previous icon Back to blog
Apr 25, 2022
4 minutes read

The Differences Between Chatbots and Conversational AI

Although chatbots and conversational AI are sometimes used interchangeably, they aren’t the same thing. Today we’ll review the difference between chatbots and conversational AI and which option is better for your business.

Josh Intagliata
Josh Intagliata,
Product Marketing Manager

What Is a Chatbot?

A chatbot is software that automates conversations and communicates via voice or text. Chatbots can quickly respond to customer queries and streamline your customer service workflow using predefined rules or artificial intelligence. 

Chatbots fall into two main categories: rule-based chatbots and AI chatbots.

Rule-Based Chatbots

Sometimes known as menu-based or basic chatbots, rule-based chatbots are typically what people mean when they talk about chatbots. They communicate using a set of predefined responses based on keywords and other language identifiers from the customer. In some cases, rule-based chatbots display a decision tree so users can select answers based on their situation.

Because these chatbots are oriented around pre-selected questions and responses, they are relatively easy to implement. Although rule-based chatbots seem fairly simplistic, they are an excellent tool for answering commonly asked questions and resolving basic customer issues. However, they will not be able to have a real conversation with a human being.

AI Chatbots

AI chatbots use advanced technology such as machine learning, natural language processing (NLP) and natural language understanding (NLU) to understand the context of a user request. By leveraging the power of AI technology to analyze thousands of points of contextual data in customer conversations, AI chatbots offer improved understanding and decision-making abilities.

Rather than being limited to preset rules, AI chatbots are constantly learning from each conversation with a customer. The more exchanges an AI chatbot has, the more helpful its responses will be as time goes on. An integral part of an AI chatbot is its ability to understand natural human language, which allows it to communicate beyond predefined questions and responses.

What is Conversational AI?

Conversational AI is a type of chatbot that combines artificial intelligence with other emerging technologies like machine learning, natural language processing, process workflows, and speech recognition, providing a personalized customer service experience. Thanks to its versatility and cost-efficiency, global spending by retailers on AI services like conversational AI will reach $12 billion by 2023.

Conversational AI extends beyond the basic chatbot capabilities and sets a new standard for the customer experience. By using deep learning technology, conversational AI tools can continuously learn and improve, making them more adaptable to the unique needs of any growing business.

Conversational AI typically uses a combination of tools, including:

  • An automatic speech recognizer (ASR)
  • A spoken language understanding module (SLU)
  • A dialog manager (DM)
  • A natural language generator (NLG)
  • A text-to-speech (TTS) synthesizer

Together, these tools use information from a centralized database that contains all the knowledge that conversational AI has gained in every customer interaction. As a result, conversational AI can deliver a dynamic, context-based experience personalized to the customer by constantly growing its knowledge base and language understanding.

Chatbot vs. Conversational AI: A Comparison

Chatbots

  • 24/7 Availability
  • Text Commands, Inputs, and Outputs
  • Keyword Focus
  • Fast Deployment

Conversational AI

  • 24/7 Availability
  • Text Commands, Inputs, and Outputs
  • Machine Learning
  • Natural Language Processing
  • Algorithm Training
  • Easy Scaling

Chatbot or Conversational AI: Which is Better For Your Business?

Recent research shows that 52 percent of companies in the United States have accelerated their AI adoption plans in response to the COVID-19 pandemic. Although any automated messaging technology can offer a massive boost to your business’s customer service, the difference between a chatbot and conversational AI might affect your decision.

Because chatbots only need a set of predefined queries and responses, they can be set up and deployed very quickly. As a result, basic chatbots are often ideal for small- to medium-sized businesses (SMBs) because they don’t need to handle a lot of data or respond to complex customer inquiries.

Go Beyond Chatbots With CM.com’s Conversational AI

Chatbots are just the beginning of what technology can achieve in customer service. Thanks to the latest advances in artificial intelligence, conversational AI has proved to be a powerful tool for communicating with customers. If you want to know how conversational AI can work with your business, CM.com can help.

Our Conversational AI Cloud can help you create your own exchanges in our user-friendly interface. In addition, our platform enables continuous learning and improvement for an ever-improving customer experience, from easy-to-build conversational bots to AI-powered analysis.

To learn more about improving your customer service with AI, contact an expert today.

Get Started with Conversational AI Today!

Was this article interesting?
Share it!
Josh Intagliata
Josh Intagliata,
Product Marketing Manager
logo linkedin icon

A marketing technology expert, passionate about driving business growth through strategic product marketing. With expertise in digital product marketing, and go-to-market strategy, he boasts a track record of success in driving product adoption and revenue growth.

Latest Articles

engage-platform-effect-customer-service
May 09, 2024 • CM.com

Happy clients, happy agents: the platform effect in customer service

As a member of the customer service team, you stand on the frontline of customer interaction every day. In a world where customers demand quick and personalized service, long wait times, impersonal responses, or worse, incorrect answers, can quickly drive a customer away. Your goal, however, is to connect customers with your organization and deliver the best answers and service possible.

Education Technology
Apr 03, 2024 • Conversational AI

How to use AI to improve customer service

Meeting customers' expectations remains the biggest challenge in service. Speed, convenience, and accurate responses are critical to achieving this. With the power of AI, customer questions can be identified, categorised, and resolved more quickly. Plus, your organisation is continuously fed with data to improve the entire customer journey.

Acquisition and retention in marketing engage platform
Oct 26, 2023 • Conversational AI

Decoding the Struggles of Acquisition and Retention

They say percentages don't matter in life, but in marketing, they are everything. The customer journey, from acquisition to retention, is filled with potential incremental drop-offs at every touchpoint. A confusing experience here, an ill-timed communication there, and your conversion rate is suddenly plummeting.

Conversational AI Cloud web conversations blog woman chatting chatbot
Oct 18, 2023 • Chatbots

6 Steps for MSP Profitability with AI Chatbots

As the Managed Service Provider (MSP) landscape continues to evolve, staying ahead means embracing innovative solutions that not only enhance efficiency but also elevate customer service to new heights. Enter AI Chatbots from CM.com – a game-changing tool that can revolutionize how MSPs interact with clients. In this blog, we’ll provide you with a comprehensive roadmap consisting of six steps to boost profitability using AI Chatbots from CM.com.

customer service team
Jul 07, 2023 • Customer Experience

The Future of Customer Service Starts with Multidisciplinary Teams

86% of consumers say good customer service can take them from first-time buyers to brand advocates. While excellent customer service is an essential focus of any successful brand, forward-thinking companies are forming customer-focused multidisciplinary teams to help create exceptional customer experiences.

Generative AI chatGPT blog about new updates
Jun 30, 2023 • Conversational AI

CM.com's next steps into Generative AI: upcoming releases for 2023

The market for generative AI has experienced significant growth, with over $14.8 billion of venture capital invested in startups building their products on Large Language Models like OpenAI’s ChatGPT and other generative AI tools. The space is booming, evident from the high number of website domain registrations in the field every week. The key challenge for most companies is to find out what will propel their businesses moving forward.

Return form customer about chatbot and personalization
May 12, 2023 • Chatbots

Seven Chatbot use Cases to Improve Customer Experience

You’ll no doubt have encountered chatbots in your day-to-day interactions with brands, financial institutions, or retail businesses. You might not have realized it, but chatbots can take many forms. Finding one right for you involves knowing a little about their work and what they can do. To help you on the way, here are seven chatbot use cases to improve customer experience.

openai-llms-blog-image
Mar 21, 2023 • Conversational AI

Implementing Large Language Models and Generative AI, CM.com’s first features

Today CM.com has introduced a significant release for its Conversational AI Cloud and Mobile Service Cloud. In our Conversational AI Cloud, we introduced generative AI for generating conversational content and completely overhauled the way we do intent classification, further improving Conversational AI Cloud’s multi-engine NLU. Meanwhile, our teams have been working hard to introduce conversation summaries in CM.com’s Mobile Service Cloud.

CM.com ChatGPT blog logos
Feb 28, 2023 • Conversational AI

Unlock The Potential of ChatGPT and Large Language Models (LLMs)

With the advent of ChatGPT, it feels like we’re venturing into a whole new world. Everyone can ask questions and give commands to what is perceived as an “omniscient” chatbot. Within a single week, ChatGPT acquired 1 million active users. Big Tech got shaken up with Google introducing their LaMDA-based “Bard” and Bing Search incorporating GPT-4 with Bing Chat. There seems to be no limit to the enthusiasm. But what is ChatGPT? What does it mean for businesses? We discussed this with Arman van Lieshout, Product Manager at CM.com, for our Conversational AI solution.