How Can Conversational AI Transform Customer Experience?

A picture containing person, holding, remote, indoor

Description automatically generated


Conversational AI has enormous potential to transform customer experience and change the way in which humans interact with technology. According to, voice-enabled speaker usage increased by 129% in 2017. In addition, 67% of Millennials(the all important demographic) are willing to purchase from chatbots. Customers are showing an increasing comfort with talking to machines, which presents a tremendous opportunity for conversational artificial intelligence to transform customer experience. Furthermore, Gartnerreports that, Twenty-five percent of customer service and support operations will integrate virtual customer assistant (VCA) or chatbot technology across engagement channels by 2020, up from less than two percent in 2017 (”

AI has the potential to provide human-like conversations without having to speak to a human. Moreover, because customers are becoming acclimated to talking with a machine, enterprises could provide the same quality or better customer service at a much lesser cost. These savings could then be re-allocated to innovation in other areas, leading to yet more technological advances. All of this is to say that conversational AI is more than a cool trick; rather, it is an opportunity for technological and economic advancement the likes of which we have never seen before

What is Conversational AI? 

Before diving into how AI can change customer experience, lets first define conversational AI. 

Conversational AI refers to the use of messaging apps, speech-based assistants and chatbots to automate communication and create personalized customer experiences at scale. On this page, you’ll find a deeper explanation of conversational AI as well as links to additional resources. 

What’s Fueling Conversational AI? 

A picture containing clipart

Description automatically generated


According to, “conversational AI is based on the rise of messaging apps and voice assistant platforms, both of which are increasingly being fueled by artificial intelligence. And although these have traditionally been viewed as disconnected technologies, they are converging in increasingly important ways” (  Essentially, messenger apps and voice assistants are being paired with AI to provide a human-like conversational experience.  

Some examples of these include: 
  • Facebook Messenger
  • Instagram
  • Snapchat
  • Skype
  • WeChat
  • WhatsApp

According to Georgian Partners, 75% of smartphone users use at least one messaging app, 63% of Facebook users have increased messaging with businesses over the last year (for sales and customer support reasons), and more than one billion messages are exchanged between consumers and businesses every month ( Those numbers show the scale at which people are using messaging apps and that there are clear applications for AI based messaging apps.

How Can Conversational AI Transform Customer Experience?


Good customer service leads to higher lead conversion, and better customer retentionA study by Adobefound that repeat customers are buying almost 30% more items per order than first-time shoppers.The important takeaway from this study is that customer retention is important and loyal customers are far more profitable than first-time customers. Customers have questions when they are looking to make a purchase, and the companies that provide the best (and fastest) answers to these questions, have the best chance of turning people into customers (or at least retainingexisting customers). Therefore, customer support is a very important part of customer retention. 

The best strategy for offering fast customer support is conversational artificial intelligence.Many companies try to solve this problem by investing in more people to answer phone calls and emails. However, according to, “by the time a customer calls or emails you with a question, you’ve probably missed your chance at being the best.” Consumers are increasingly impatient, value convenience (especially Millennials) and have technology available at their fingertips. In fact, softwareadvice.comreports that 47% of consumers always search for an answer online before calling a company. 

AI-based chatbots can aid in customer retention by providing speedy, personalized customer service in a way that is intuitive for humans to understand – conversation. Chatbots are a method of deploying conversational AI and are becoming an increasingly common customer support channel. Companies that offer this kind of customer support will be able to provide timely answers to customer questions and are always available. In addition, chatbots eliminate the need of hiring more customer support representatives or sales representatives. 

In addition, technologyadvice.comreported that “82.4% of customers said that they are more likely to shop at stores that offers some type of rewards program.” Chatbots are the perfect method for deploying a rewards program, as they can be used to remind customers of when they have earned an incentive, offer a discount due to past loyalty, or upsell the customer. 


As previously mentioned, conversational AI will be able to provide personalized communication for customer support and sales purposes. However, there will be other areas in which personalization will be applied. For example, marketing messages will be hyper-targeted, chatbots will be able to send personalized communication based on past purchase history, and more.

Constant Availability 

Keeping up with the Self-service predictions, conversational AI methods make it possible for customers to obtain answers to their questions 24/7 and eliminates the need to wait for the “next available representative.” Consumers are impatient and expect near immediate (if not immediate) assistance. Conversational AI will reduce friction in that area of the customer experience.  

Reducing Friction In The Buyer’s Journey 

Chatbots will allow consumers to be able to ask questions in the way that they would ask a sales representative. That is, the chatbots will be able to upsell customers, make personalized offers and collect consumers’ contact information for marketing purposes. 

Automated Life Assistance

Most people use a voice assistants like Alexa or Google Home, but businesses have started to integrate with voice assistants in order to make customers’ lives easier. For example, banks allow customers to use voice assistants to schedule transfers and bill-pay. Consumers enjoy the convenience and intuitiveness of using voice assistants. Voice assistants will improve their understanding of language over time, which will further incentivize consumers to use voice assistants. For example, consumers can order bread while cooking and their voice assistants will be able to find the cheapest bread possible.  

Social Listening 

Conversational AI presents the opportunity to collect data by listening to customers. Specifically, conversational AI can be used to enhance customers surveys and generally solicit better feedback from consumers. For example, customers surveys often include open-ended questions such as ‘tell us more,’ but the reality is that customers are unlikely to give meaningful feedback when asked an open-ended question. However, with advances in conversational AI, chatbots can ask customers intelligent, targeted questions, with relevant follow-up questions to probe consumers into giving deeper, contextual answers. 


Blockchain will allow consumers to securelyprocess sensitive information while using chatbots. For example, consumers can ask a chatbot a question about a product, receive an answer to that question, and then purchase that product all without leaving the chat box. 

 The Technology Behind Conversational AI

Many of the predictions that have been mentioned so far are assuming that there will be advances in AI in the years to come. One way in which AI works is through Natural Language Processing (NLP). defines NLP as “a type of artificial intelligence technology that aims to interpret, to recognize, and understand user request in the form of free language” ( Some examples of technology that use NLP would be Google Home, Alexa, Siri, or any intelligent messenger bot. Essentially, NLP technology is a series of algorithms that are programmed to recognize language and respond accordingly.  

When people think of this kind of AI, they tend to think about a futuristic chatbot that is able to have an in-depth conversation with a human. However, according to, the reality is that NLP technologies are still in the early stage and the average precision rate is around 60-70%. The precision rate will need to be considerably higher in order for some of the predictions listed above to really become a reality.

The main difficulty is that the algorithms that power these AI-based technologies need to ingest data before making sense of it. For example, Siri needed to hear the phrase “Siri, find the nearest parking lot,” many times before understanding what that meant and how to respond. AI algorithms may need to ingest data hundreds of thousands to millions of times to understand more complex topics. 

The above description of NLP barely scratches the surface of AI. There is much more that goes into making an NLP based chatbot, for example. Keep an eye out for our next blog post where we will go into more detail about the technology that drives conversational AI, how that technology is the driving force behind changes in customer experience, and how Interactions’ products are leading the way in the field of conversational AI.  


Overall, conversational AI will allow for far more convenience in the buyer’s journey than has ever been offered before, which will significantly reduce friction in the buyer’s journey. Furthermore, it will help automate many business tasks such as customer support that require a great deal of time, money and people. However, technology will need some time to advance before some of the above predictions will really be able to take effect, but eventually, AI will make some major waves for businesses and consumers.