Chat and conversational AI are terms often used interchangeably, but there are key differences. 

For example, if you have used the chat function on a website to obtain more information about store hours or directions, you have interacted with a chatbot. If you have asked for more complex help from Google, Siri, Alexa or others, you have interacted with conversational artificial intelligence.

Both forms of chatbot can provide 24/7/365 support and some can be integrated as part of an omnichannel marketing strategy across all your social media and website.

Let's look at the similarities and differences between chatbots and conversational AI and how the technology can help your business. 

What Is a Chatbot?

A chatbot is a computer program that is designed to replicate human conversation. Whether it is based on decision trees (If yes, then…) or uses technology such as natural language processing (NLP) the goal is to simulate human interactions. 

Rule-based chatbots can be very simple (such as press 1 for directions, press 2 for store hours) or they can be programmed with complex rules. If you have used a search bar on a website to filter to a specific category of clothing, you are familiar with rule-based coding.

While rule-based chatbots can provide great support and information, they cannot answer any inquiries that fall outside the rules. (They could navigate to toddler boys’ clothing, short sleeve t-shirts, but wouldn’t be able to answer whether the top has a sewn-in or printed tag.)

That’s where conversational AI can have an advantage.

What Is Conversational AI?

Conversational AI takes chatbot technology to the next level to provide a more realistic human interaction. All conversational AI are chatbots, but not all chatbots use conversational AI. 

The conversational AI chatbot can better understand human language, syntax and semantics, and mimics more closely how people converse. It can interpret both the meaning and intention of a word or inquiry, combined with a hierarchy of data responses. 

Conversational AI uses machine learning (ML) which has the ability to “learn” from previous interactions, store the information and provide more robust or accurate answers.

For example, if a person is searching for makeup brushes, a machine-learning chatbot will remember previous interactions and ask if the customer is interested in natural or manmade fibers, and then return only those results. In future inquiries, those results would include the most popular purchases from previous inquiries for the same thing.

Chatbot or Conversational AI

While both forms of chatbot provide support and value, do you need conversational AI for your business? Here’s a comparison:

Chatbots

• Tend to be less expensive and faster to implement
• Flow of conversation is guided by rules, (if, then) and “guardrails” 
• Perfect for routine tasks and inquiries 
• Cannot provide information that is outside rules 
• Must be manually updated if information changes

Conversational AI

• More expensive, longer integration
• Can handle more complex situations
• Can detect and interpret intention 
• Learns and evolves, stores data for future interactions
• Can be scaled

E-commerce and Conversational AI

One advantage of conversational AI in e-commerce is the ability to personalize the shopping experience. There are many routine inquiries and tasks that can be handled by chatbots, such as store hours, buy now, re-order, subscription management, abandoned carts and requests for an agent. 

However, AI chatbots can crawl your databases, and customize interactions based on the customer. One of the biggest advantages of conversational AI is that it continuously stores information from transactions to “learn” and improve. 

AI chatbots can access purchase and search history metrics, provide complementary product suggestions or upsells and transfer seamlessly to a live agent, preserving all prior communications. 

This results in more accurate, robust responses, and greater customer satisfaction as the bot learns from previous interactions. 

The other big advantage, of course, is that AI allows you to enter into a conversation with your customers, rather than simply providing information. This allows for personalization, proactive recommendations and a more positive and memorable experience.

How Can Chatbots Help Your Business?

Whether you invest in rule-based chatbots or conversational AI, there are a number of ways the technology can assist your business.

1. Personalization: Chatbots can quickly review previous purchasing history and search results of customers to provide comprehensive suggestions based on an aggregate of purchases. That can result in a 67 % increase in sales. 
   
   
2. Omnichannel communications: Customers expect the same experience online as in-person, and conversational AI makes that seamless. For more, see: Why Messaging Channels Are Crucial to Your Omnichannel Marketing
   
   
3. Customer service: A study by Zendesk found 68% of customer service agents reported feeling overwhelmed. IBM reported that 52% of customers hang up on a customer service call before they get their issue resolved. The same study found that chatbots can handle 80% of routine inquiries with 90% customer satisfaction, which frees up your live agent’s time for more complex matters.MIT Technology Review reported 90% of respondents reported a noticeable improvement in the speed of customer complaint resolution.

Chatbots can provide a number of positive benefits to your organization. Chatbots enabled with machine learning that create conversational AI can increase those benefits by providing excellent experiences for your customers.