What is Conversational AI? Definition, Benefits and Examples

Does something that’s cost-effective, scalable and can increase customer satisfaction sound preferable? It does to us. And conversational AI has the power to do all of this, and more.

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Put yourself in your customers’ shoes: if you had an issue and needed it resolved as quickly as possible, how would you do it? By phone, where there’s a good chance you’ll be left waiting on hold or put through to several departments over the course of the call? Or would you prefer something streamlined, stress-free and near-instantaneous?

The same goes for you as a business. Does something that’s cost-effective, scalable and can increase customer satisfaction sound preferable? It does to us. And conversational AI has the power to do all of this, and more.

In this article, we’ll define conversational AI in more detail, let you in on how it works, detail its advantages, and show you some examples of conversational AI in practice to see how your business can benefit from it.

What is Conversational AI?

Conversational AI refers to the set of technologies, such as chatbots and virtual assistants, that replicate human-like conversations on websites, online stores and social media channels.

To do this, conversational AI uses vast amounts of data, machine learning and natural language processing to recognise language and communication, identify the intent behind them, and respond with relevant information.

Talking with a machine might seem strange at first, but it allows for speedier answers and resolutions, while giving brands greater insights into customer behaviours. And the more insights a business has, the more it can enhance the customer experience at every one of its touchpoints.

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How does conversational AI work?

There are two functions that are primarily at play with conversational AI. The first of these, machine learning, collects information from its own interactions. The more it does this, the more it’s able to “learn” and improve on its own performance over time.

So, if you’ve been using a machine learning system for a few months, then it’s likely to perform better than it did when you first added it to your page.

Conversational AI’s second function is natural language processing (NLP). This process is what allows the AI to understand words and phrases. Once it can recognise these, it then uses natural language generation to chat with your customers.

For example, let’s say a customer messages you about when they can expect their order to arrive. Natural language generation will look at previous instances of answering similar questions regarding shipping. Since it understands phrases and words used in this context, it can then provide your customers with natural, human-like responses in a satisfactory way.

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What are the benefits of conversational AI?

For customers:

Quick responses

Probably the most notable benefit for customers is the sheer speed of the responses they can get from conversational AI. A chatbot or voicebot can provide an answer to a customer’s query in very little time. And AI that’s well versed with accurate information means quick customer resolutions again and again.

Personalised interactions

Conversing with a machine might sound impersonal, but the opposite is very much true. When integrated with CRMs, conversational AI creates a customer profile based on relevant customer information. This info adds both context and a personal touch that won’t go unappreciated by your customers.

Reduce wait and hold times

Of course, one of the most frustrating things about over-the-phone customer service is being kept on hold. Because of speedy reply times, conversational AI drastically reduces hold and wait times.

And should the issue need to be escalated to an actual human, then your conversational AI will instantly put your customers through to the right department.


With conversational AI, you’re essentially providing your followers with round-the-clock customer service, anyplace and anytime. If someone needs help when your physical staff have downed tools for the day, then a chatbot can easily swoop in, even if it’s silly o’clock.

Handily, they don’t have to deal with language barriers either; most conversational AI tech features language translation software of some kind. And a customer is more like to come back for more when they know they’re catered to linguistically.


For businesses:


Depending on the size of your business, you could receive thousands of queries every single day. If you rely on agents alone to respond to these customers in a timely manner, then they may struggle to put a dent in such a number.

Conversational AI can help companies scale their support function by responding to all customers. And like we said, virtual assistants are available around the clock and on multiple channels, so they can deal with issues when your agents are unavailable. 

Reduced costs

Customer support can be pricey, especially if you require 24/7 assistance in a variety of languages that involves hiring and onboarding new employees. Conversational AI takes the strain off operational costs by resolving queries and leaving agents with less to deal with – at no extra cost to boot.

Customer insights

The right conversational AI platform can capture key details on your customers, creating insights which you can use to better understand their behaviour and optimise the customer experience. And in the long run, that means more satisfied customers who’ll return time and time again.

More efficient agents

With conversational AI taking care of the grunt work, your agents are free to be more efficient and productive in the absence of repetitive tasks. Instead of focusing on simple tasks like checking account balances, they can take on more complex cases that require their full attention.

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Uses of conversational AI

You’ve probably had an AI chatbot pop up while browsing your favourite websites. And even if you’ve never used them yourself, they can provide users with all sorts of essential customer services, including:

Scheduling appointments

Chatbots can be linked to an organisation’s calendar, providing the customer with info on available staff and time slots. This handy feature makes booking appointments without the need to contact front desks a breeze.

Booking tickets

Digital ordering is becoming increasingly popular on social channels like Facebook and Instagram. Rather than speaking to the page owner, customers can now place orders through a chatbot, which will also process the order and payment as well.

Order tracking

Need to know where your order is at? Chatbots can provide you with the package’s current location, expected time of delivery, or delays it may be facing. They can even ask you for feedback to improve customer service too.

Refund processing

By identifying the user and the purchase, chatbots can process the customer’s purchase return requests, answer queries regarding refund policies and provide up-to-date info on how a customer’s refund is progressing.

Process membership requests

Chatbots can also help customers apply for, renew and cancel their memberships. They’ll also provide information about terms and conditions of service, free trials, fees, and payment methods.

User onboarding

If a customer is unfamiliar with your site, product or service, then a chatbot will be able to guide the user through the process of opening an account, signing in for the first time, and setting up the product itself.

Cross selling

Armed with insights and information about the customer’s previous purchases, chatbots can even recommend additional products that they may be interested in. This can then provide your company with a little extra revenue in the process.

Looking for customer service that really speaks to your contacts? Gnatta makes interactions matter, delivering quality exchanges and quicker responses that meet your customers’ expectations. Find out how we can help here or to try out your free trial, click here

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