Chatbot vs. Conversational AI: Differences and Examples

Chatbots and conversational AI are both used in customer service. They answer customer questions and provide around-the-clock-service. While these tools are alike in some ways, they’re not the same — but they’re both critical to customer experience with self-service.

Our research finds that 61% of customers would rather use self-service for simple issues. However, there’s little room for error: 72% of customers won’t reuse a company’s chatbot after just one negative experience. Customers also expect a more personal touch when they used to — no matter how they get service.

Here, we explore chatbot vs. conversational AI, how the technologies compare and differ, common uses and what to consider when using them in your own customer service processes.

• What is a chatbot?
• What is conversational AI?
• Examples of chatbots vs. conversational AI for customer service
• Comparing chatbots vs. conversational AI for customer service
• How to choose a chatbot vs. conversational AI solution
• Get started

A chatbot is a computer program that interacts with people in a way designed to mimic human dialogue. Often a chatbot appears as a dialogue box that pops up at the bottom of a website with a persona, prompting you to answer a question, such as: “What can I help you with?”

Chatbots are a popular customer self-service option that help consumers get an answer to simple questions fast. At its most basic level, a chatbot uses rules-based programming to give a customer the best answer or resource for their query based on the keywords used.

When a customer types their question into the dialogue box, the programme can scan a knowledge base of potential responses to identify the best match. You can set that knowledge base up to include any useful resources you've created, such as answers to frequently asked questions, knowledge base articles and tutorial videos. The chatbot then serves up the most relevant answer it finds.

Conversational AI is a technology that uses natural language processing and machine learning to help software programs understand and interpret conversational text and provide conversational responses. Conversational AI can respond to both voice and text inputs and can be incorporated into chatbots, AI agents and voice assistants (such as Siri and Alexa).

Conversational AI is more advanced than a rules-based chatbot. It's better at recognising the fuller context of what a person is saying, which can lead to more accurate responses. Bonus: it’s also significantly easier to set up.

Not all chatbots use conversational AI and the use cases for the technology expand beyond chatbots. However, the two concepts are often linked for good reason. A chatbot that has conversational AI functionality can go beyond providing pre-written responses and links. It can pull from your existing content to craft a personalised response that sounds more human.

Both chatbots and conversational AI can be powerful customer service tools. To give you an idea of how that looks in practice, here are some examples of possible use cases:

Customer service chatbot examples

Businesses can use customer service chatbots to handle many common customer needs, such as:

• Pointing visitors toward the best page or resource: A customer can ask a chatbot for help identifying an allergy-friendly dog food for their dog on a pet store’s website. The chatbot can provide links to matching product pages and/or a blog article about the best offerings to consider.
• Answer simple questions: A customer wants to know if the pet store can handle their cat's prescriptions. The chatbot can find the pertinent answer on the FAQs page and provide it right in the chat.
• Provide order updates: A customer is eager to get a new toy in time for their dog’s birthday and wants to know the order status. A chatbot can be programmed to pull up specific order details and provide tracking information.
• Connect customers to a human agent. A loyal customer received the wrong type of cat food and needs a replacement straightaway. The chatbot can identify that this is an issue that requires a human and automatically route the customer to a service representative.

Conversational AI customer service examples

There's a lot of overlap in the use cases for chatbots and conversational AI in customer service (more on that below). But conversational AI has a couple of notable uses beyond chatbots:

• Place orders via phone or voice assistants: A restaurant could use conversational AI to allow customers to place delivery orders over the phone or through their voice assistant without human interaction.
• Provide support over voice channels: The restaurant could program the AI to provide recommendations, answer simple questions or check on the status of a customer's order — all based on voice inputs — without needing to connect to a staff member.
• Connect customers to a human agent: If a customer calls in with a high-stakes question about food allergies, a conversational AI tool can recognise the question requires human assistance and can transfer the call to a staff member.

Examples of using a chatbot with conversational AI:

For businesses, the question isn't really how to decide between chatbot vs. conversational AI tools; it's whether you want to use a chatbot that offers conversational AI features. A chatbot with conversational AI functionality can do everything a typical chatbot can do and then some:

• Answer more types of customer questions: Chatbots with conversational AI capability aren't limited to providing answers that already exist in a database. If the customer of a bank with an AI-powered chatbot wants help comparing two checking account options, the chatbot can pull information from multiple resources to provide a useful answer, even if there's not a specific article comparing those options.
• Provide fast, personalised suggestions: An autonomous agent can tailor its responses to the specific inputs a customer provides. If a customer lists out their top priorities for business banking, the chatbot can suggest personalised products or services that best meet those needs.
• Connect customers to a human agent when required: This point sounds familiar for good reason. Perhaps the most important chatbot best practice is making sure that customers can be easily routed to a human when needed. They always have a frictionless experience. A chatbot with conversational AI functionality should be able to handle more issues on its own, but it still needs a way to hand complex customer enquiries over to human support staff.

Choosing the right customer service technology can improve the customer experience and make your staff' work easier. To help you to decide which technology will work best for you, here's how they compare:

Benefits of chatbots in customer service

Even without AI functionality, basic chatbots have a lot to offer a customer service team, including:

• They have wide consumer adoption: Our research finds that 55% of customers reported having used a self-service chatbot. For basic questions, many customers are happy using a chatbot to find the answers on their own.
• Customers can get a fast answer any time of day: By answering simple questions in real time, chatbots can get customers the information they need fast. Customers don't have to worry about long hold times or waiting until business hours to get an email response or callback from an agent.
• They reduce the workload on human agents: When customers can help themselves without needing a service agent to step in, it reduces your customer service team's workload. That frees up time to handle the more complex service issues and build stronger customer relationships. .
• They're an affordable option: For businesses with a limited budget, implementing a rules-based chatbot is likely to be more affordable than one that offers AI features. If your needs are on the simpler side, a basic chatbot may offer the functionality you need at a lower cost.

Benefits of conversational Al in customer service

Considering broader conversational AI options — not just chatbots — can offer some unique benefits as well:

• You can expand AI capability across all channels: In fact, 71% of customers said they prefer using different channels depending on the context. Conversational AI lets you enjoy the benefit of time-saving customer service automation across multiple channels.
• It improves accessibility for customers with disabilities. Voice channels are a good choice for those with vision impairments, while text-based channels may be an easier option for anyone with hearing loss. Conversational AI lets you improve support across both groups.

Benefits of chatbots with conversational AI

AI chatbots offer most of the benefits of basic chatbots, with some additional advantages:

• They answer a wider range of questions: AI chatbots can compose personalised , relevant answers based on the user's intent, rather than being limited to the pre-defined rules and responses in a database.
• They offer better personalisation options: AI chatbots can customise each response based on the input based on customer data from your CRM.
• They can offer multilingual support: Hiring customer service agents fluent in every language your customers speak is a difficult (if not impossible) goal. Chatbots can use AI to do the translation work for you, creating a better experience for customers more comfortable with a different language than your customer service team speaks.
• They learn from every interaction: AI chatbots that have machine learning technology use the data from every interaction to improve future responses and create better support experiences.
• They provide useful data and analytics: AI chatbots can automatically record customer data from every interaction and some will integrate with your customer relationship management. Basic chatbots will collect some data, but AI features can increase the amount and quality of the analytics you gain.

The right customer service technology will depend on your particular needs. If most customer service enquiries you encounter are simple, a basic chatbot tool may work well enough. If your team regularly handles more complex issues and questions, a customer service chatbot with conversational AI functionality will serve you well.

Look for for a solution that:

• Is easy to set up and customise to your needs
• Offers multilingual support
• Can be used on the channels your customers prefer (your website, SMS, WhatsApp etc.)
• Integrates seamlessly with the rest of your customer service tech stack

The right customer service chatbot or conversational AI software can simplify your team's workflows, reduce their workload and help you to improve customer satisfaction at the same time. It's all a matter of deciding what type of offering meets your company’s customer service goals and budget.