Chatbot vs Conversational AI: Here Are the Differences

The well-known idiom tells us “talk is cheap”, but meaningful conversations can add significant value to businesses. Each interaction with a customer is an opportunity to build trust, resolve issues, and enhance loyalty.

The conversational AI market is projected to reach $45.5 billion globally by 2030, growing at a CAGR of 18%. Conversational AI isn’t just a fancier way to say “chatbot”—it offers more intuitive and effective interactions.

This article will explore everything you need to know about conversational AI, provide a step-by-step guide to creating an AI agent, and show you how this technology will impact your business.

Chatbot vs. Conversational AI

In essence, conversational AI uses advanced AI technologies to create human-like dialogs, while a chatbot is a simpler application that can either leverage conversational AI or function based on predefined rules and patterns.

Think of it like comparing a smartphone to a basic cell phone: the smartphone (conversational AI) offers advanced features, apps, and internet connectivity for a more dynamic and interactive experience, while the basic cell phone (chatbot) can handle simple tasks like calls and texts with straightforward functionality.

How Does Conversational AI Enhance Customer Experience Compared to Traditional Chatbots?

Conversational AI enhances customer experience by delivering more natural, intuitive, and efficient interactions. For example, Erica, Bank of America’s virtual assistant, uses conversational AI to provide personalized financial advice, monitor transactions, and offer spending insights. In contrast, traditional chatbots often rely on predefined scripts and struggle with complex inquiries, resulting in less engaging and helpful interactions.

‍Conversational AI agents can scale customer support automation far more effectively than traditional chatbots. Voiceflow helped Trilogy create an AI agent called Atlas Core, which integrates with Trilogy’s help center—a knowledge base. This AI agent handles 59% of support tickets, significantly reducing the workload on human agents and enhancing efficiency.

What’s Voice-Based Conversational AI?

Voice-based conversational AI can engage in natural language conversations through voice or speech interfaces, mimicking human-like language like ChatGPT-4o and Siri. It combines technologies like automatic speech recognition (ASR), natural language processing (NLP), text-to-speech (TTS), and dialog management to enable voice interactions.  

Chatbot vs. Voicebot

Both chatbots and voicebots utilize conversational AI, but they serve different purposes. Chatbots are text-based interfaces designed for messaging platforms, making them ideal for applications like customer support chats or social media interactions. In contrast, voicebots enable voice interactions and are suited for smart speakers and voice-controlled devices, providing a more hands-free and natural user experience for tasks such as setting reminders, playing music, or controlling smart home devices.

Conversational AI vs. Generative AI: 3 Key Differences

Here are four key differences between conversational AI and generative AI:

1. Purpose—while conversational AI facilitates human-like conversations for customer support and virtual assistants, generative AI creates new content, such as text, images, music, movies, or code.
2. Technology—conversational AI relies heavily on natural language processing (NLP) while generative AI focuses on using advanced neural networks like Generative Adversarial Networks (GANs), Variational Autoencoders (VAEs), and Diffusion models.
3. Applications—conversational AI apps include chatbots, voicebots, virtual assistants, and AI agents, whereas generative AI creates new content, such as DALLE

Conversational AI Examples

Conversational AI for Customer Service

Conversational AI improves customer service by handling inquiries, resolving issues, and providing personalized assistance 24/7, reducing wait times and operational costs. For example, Trilogy automated 60% of their customer support in 12 weeks!

Conversational AI in Banking and Financial Services

In banking, conversational AI can assist with tasks such as account management, transaction queries, fraud detection, and personalized financial advice. Check out how an investment bank uses Voiceflow to run more efficient conversational AI design reviews.

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Conversational AI in Healthcare

Conversational AI in healthcare can help with patient triage, appointment scheduling, medication reminders, and providing health information, streamlining processes and improving patient engagement.

Conversational AI for Sales

Conversational AI boosts sales by engaging potential customers, answering product queries, providing recommendations, and guiding users through the purchasing process.

Best Conversational AI Software Platforms

The best conversational AI platforms include Voiceflow, IBM Watson Assistant, and Amazon Lex. Here’s a head-to-head comparison summary of the top 3 conversational AI platforms:

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The Bottom Line

We explored the differences between chatbots and conversational AI and showcased how conversational AI offers more natural and effective interactions, with examples from customer service, banking, healthcare, and sales.

To develop advanced conversational AI agents, Voiceflow stands out for its ease of use, support for voice and text, and free tier availability. Start developing advanced AI conversational agents with Voiceflow today – it’s free and user-friendly!

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Frequently Asked Questions

Is a chatbot artificial intelligence?

A chatbot can be considered a form of artificial intelligence if it uses machine learning and natural language processing to understand and respond to user inputs. However, not all chatbots are AI-powered; some rely on simple predefined scripts and rules.

How to different a bot and artificial intelligence?

A bot performs automated tasks, which can be simple or complex, but does not necessarily use AI. Artificial intelligence involves learning and adapting from data, enabling more sophisticated and human-like interactions, which advanced bots may incorporate.