Artificial Intelligence In Marketing Market Size Report, 2030
What Is Conversational AI? A Full 2025 Guide For Dummies
What is conversational AI, and what can it be used for? In short, conversational AI allows humans to have life-like interactions with machines.
However impossible that may sound, it's made life easier. Think about all the chatbots you interact with and the virtual assistants you use—all made possible with conversational AI.
In this article, we'll discuss conversational AI in more detail, including how it works, the risks and benefits of using it, and what the future holds.
What is Conversational AI?Conversational AI is a type of Artificial Intelligence (AI) technology that can understand and process human speech and language and engage in human-like conversations.
Businesses use conversational AI to deploy service chatbots and suggestive AI models, while household users use virtual agents like Siri and Alexa built on conversational AI models.
How Does Conversational AI Work?Conversational AI uses Machine Learning (ML) and Natural Language Processing (NLP) to convert human speech into a language the machine can understand.
There are three broad steps involved in Conversational AI systems. These are:
There are components that make up a conversational AI model. Here's a rundown of each one.
Machine Learning (ML)Machine Learning is a sub-branch of Artificial Intelligence that involves training AI models on huge datasets. Machines can identify patterns in this data and learn from them to make predictions without human intervention.
Instead of programming machines to respond in a specific way, ML aims to generate outputs based on algorithmic data training. The more data processed, the more accurate the responses become over time.
Natural Language Processing (NLP)NLP is a learning method where machines or AI models use Machine Learning to analyze and understand human language and respond to your requests. This can further be divided into two components:
NLU doesn't work with voice-based commands. Instead, AI machines use ASR to understand human voice inputs. This involves converting speech into text and filtering out background noise to understand the query.
AI assistants like Siri and Alexa use ASR to process your commands.
What is a Key Differentiator of Conversational AI?The main differentiators of conversational AI are the use of Natural Language Processing (NLU) and Natural Language Understanding.
This innate ability of conversational AI to understand human input and then engage in real-like conversation is what makes it different from other forms of AI.
Unlike other AI models, it doesn't focus on generating new content or processing real-time data. Instead, it focuses on improving the experience through human-like interactions.
Conversational AI vs Chatbot: Is There a Difference?Conversational AI and Chatbots are often used interchangeably, but there's a thin line of difference between these.
Chatbots are a type of conversational AI model. They can either have a pre-determined conversational flow or use NLP in real time to produce responses to the human input.
You've probably seen a chatbot where you have to select an option to proceed. These are the ones with pre-determined flow. Chatbots that let you type your query and then produce an answer accordingly use NLP.
Conversational AI is a broader term used to define a larger subset of AI. Chatbots are just one of the many applications of conversational AI. Other applications like virtual assistants are also a type of conversational AI.
Is Conversational AI the Same as Generative AI? Generative AI is used to generate original content such as text, speech, music, and art. AI image generators, writers, and voice synthesis are some examples of generative AI.This technology creates new, original content. For example, a Generative AI model trained on millions of images can produce an entirely new image with a prompt.
But this new image will not be pulled from its training data—it'll be an original image INSPIRED from the dataset. Common examples of Gen AI tools include Jasper AI and Artsmart.
Conversational AI models, like the tech used in Siri, on the other hand, focus on holding conversations by interpreting human language using NLP.
'Suggested feeds,' like those on e-commerce websites, also use conversational AI to suggest products you may like based on your browsing and buying habits.
Conversational Artificial Intelligence Use CasesHere are some popular practical applications of conversational AI:
Virtual AssistantsVAs are by far one of the most well-known applications of conversational AI—we are all familiar with Alexa and Siri.
You can use these virtual assistants to search the web, play music, and even control your home devices. They use conversational AI technology to understand and process each request.
SaaS AssistantsMany SaaS providers are also integrating virtual assistants into their systems. For example, Salesforce's Einstein AI can answer any question your customers have, analyze data, and even generate reports in seconds.
Before, when you needed information, such as the status of a project, you'd have to scan the entire CRM platform to look for it. Now, you can simply ask the AI virtual assistant. HubSpot's AI capabilities are also making waves in the industry.
AI ChatbotsMany businesses use chatbots to improve customer service and the overall customer experience. These bots are trained on company data, policy documents, and terms of service.
Whenever a user asks the chatbot something, it scans the entire data set to produce appropriate answers. These chatbots use conversational AI NLP to understand what the user is looking for.
Benefits and Risks of Conversational AI SoftwareLet's look into some advantages and risks of using conversational AI:
ProsConversational AI brings many benefits to both businesses and consumers. It helps businesses save on customer service costs by automating repetitive tasks and improving overall customer service.
However, conversational AI also has risks. For starters, chatbots replace human agents, leading to job losses. Plus, they're prone to hallucinations, where they start producing incorrect or fictional responses.
That said, it's worth noting that as the technology develops over time, this is expected to improve.
What is the Future of Conversational AI?The conversational AI market is expected to grow to $39.55 billion by 2030 from $8.45 billion in 2022. There's no doubt that it's evolving at a rapid rate, and we may soon see new innovations.
For example, researchers are working to improve the emotional quotient of these AI models. In the future, conversational AI will be able to interpret human emotions and have deep psychological conversations.
Currently, conversational AI is limited to text and voice inputs. However, these models may soon be able to interpret hand gestures and images as well.
You may be able to operate conversational AI models using just your hand. Let that sink in.
Businesses are also moving towards building a multi-bot experience to improve customer service. For example, e-commerce platforms may roll out bots that exclusively handle returns while others handle refunds.
Final ThoughtsConversational AI tech allows machines to converse with humans, understanding text and voice inputs through NLP and processing the information to produce engaging outputs.
These models are trained through machine learning using a large amount of historical data. Chatbots and virtual assistants are the two most prominent examples of conversational AI.
As technology develops over time, experts believe conversational AI will be able to host emotional interactions with humans and even understand hand gestures.
FAQsWhat is the objective of conversational AI?
Conversational AI aims to understand human language using techniques such as Machine Learning and Natural Language Processing and then produce the desired output. Virtual assistance and AI chatbots are classic examples of conversational AI.
What is an example of conversational AI?
Virtual assistants such as Siri and Alexa are popular examples of conversational AI. You can use these assistants to search for anything on the web and even control smart devices. Similarly, ChatGPT is a well-known example of what conversational AI is capable of.
Why use conversational AI?
Conversational AI brings the benefits of cost-efficiency for businesses. They help handle redundant tasks, allowing better resource allocations. Customers also benefit from better service through AI chatbots and virtual assistants like Alexa and Siri.
Is ChatGPT a conversational AI?
Yes, ChatGPT is a conversational AI. It uses Machine Learning and Natural Language Processing to understand the input given to it. It can engage in real-like human conversations and even search for information from the web.
How accurate is conversational AI?
The accuracy of conversational AI depends on the data it was trained on. The bigger the dataset, the more accurate the AI will be. Plus, the data needs to be diverse and inclusive to reduce AI biases. Although AI models are also prone to hallucinations, companies are working on fixing these issues.
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