Chatbots vs Conversational AI: What Is the Difference?

Miriam Schröder
Authors name: Miriam Schröder
Chatbots vs Conversational AI: What Is the Difference? | Cognigy
15:48
Table of Content :
  • Intro

  • What Is Conversational AI?

  • What Is a Chatbot?

  • What is the Difference Between Conversational AI and Chatbot?

  • What Are the Benefits of Conversational AI and Chatbots?

  • What Are the Use Cases of Conversational AI in Contact Centers?

  • What Are the Use Cases of Chatbots in Contact Centers?

  • Conversational AI vs Chatbot: Which Is Best for Your Contact Center?

  • The Future of Conversational AI and Chatbots in Contact Centers

  • Get Enterprise-ready Conversational AI Solutions

  • References

Book a Demo
Get a demo of Cognigy.AI and discover the power of AI Agents for customer service

Intro

In today’s fast-moving digital landscape, understanding the latest developments in AI can be the key to becoming an industry leader or falling behind the curve. Technology that was once cutting-edge can become outdated in no time at all, and organizations that want to remain successful must adapt quickly. 

This is abundantly clear in the field of automation, where new Artificial Intelligence (AI) developments have forever changed how people perceive chatbots and self-service chat systems. 

Though pre-AI chatbots initially promised compelling benefits for automating customer queries, their restrictions and limitations are no longer worthwhile. Instead, AI Agents that utilize Conversational AI have been developed to automate some of the most time-consuming processes in your organization. 

For businesses making any investment in automation, understanding the difference between chatbots and Conversational AI is critical. In this guide, we’ll explore the world of pre-AI chatbots, the rise of AI, and how AI Agents have effectively replaced chatbots to act as a dynamic, responsive customer service solution that can save you time and money.

What Is Conversational AI?

Conversational AI is a type of Artificial Intelligence that deals with the understanding and interpretation of natural language. CAI uses a technology called Natural Language Understanding (NLU) to interpret language input through both voice and text channels. With CAI, a machine can understand intent and recognize patterns within a user’s speech – then respond in a human-like manner that mimics live conversations.  

Conversational AI is often paired with Generative AI to offer more utility. If you need to understand how these two types of AI compare and complement one another, read our guide to Generative AI vs Conversational AI here. 

What Is a Chatbot?

The term chatbot is fairly vague, as it can be used to describe any customer-facing chat technology. In a post-AI world, however, the word usually refers to a traditional AI chatbot that did not leverage Natural Language Understanding or Machine Learning. 
 
Instead, chatbots rely on a pre-programmed workflow that places strict limitations on how dynamic they can be. Rather than being able to understand language, the chatbot relied on identifying specific keywords and issuing pre-written responses. This essentially made them a more advanced version of an FAQ page and limited their value to narrow use cases. 

What is the Difference Between Conversational AI and Chatbot?

Early chatbots relied on predefined scripts and simple keyword triggers, which often resulted in limited, rigid, and frustrating user experiences. Without AI, chatbots lack any ability to understand context or complex user commands – making them prone to errors and a sense of mechanical, counterintuitive interaction.
 
The development of AI, especially in light of Conversational AI, represents a huge leap forward.  By leveraging natural language understanding (NLU) and machine learning, these systems comprehend context, interpret user intent, and engage in dynamic, human-like conversations. This advancement enables businesses to provide more personalized and efficient customer interactions, enhancing overall user satisfaction. 
 
To put that all as simply as possible, the main difference between Conversational AI and a chatbot is that a chatbot is a limited tool that cannot grasp language and instead functions based on recognizing pre-defined keywords – whereas CAI can understand, interpret, and even take action based on language. 
 
In recent years, the term ‘chatbot’ has become largely outdated, replaced by dedicated AI Agents that can engage fluidly with customers to speed up processes, answer queries, and resolve tasks. 

What Are the Benefits of Conversational AI and Chatbots?

The main benefit of Conversational AI is that it helps implement an intuitive AI Agent within your organization that can revolutionize your customer support services. By delivering automation that doesn’t compromise on service quality, Conversational AI increases productivity, drives down costs, and even improves customer satisfaction. 

Offers 24/7 Customer Service

An AI Agent powered by Conversational AI is available to your customers 24/7, with no waiting times or hold queues. This immediately resolves one of the biggest sources of frustration in your customer support process and allows you to begin progressing a case immediately. 

The AI Agent can talk to your customer, collect important details, and build an understanding of their problem or task, then either pass the case to your human team or action it without any human involvement. 

By offering 24/7 availability, automated AI Agents help cut down on customer wait times. If the case needs human intervention, the AI Agent will have already taken care of the more mundane elements of the call, such as collecting verification information and summarizing the problem, which means human agents can then tackle the problem far faster once it is passed to them. 

Increases Productivity

AI Agents improve productivity for your human agents and for your business as a whole. By taking care of the high-volume, low-complexity tasks in your customer process, they free up time for your human agents to focus on complex (and more valuable) cases. 

Not only that, but AI Agents also provide insights by creating contextual handovers – enabling human teams to immediately focus on a specific customer problem without having to ask them to fill in basic details or explain the problem again. 

Enables Engaging Self-Service

Digital self-service is all about offering customers a way to get instant support without having to contact a human agent. 67% of customers prefer self-service over speaking to a human agent.1 With the right self-service options in place, customers will be able to carry out important tasks on their own schedule rather than having to add to your contact center’s call queue. 

With an AI Agent, self-service becomes an engaging and intuitive experience that uses conversation as an interface. Customers can simply chat to an agent and have their tasks resolved, which vastly improves the chance of satisfactory outcomes and makes the entire process far more efficient for your users. 

Supports Omnichannel, Multilingual Needs

The majority of contact centers have customers who speak lots of different languages, but are forced to try and communicate in the language spoken wherever your center is located. Investing in translators or offshoring to other territories is extremely costly.

AI Agents use Conversational AI to translate 100s of languages in real-time, giving you an affordable way to provide support to customers in their native tongue. They can speak using voice or text, and the AI Agent will respond in a natural, human-like way in the customer’s preferred language.

Not only that, but AI Agents are not tied to a specific platform or channel – meaning your customers can access support across a wide variety of channels, including phone, text message, web chat, social media, instant messaging, and more. 

Reduces costs 

All of the benefits above combine to result in shorter call times, more efficient processes, and faster customer case resolution without the associated increase in resources. Ultimately, this leads to a dramatic reduction in costs and gives you the ability to scale an enterprise organization in a way that was previously impossible. 

Need more evidence of this? Read our full article detailing the benefits of Conversational AI to learn more. 

What Are the Use Cases of Conversational AI in Contact Centers?

The clearest way to illustrate the difference between Conversational AI and chatbots is to demonstrate clear use cases that show how AI Agents can be utilized within your organization….

Customer Service Agents

Conversational AI’s ability to understand and interpret language means AI Agents can act as frontline customer support agents that answer customer queries and engage in live conversations. Rather than replacing your human team, voice AI Agents help augment your existing resources and support positive customer outcomes via partial or even full automation based on use case. 

Where pre-AI chatbots were capable of answering questions or automating some elements of a specific, fixed process, such as order tracking, Conversational AI can act as a more comprehensive customer service agent that is able to handle complex interactions, reduce wait times, and improve satisfaction.

Intuitive Troubleshooting Agent

With a combination of Conversational AI and Generative AI, AI agents can answer customer questions in a far more comprehensive and flexible manner than pre-AI chatbots. 

Though these earlier systems may have been able to answer questions by matching keywords against a knowledge hub, Conversational AI can take things further by fielding questions in a natural and humanlike way and answering contextually as a human would, instead of just pasting a standardized answer. 

Aside from just answering questions, an AI Agent can guide users through a troubleshooting process and engage with them across every stage. It could, for example, give a user advice on fixing a problem, ask them whether they’ve taken the suggested steps, and then tailor new recommendations if the customer is still engaged and a resolution has not been reached. 

Agent Copilot

Conversational AI and Generative AI can be paired to offer a robust Agent Copilot service that gives your human agents live assistance that makes their working lives far easier. At an early stage, the AI Agent can collect identifying information to verify the user, to save your human team lots of time, then pass the case to them via a contextual handover that fully informs the agent so they can answer the call immediately, ready to resolve the problem. 

During the call, the AI Agent can translate and transcribe, create summaries, or even present contextual answers to your human agent’s screen as soon as a customer asks them. With Agent Copilot, your human teams can focus on complex, high-value tasks and get cases resolved faster and more efficiently. Real-time support by AI means fewer agent errors and a higher first contact resolution rate as well! 

When the call is finished, the AI Agent can also automatically generate a wrap-up summary, saving even more time for your agents and removing one of the biggest manual chores in the contact center workflow. 

See more examples of Conversational AI.

Go beyond use cases and see real-life case studies that show you how Conversational AI is used by some of Europe’s biggest brands. Visit our Conversational AI examples page to learn more. 

What Are the Use Cases of Chatbots in Contact Centers?

To help demonstrate the difference between chatbots and their limited scope when compared to AI Agents, here are some of the traditional use cases you may encounter when considering ‘chatbot’ tools…

FAQ Bot FAQ Agent With Knowledge AI

Lots of businesses struggle with customers clogging up phone lines to ask common questions where the answer is already available elsewhere. FAQ Agents provide a fast and efficient way to allow customers to ask questions and quickly direct them to the relevant answer. 

Previous iterations of FAQ chatbots were limited to simple responses based on customers' choosing from a set list of options. Knowledge AI technology now enables businesses to build dynamic FAQ Agents that are trained using your enterprise support knowledge. These agents can answer questions contextually, personalize interactions, and provide the most accurate answers to customer questions. 

Order Status Bot

Before the advent of AI, some ecommerce businesses used chatbots to try and deal with customer queries around existing orders. Without AI, these chatbots could only function in a very basic manner by taking note of an order number or customer details and then fetching the status from a CRM system. 

With AI Agents, this process becomes far more intuitive, with the AI Agent able to take more independent actions such as contacting your warehouse to check if an order has shipped, or negotiating with a frustrated customer to avoid them canceling.  

Onboarding Chatbot

One of the best uses of a chatbot is to take users through a predetermined onboarding process. Due to the linear nature of onboarding, there’s less need for the chatbot to adapt or reason than in other use cases. 

In fact, even with the introduction of AI Agents to the customer support process, there’s still value in using a more rigid, pre-determined chatbot to conduct onboarding if you want to ensure compliance with any strict regulatory processes your organization may have. 

With Cognigy.AI, you can implement an AI Agent that combines the dynamic reasoning of advanced Agentic AII with more rigid, pre-determined conversational flows – switching between them whenever appropriate to deliver an intuitive onboarding experience for your clients/customers. 

Conversational AI vs Chatbot: Which Is Best for Your Contact Center?

Now that we’ve reached the end of this guide, there’s no question left when it comes to comparing chatbots and Conversational AI. With the ability to actually understand language and communicate with customers, AI Agents that use CAI make previous iterations of ‘chatbot’ technology obsolete. 
 
By better catering to what customers actually want and avoiding the rigid, mechanical nature of pre-AI chatbots, Conversational AI gives your contact center the most effective way to automate your frontline customer service processes. 

The Future of Conversational AI and Chatbots in Contact Centers

The original premise of a chatbot was to help businesses deal with customer service issues and provide support in an automated way. The limitations of this technology held them back and led to users often feeling mistrustful of chatbot technology. 

AI Agents have transformed this perception and have given organizations the ability to provide nuanced, personalized support to customers in a cost-effective way. New developments such as Agentic AI further refine this capability by giving AI Agents a way to reason their way through tasks and take flexible actions as they work towards their goals. 

With this technology in place, enterprise businesses can automate customer service processes in a way that was previously impractical or even impossible. Adopting an AI Agent workforce offers the perfect solution if you want to remain competitive as you scale to meet rising customer demand. 

Get Enterprise-ready Conversational AI Solutions

AI Agents are the future of customer service. To implement the best solution for your enterprise, you need to work with an experienced provider that has demonstrable evidence of working successfully with other large brands. 

Cognigy has helped globally-recognized organizations such as Lufthansa, Toyota, and Bosch effectively automate their customer processes using dedicated AI Agents. 

Want lower costs, more productive teams, and happier customers? Book a demo today to see how Cognigy can help you.

References

  1. https://www.zendesk.co.uk/blog/searching-for-self-service/