Unpacking the Rise of Conversational AI


The Gist

  • Industry impact. Conversational AI tools are revolutionizing customer experiences across various industries including ecommerce, healthcare and banking.
  • Growing market. The global conversational AI market is projected to grow at a rate of 23.6% annually over the next seven years.
  • Learning curve. Implementing conversational AI requires specific skill sets and an understanding of data security, making it a complex but rewarding endeavor.

Conversational AI tools used to improve and enhance customer experiences may not perform tasks at the intellectual level of humans, yet. 

But the pros of conversational AI outweigh the cons. While advanced chatbots and virtual assistants don’t always understand regional dialects and are prone to technical glitches and downtime, they compensate for these shortcomings with 24/7 support, instant responses, cost savings, and the ability to gather valuable real-time data about customer behavior.

And conversational AI will only improve as the technologies that drive it — machine learning, natural language processing (NLP), natural language generation (NLG), and deep learning — continue evolving.

Over the next seven years, the global conversational AI market is forecast to grow at a rate of 23.6% per year, according to Grand View Research.

“Conversational AI is a happening space and we’re seeing increased use of chatbots, virtual assistants, and automated voice systems,” said Inge De Bleeker, head of conversation design at OpenDialog AI. “In many call centers today, the interactions are moving away from the stilted ‘press 1’ decision trees and are becoming voice-driven experiences akin to human conversations.”

Various industries have capitalized on these maturing conversational AI tools, with each industry having its own unique CX needs and goals.

“Industries that rely on contact centers [banking, healthcare, etc.] have been on the front lines of conversational AI,” said Bradley Metrock, general partner of Project Voice Capital Partners, which invests in conversational AI startups. 

“But at this point, conversational AI has impacted every industry out there.”

Let’s explore three industries that have been early and ongoing adopters of conversational AI tools to streamline customer requests and lower costs.

Conversational AI Tools in Ecommerce

Thanks to the increase in online purchases, the use of chatbots in retail that simulate human conversations has surged, with Gartner predicting that chatbots will be the main customer support tool for one-quarter of companies by 2027.

Ecommerce chatbots are used through text chats, voice commands, or both and they serve a variety of duties, including:

  • Saving retailers money and time by serving customers 24/7 (eliminates the need to hire full-time staff)
  • Answering FAQs and guiding customers to the next step of a purchase
  • Recommending products based on a customer’s previous purchases
  • Generally helping customers find what they’re looking for

Most ecommerce chatbots can handle rudimentary customer inquiries, but the more advanced chatbots, often referred to as “virtual assistants,” use AI technologies to respond to customer questions in a more human-like way.

Cosmetics retailer Sephora is a “virtual assistant” innovator. Sephora’s website chatbot answers questions about returns and exchanges. But it’s also a shopping assistant that asks customers questions about their skin tone and makeup preferences and then gives tailored recommendations.

H&M, Walmart, eBay and Amazon are other retailers known for using conversational AI to provide 24/7 customer support.


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