and text inputs. In customer service, this technology is used to interact with customers in a human-like way. The interaction can occur through a bot in a messaging channel or through a voice assistant on the phone.

Conversational AI platforms use data, machine learning, and natural language processing to understand user intent, mimic human interactions, and facilitate conversational flow. They can also use other technologies such as sentiment analysis, emotion detection, and speech synthesis to enhance the customer experience.

Conversational AI can handle more complex and dynamic conversations than chatbots. They can also switch between different topics, contexts, and channels seamlessly. Conversational AI can provide personalized and proactive service based on customer data and behavior.

How do chatbots and conversational AI benefit customer service?

Chatbots and conversational AI can benefit customer service in many ways, such as:

  • Reducing costs: Chatbots and conversational AI can handle repetitive and simple tasks that would otherwise require human agents. This can reduce labor costs and free up agents for more valuable work.
  • Increasing efficiency: Chatbots and conversational AI can provide instant and accurate responses to common customer queries. This can reduce wait times, increase resolution rates, and improve customer satisfaction.
  • Enhancing engagement: Chatbots and conversational AI can engage customers in natural and friendly conversations. They can also provide personalized recommendations, offers, and feedback based on customer preferences and behavior.
  • Improving loyalty: Chatbots and conversational AI can provide consistent and reliable service across different channels and devices. They can also follow up with customers after interactions and collect feedback to improve future service.

How to choose between chatbots and conversational AI for your business?

The choice between chatbots and conversational AI depends on your business goals, needs, and resources. Here are some factors to consider:

  • Complexity: Chatbots are suitable for simple and straightforward conversations that follow predefined rules and flows. Conversational AI is suitable for complex and dynamic conversations that require understanding user intent and context.
  • Scalability: Chatbots are easy to set up and maintain with minimal coding or technical skills. Conversational AI requires more data, training, and testing to ensure high performance and accuracy.
  • Functionality: Chatbots can provide basic information, answer FAQs, collect data, or route requests to human agents. Conversational AI can provide more advanced features such as voice recognition, emotion detection, personalization, or proactive service.
  • Integration: Chatbots can integrate with existing platforms such as Zendesk or other third-party systems. Conversational AI may require more customization or development to integrate with your existing systems.
  • Cost: Chatbots are generally cheaper than conversational AI as they require less data, training, and maintenance. Conversational AI may have higher upfront costs but may offer higher returns in the long run.

The bottom line

Chatbots and conversational AI are both powerful technologies that can improve your customer service experience. However, they are not the same and have different strengths and limitations. By understanding the differences between them, you can choose the best option for your business and your customers.

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