The Evolution of Chatbots and the Rise of Conversational AI

Get to grips with the evolution of conversational AI, and uncover where the space is heading

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The Evolution of Chatbots and the Rise of Conversational AI
Contact CentreInsights

Published: November 25, 2022

Rebekah Carter

Ask anyone to consider what comes to mind when they think about “AI”, and “chatbot” is likely to be high on the list.

Emerging as one of the most hotly debated forms of CX automation, chatbots are changing customer service and support. Indeed, 67% of decision makers now say their companies use chatbots, compared to only 23% in 2018.

Chatbots are also often the first concept that springs to mind when discussing “conversational AI” – the ability of machines to interact with human beings. However, the first bot models to emerge on the market failed to demonstrate the full potential of conversational AI.

Fortunately, the technology has come a long way, and the evolution of machine learning (ML), natural language understanding (NLU), and natural language processing (NLP), has begun to pave the way for a new generation of powerful customer support tools.

The Birth of Conversational AI: First Gen Chatbots

When chatbots first entered the CX space, many were advertised as a powerful, AI-driven solution for customer service. However, the reality was many of these basic tools only contained small amounts of AI. They relied on simplistic NLP models to uncover customer intent, then churn out scripted answers in response to recognisable keywords.

Unfortunately, the result was little more than a fancy FAQ engine which failed to capture the hearts of users and consumers alike. In fact, 54% of US online consumers surveyed by Forrester said they believed interacting with a chatbot “negatively impacted their quality of life.”

Yet, even when upgraded chatbot solutions began to emerge, many businesses still steered clear. Why? Because their sophisticated models required teams of designers and developers, computational linguistic specialists, and experts in knowledge management.

The expense of creating a custom chatbot, combined with the negative perception among consumers of these tools prompted many companies to explore alternative routes.

The Rise of a New Age of Chatbots

As the marketplace continued to evolve, and consumers began to demand more convenient, personalised, and meaningful experiences from companies, investment in new strategies for strengthening the potential of chatbots increased. Advancements in NLP, NLU, ML, and robotic process automation (RPA) brought new capabilities to the chatbot landscape. Basic FAQ-style bots transformed into emotionally driven, intuitive tools.

Today’s chatbots have grown more intelligent, and more capable of achieving a wide range of tasks on the behalf of consumers. These tools – paired with a health flow of data – can essentially “think” for themselves, to autonomously resolve requests, sustain employee productivity, and enhance the experiences of customers with creative solutions to problems.

Even better, the rapid acceleration of the digital and technology landscapes has made intelligent chatbots easier to access. No-code and low-code tools now allow businesses to build their own conversational intelligence systems without the help of programming specialists. Virtually every business can welcome its own smart bot into the workplace.

In addition, one of the biggest developments has been in the democratisation of conversational AI – ie in addition to the low-code/no-code tools, the cost of the technology is also now much more affordable. What was once available to large enterprises in terms of cost profile and the skillset needed is now becoming more mainstream and mass-market.

Stuart Dorman, Chief Innovation Officer at Sabio, said: “Substantial advances in the use of machine learning have led to developments in conversational AI which underpin intelligent chatbots. Looking forward, we expect this to develop further through Foundational AI models touted for broader commercial use. Although those models are in the early stages of development, we expect them to drive the next wave of innovation in the conversational AI landscape.”

What Can Chatbots Do Today?

The highly scripted and restricted robotic chatbots introduced at the beginning of the CX revolution often proved unable to effectively predict user intent or engage in meaningful dialogue. This meant most conversations between machines and humans were frustrating, impersonal, and exhausting affairs.

However, bringing more advanced AI concepts into the chatbot landscape has solved a number of these problems. Today’s bots can do a lot more than simply regurgitate FAQ responses to customers on a website browser. They can respond to natural human voice, detect emotion, and sentiment in a client’s tone, and kickstart automated workflows, without human input.

Empowered with next-generation AI solutions, chatbots can serve a range of use cases, such as:

  • Offering personal recommendations: Chatbot tools can integrate with existing CRM systems and other services to track behavioural information about customers, and offer personalised suggestions on which products to buy, or how to solve certain issues. They can also leverage machine learning capabilities to gradually improve these recommendations, adjusting their service to suit different consumer segments.
  • Automated task completion: AI chatbots with RPA (Robotic Process Automation) technology can use automated workflows to complete various tasks on the behalf of employees and customers. This could include filling out forms, checking in with customers after a purchase, or even making changes to a subscription or profile.
  • Sentiment analysis: Through a combination of NLP, computational linguistics and ML tools, chatbots have developed a deeper understanding of human emotion. They can detect how a customer feels at particular points of the customer journey and use this information to determine next-best-steps for service.
  • Language Translation: Chatbots can also recognise when they might not have the capacity to serve a customer or solve a problem on their own. When this is the case, they automatically escalate a conversation to the right member of staff across any channel, passing on a conversation transcript to provide contact centre agents with context.
  • Omnichannel interactions: Chatbots aren’t just a tool for website messaging and social media conversations anymore. Today’s businesses can build “virtual assistants” designed with the same technology as chatbots, capable of responding to spoken human language. This leads to new opportunities when creating intelligent IVR systems.
  • Auto Summarisation: Call wrap-up time can now be reduced significantly thanks to AI-powered chatbots now having the ability to capture and sum-up notes from calls and other interactions. This will save an Advisor time in wrapping up a call or interaction, enabling them to focus instead on other value-added tasks.

Finally, chatbots can effectively capture information from discussions throughout the customer journey and use it to optimise CRM data, drive better business decisions, and train future employees.

Stuart adds: “We are now nearing the point where AI technology is so good that it will be impossible for a human to distinguish if they’re having a conversation with a bot or another living breathing human being. The completion of the Turing test just got one step – or a few steps – closer…”

The New Age of Conversational AI is Here – But It’s Potential Will Continue to Evolve Rapidly

While the first-gen chatbot might have been our initial introduction to the potential of conversational AI, it only scratched the surface of what was possible.

The more intelligent chatbots become, the more they’re proving themselves to be valuable tools in managing critical stages of the customer journey. Indeed, today’s companies are more actively looking to AI to open new avenues for revenue and higher customer satisfaction scores.

What’s more, both employees and customers alike are becoming increasingly comfortable with the idea of interacting with bots on a regular basis.

As time passes, bots will likely become the face of customer service, greeting customers on all voice, digital, and perhaps even the metaverse.

There, they will solve their problems right away, or seamlessly escalate issues to customers that are of an especially complex or emotive nature. That is likely the future of the contact centre.

Stuart adds: “AI’s ongoing evolution is fascinating. We are a long way from the beginning of the AI revolution, but equally, we’ve still a long way to go. Despite that, organisations should be starting to build processes around AI just now. My advice would be to test and learn, build up skillsets and a culture required internally to be able to embrace AI both today and as it continues to evolve.

“AI is incredibly capable today. Its utility has improved since this time last year and this time next year it will be better than today. But most organisations aren’t getting anywhere near these capabilities which is why now is the time to be had in using and preparing for this technology.”

Discover more about how to add conversational AI to your contact centre by visiting Sabio.



ChatbotsConversational AIGenerative AIInteractive Voice Response

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