Chatbot vs Conversational AI (Differences, FAQs)

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Chatbot vs conversational AI: What’s the difference?

While they may seem like the same thing, there are significant differences between the two technologies. This includes differences in how they work, their scalability, outputs, and more.

In this article, we’ll cover the 6 key differences between traditional chatbots and conversational AI and answer some related FAQs.

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Chatbot vs Conversational AI: 6 Key Differences

Before we begin, here’s a glance at the main differences between the two solutions.

 ChatboxConversational AI
DefinitionComputer program simulating human interactionSet of tools enabling computer-generated conversations
Type of Input and OutputTextText, audio, video.
ChannelsSingle channelOmnichannel
OperationRule-based, pre-definedMachine learning
Interaction and ScopeLimited to linear interactionsNonlinear, able to adapt to interactions
ScalabilityExpensive and tedious due to manual maintenanceEasily scalable due to self-learning abilities

Now, let’s take a deep dive into the 6 key differences between chatbots and conversational AI:

  1. Definition

    Let’s start with how bots and conversational AI differ in terms of their definitions:

    What is a Chatbot?

    A conventional chatbot is a computer program that can simulate conversations with human users. Chatbots can be used in various settings, including customer service, marketing, and education. They can provide information, answer questions, and accomplish tasks.

    There are three primary types of chatbots: rule-based chatbots, text-based chatbots, and artificial intelligence (AI) chatbots.

    • Rule-based chatbots: A rule-based chatbot is programmed with rules defining how to respond to certain questions or requests. They are the most common type of chatbot.
    • Text-based chatbots: A form of a traditional chatbot, text-based bots can only communicate with users through text. They use Natural Language Processing to interpret what users say and generate a response based on user input.
    • AI based chatbots: An AI powered chatbot uses machine learning to learn how to interact with users. AI based chatbots can have more natural and engaging conversations than rule-based chatbots.

    Most traditional chatbots exist as basic software programs, operating through a user interface designed for chatting on a website or an app.

    What is Conversational AI?

    Conversational AI or conversational Artificial Intelligence is the set of AI technology tools behind automated messaging and speech-enabled apps that allow human conversation between computers and humans.

    These conversational AI applications or AI technology tools include:

    • Natural Language Processing (NLP)
    • Machine Learning (ML)
    • Natural Language Generator (NLG)
    • Automatic Speech Recognition (ASR)
    • Dialog Manager (DM)
    • Deep learning
    • Intelligent analysis

    Examples of conversational AI technology systems include Amazon’s Alexa, Google Assistant, Apple's Siri, Google Home, Microsoft Virtual Agent, and more.

  2. Type of Input and Output

    Both chatbot and conversational AI systems are designed to comprehend inputs (customer questions or issues) and generate a suitable output (solution or response). However, the kind of inputs and outputs differ significantly.

    1. Chatbot

      Traditional chatbots can only text commands, inputs, and outputs, usually in a single language. They can’t comprehend or generate voice inputs or outputs.

    2. Conversational AI

      Conversational Artificial Intelligence, on the other hand, is capable of voice and text commands, inputs, and outputs. Moreover, conversational AI systems can work simultaneously in various languages while conveying the same overall logic within customer conversations.

  3. Channels

    Let’s now focus on the different channels that you can use traditional chatbots and conversational AI solutions on:

    1. Chatbot

      A conventional chatbot is a single-channel tool, meaning it can be used only as a chat interface on a website, social media platform, or app.

    2. Conversational AI

      Conversational AI is omnichannel, making it far more versatile. It can be deployed in a website, voice assistant (Siri, Cortana, Google Assistant), smart speaker (Amazon’s Alexa, Google Home), virtual assistant (or intelligent virtual assistant), virtual agent, contact center, and even SMS!

  4. Operation

    When it comes to how a chatbot and conversational AI platform work, there are significant differences:

    1. Chatbot

      Chatbots operate on predetermined, scripted conversational flows. To update or revise the pre-defined script and conversational flow, you must reconfigure the chatbot.

      Chatbots also use Natural Language Understanding, but it’s limited to basic keyword recognition. They look for specific words in customer conversations and then provide an automated response to those words.

    2. Conversational AI

      Conversational AI solutions use natural language processing and contextualization to analyze the user intent and then generate a unique response that isn’t pre-programmed.

      This also allows the AI bot to improve itself and generate accurate, personalized humanlike responses continuously. It does not rely on predetermined keywords to generate standard responses.

  5. Interaction and Scope

    The technologies that help a chatbot and conversational AI solution interact with a customer also vary greatly:

    1. Chatbot

      A chatbot is rule-based and follows a predetermined conversational flow. This means a chatbot’s conversations are limited to linear interactions.

      The pre-defined regulations and workflows prevent a rule-based chatbot from handling out-of-scope tasks (responding to things the bot wasn’t programmed to respond to).

    2. Conversational AI

      Conversational AI, however, has a vast scope thanks to machine learning and Natural Language Understanding (NLU). These technologies help conversational AI applications have nonlinear and dynamic customer interactions.

      As a conversational AI solution doesn't follow specific scripts, it can adapt to unique situations in real time, enhancing customer experience and customer satisfaction.

  6. Scalability

    Conversational AI and traditional chatbots are both scalable. However, there’s a massive difference between their cost and ease of scalability.

    1. Chatbot

      A chatbot is quite expensive and time-consuming to scale because its conversational flow requires frequent manual maintenance, updates, and revisions to remain useful for quality customer service.

      Every time you wish to change how your chatbot responds to a particular customer query, you’ll need to reprogram it.

    2. Conversational AI

      Conversational AI, on the other hand, is easily scalable.

      The conversational AI technology pulls data from various sources such as websites, databases, text corpora, and APIs. The conversational interface automatically applies the changes whenever these sources are revised or updated.

      Moreover, with such large databases, a conversational AI platform is constantly self-learning and grows with your company without manual updates or revisions.

To observe their capabilities, let’s see how these technologies operate in the real world.

Chatbot vs Conversational AI: Customer Service Examples

Automated messaging technology, whether in the form of rule-based chatbots or various types of conversational AI, greatly assists brands in delivering prompt customer support.

1. Chatbots in Customer Service

It’s no secret that using chatbots can save you time.

To be specific, customer support teams handling 20,000 requests per month can save over 240 hours monthly using chatbots.

  1. Amazon Chatbot

    Amazon employs a chatbot named "Amazon Customer Service" to address customer inquiries and resolve issues.

    This chatbot is accessible at all times, day or night, and can address a wide range of concerns. It can assist with inquiries about orders, shipping, returns, and refunds.

  2. HDFC Bank’s EVA

    In 2014, HDFC Bank launched its chatbot, EVA. It is your personal assistant when visiting the bank’s website or mobile app and is available 24/7.

    EVA can answer customer questions about accounts, transfer money, and pay bills. EVA can also help customers with investment planning, insurance, and loans.

  3. Sephora Reservation Assistant

    In 2017, the popular beauty brand Sephora launched its Reservation Assistant via Facebook Messenger.

    This traditional chatbot assists customers in booking appointments at a Sephora store. Compared to any other channel for booking in-store makeover appointments, the Sephora bot has achieved an impressive 11% higher conversion rate.

Now, let’s see how Conversational AI performs in customer service.

Conversational AI in Customer Service

Companies are actively embracing conversational AI, and with good reason.

Consumer retail spending over chatbots is expected to surge to $142 billion by 2024, demonstrating substantial growth from $2.8 billion in 2019. This signifies an average annual growth rate of 400% over the next four years.

  1. Honda

    Honda Motor Europe, a global automotive company, has seen significant benefits from using iovox Insights, a call tracking and conversational AI platform.

    iovox insights helped Honda reduce lead recall time by more than 40% and increase lead conversion rate to sales by nearly 60%. This led to increased customer satisfaction and more sales.

  2. Lyft App

    Lyft is a ride-hailing service from the United States. On the Lyft app, interactive assistance takes the form of a chat-like experience driven by AI and machine learning-powered bots.

    The conversational AI tool anticipates and predicts customer inquiries, delivering personalized user interactions as passengers engage in a conversational manner to resolve their concerns.

So, the question is, which technology solution is the best option for your business?

Chatbot vs Conversational AI: Final Verdict

The answer’s simple, conversational AI is a far better solution for your business.

Sure, both rule-based chatbots and conversational AI applications make it possible to resolve a customer query without human interaction.

However, traditional chatbots can only perform certain specified, pre-scripted tasks such as answering simple FAQs, helping with app navigation, etc.

And when customer questions go beyond the script, the response is robotic or unhelpful. This can reduce customer engagement because they’d rather have a conversation with a helpful contact center agent than a bot.

Conversational AI, on the other hand, is the clear winner between the two since it can do everything a chatbot can and more!

Unlike basic chatbots, a conversational AI tool can handle complex customer problems, employ machine learning, and generate personalized, humanlike responses. This way, a human agent can focus on more complex business operations.

As a result, conversational AI plays a massive role in improving customer engagement, customer satisfaction, and user experience.

On the lookout for the best conversational AI solution?

The search ends here!

iovox Insights: A Leading-Edge Conversational AI Solution

iovox Insights is a powerful conversational AI solution that can be valuable in any industry.

With iovox Insights, you can transcribe recorded conversations and draw valuable insights to identify business trends to improve customer support and enhance customer experience.

Here are some impressive things iovox Insights can do for your business:

  1. Discover Trends, Opportunities, and Outcomes

    iovox Insights can analyze speech and identify key phrases contributing to successful sales. Additionally, it assists in identifying trends and opportunities for cross-selling.

    For example, let's say you’re an insurance agent, and a potential customer contacts you regarding life insurance but also mentions their upcoming homeowners’ or auto insurance renewal.

    In this case, iovox Insights can promptly send you alerts based on specific triggers.

    These alerts empower your sales team to capitalize on upselling or cross-selling opportunities for insurance policies effortlessly.

  2. Enhance Lead Qualification

    iovox Insights offers a comprehensive analysis of each phone call, enabling you to pinpoint high-performing keywords that generate qualified leads for sales.


    Using conversational AI, iovox Insights logs the keywords used during a call. This allows you to identify the keywords that contribute to successful sales.

    This functionality enables you to determine whether specific keywords effectively drive sales swiftly. In turn, you can optimize your marketing strategies based on these insights.

  3. Evaluate and Enhance Overall Customer Experience

    With iovox Insights, you can help skyrocket your agent performance and customer journey.

    For example, you can review transcribed call records to verify whether agents adhered to legal requirements and call scripts.

    By examining the transcripts more closely, you can uncover instances of non-compliance and situations where a human agent went beyond their regular duties to assist customers.

    Additionally, you can identify key areas for improvement among your insurance agents. This allows you to provide them with targeted training and equip them with effective insurance sales techniques.

With that said, let’s go through three FAQs to clear up any questions you may have:

3 FAQs on Chatbots and Conversational AI

Here are some answers to FAQs related to conversational AI solutions and chatbots:

  1. What Is Natural Language Understanding?

    Natural Language Understanding is a branch of Artificial Intelligence (part of Natural Language Processing) that allows computers to understand human language.

    This enables computers to interact with humans more naturally through spoken language or text.

    It’s the software that enables computer-human interaction.

    To do so, Natural Language Understanding (NLU) employs computer software to comprehend and transform human language, such as English, Spanish, French, etc., into a machine-readable format.

    With NLU and machine learning, computers can automatically analyze tons of data quickly, saving countless hours for businesses like a call center or customer support when analyzing customer service feedback.

  2. What Makes a Chatbot Conversational?

    A conversational chatbot (or conversational AI chatbot) is the most advanced AI-powered chatbot or virtual agent today.

    Unlike basic chatbots, a conversational AI bot uses Natural Language Processing (NLP) and Machine Learning to deliver the best customer experience possible.

    Businesses can use the Watson Assistant — a cloud-based conversational AI platform that caters to non-technical builders who want to help customers answer questions and complete tasks.


    The conversational chatbot thoroughly analyzes the context surrounding a customer's query, enabling a contextual understanding of the situation. The conversational bot then employs its knowledge to devise appropriate solutions for customer inquiries.

    The main advantage of an advanced conversational AI chatbot over basic chatbots (or rule-based chatbots) is that it understands the meaning behind every customer query and doesn’t just detect keywords.

    This way, the bot can also understand customer questions even with typos, improving customer service and customer experience.

  3. What Is Conversational Commerce?

    Conversational commerce (or chat commerce or conversational marketing) is the name given to the way online retailers use the power of conversation via chatbots to sell their products and services.

    This technique quickly moves your potential customers through the marketing and sales funnels. Additionally, conversational commerce can:

    • Boost customer engagement by providing a more personalized and interactive way to interact with customers.
    • Improve customer service by providing a 24/7 self-service option for customers.
    • Reduce costs by automating tasks that human agents do, allowing your human agents to focus on more strategic tasks.

    Customers can get a conversational marketing experience through live chat, AI chatbots, voice assistants (like Amazon’s Alexa or Google Assistant), virtual agents, social media messaging platforms (like Facebook Messenger or WhatsApp), and other channels.

Final Thoughts

While basic chatbots can handle a limited number of simple tasks, they’re restricted to following predetermined rules and workflows. If a customer request is unique and hasn’t been previously defined, rule-based chatbots can’t help.

In contrast, conversational AI can understand and mimic human interaction and perform more complex tasks, increasing customer engagement. And it does it all while self-learning from every use case and customer interaction.

Thankfully, finding a conversational AI solution doesn’t have to be confusing.

You can efficiently introduce conversational AI to your company without designing your own AI bot and algorithm using a conversational AI solution like iovox Insights.

Try iovox Insights today to truly understand and track every customer interaction and never miss a growth opportunity!

At iovox, we make it easy to experiment, and we’d love to learn more about your business and how we can help. To connect with us, click the call button below, and our team will be in touch with you shortly.

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