Difference between Chatbot and conversational AI

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April 18, 2023

In today’s fast-paced business environment, communication and involvement with clients are essential. Conversational AI and chatbots have become crucial tools for enhancing these interactions as automation and AI have gained popularity. In today’s competitive market, businesses face mounting pressure to provide seamless and personalised client experiences. Chatbots and conversational AI have emerged as crucial instruments for achieving these objectives. By the end of this article, readers will know exactly when to employ Conversational AI and when to deploy a chatbot, based on their own set of business requirements. The blog serves as an educational resource for businesses trying to stay ahead of the competition by utilising the power of AI-driven conversational solutions.

The primary objective of this blog is to refute misunderstandings that exist regarding the distinctions between chatbots and conversational AI. They are conversational agents, but they serve distinct purposes and provide varying levels of complexity. By being aware of these differences, businesses can make the most of new technology. The blog will look at the key characteristics, uses, and features of conversational AI and chatbots in order to give decision-makers relevant advice.

What are Chatbots?

A chatbot is a computer program that uses voice or text chats to mimic human communication. Chatbots are frequently utilised in customer care applications to respond to inquiries from clients and offer assistance. Additionally, chatbots can be employed in marketing, education, and entertainment.

Functionality of Chatbot

Chatbots employ a variety of technologies to understand and respond to user requests. Certain chatbots rely on rule-based systems, while others use natural language processing (NLP) and machine learning. Rule-based chatbots respond in accordance with predefined rules, whereas machine learning-driven chatbots can adapt and learn over time. Thanks to natural language processing, chatbots can understand user comments and generate relevant and instructive responses (NLP).

Use Case of Chatbot

  1. Customer service: Chatbots are employed in customer service to answer questions, resolve issues, and provide support. For example, a chatbot could be used to help customers plan trips or provide product-related information.
  2. Marketing: Chatbots are used to generate leads, solicit feedback from customers, and advertise products and services. For example, a chatbot may be used to offer customers a discount on their next purchases or to ask for feedback on the launch of a new product.
  3. Education: Chatbots can provide students with access to practice sessions and instructional materials. For example, a chatbot could help kids with language learning or practise arithmetic problems.
  4. Entertainment: Chatbots create interactive games and storytelling. A chatbot could be used, for instance, to develop your own adventure game or a chatbot-powered storyteller.

Examples of Chatbot

  • Bank of America’s Erica helps customers manage their finances through voice or text.
  • E-commerce platforms like Amazon use chatbots to provide customer support, track orders, and suggest products based on customer preferences.
  • Expedia’s chatbot can help users find and book travel options.
  • Domino’s Pizza uses a chatbot to allow customers to order pizza using text messaging or Facebook Messenger.
  • Siri, an AI by Apple that communicates verbally with users
  • Meena, an open-domain chatbot by Google
  • Tay, a chatbot for Twitter made by Microsoft

What is Conversational AI?

Conversational AI is a subset of artificial intelligence (AI) that enables computers to intuitively understand, process, and generate human language. It is made possible by a blend of machine learning, deep learning, and natural language processing (NLP) technology. Conversational AI systems are trained on vast amounts of text and speech data so they can recognise patterns in human language and respond to different types of queries. Chatbots, virtual assistants, and voice-activated devices are just a few of the many uses for conversational AI systems that can be developed.

Functionality of Conversational AI

Conversational AI systems operate in four stages:

  1. Natural language understanding (NLU): This technique helps the system interpret user input and determine the meaning and intent of the speaker.
  2. Dialogue management: Considering the user’s choices and the context of the interaction, the system employs dialogue management to decide how to react to the user’s input.
  3. Natural language generation (NLG): To produce an answer that sounds natural and instructive, the system takes advantage of NLG.
  4. Machine learning (ML): The system makes use of ML to gain insights from user interactions and gradually enhance its functionality.

Use Cases of Conversational AI

  1. Customer service: A lot of businesses are employing conversational AI chatbots to provide 24/7 customer support. These chatbots are capable of handling issues, answering customer questions, and even providing personalised recommendations.
  2. Marketing: Sales and marketing processes are being improved with the help of conversational AI. For example, conversational AI chatbots can be used to set up meetings, screen potential customers, and produce demos.
  3. Human resources: Conversational AI is being used to automate a number of HR processes, including performance reviews, onboarding, and training.
  4. IT Support: Conversational AI chatbots can help staff members with IT support duties like password resets and troubleshooting.
  5. Healthcare: Conversational AI is being used to develop virtual health assistants who can answer questions from patients, offer suggestions on how to relieve symptoms, and even make appointments.

Example of conversational AI

  • Amy from HSBC accompanies clients at every step of their customer journey, onboards them, and resolves their problems related to managing their banking accounts.
  • Controlling home appliances via Google Home or Amazon Alexa.
  • Monitoring any device that can dial phone numbers or send messages to the user.
  • Apps and devices like Amazon Alexa let you order food or groceries. While they’re at it, they also learn about your preferences, so the AI bot can suggest products or services that may interest you.

Key Differences between Chatbot and Conversational AI

  FeatureChatbotConversational AI
DefinitionA computer program that simulates a conversation with humans.A broader term that refers to the use of AI to create more natural and engaging conversational experiences.
TechnologyIt uses rule-based algorithms, meaning that it follows a set of rules to generate responses.It uses AI-powered algorithms, meaning that they use machine learning to understand user intent and generate more natural and personalized responses.
CapabilitiesIt can be used to perform specific tasks, such as answering customer questions or providing support.It can be used for a wider range of applications, such as creating virtual assistants and chatbots that can have more natural and engaging conversations with users.
ExamplesSiri, Alexa, Google Assistant, and customer service chatbots.Virtual assistants, chatbots, and voice-enabled devices.

Advantages and Disadvantages


ChatbotsConversational AI
It is available 24/7It is available 24/7
It can handle multiple conversations simultaneously  It can handle multiple conversations simultaneously
It can automate repetitive tasksIt can automate repetitive tasks
It can provide customer support in multiple languagesIt can provide customer support in multiple languages
It can learn and improve over timeIt can learn and improve over time
It can support more natural and engaging conversationsIt can support more natural and engaging conversations
It can handle voice and text interactionsIt can handle voice and text interactions


ChatbotsConversational AI
They are limited in their capabilitiesThey can be more expensive to develop and deploy
It can be difficult to train and maintainIt can be more complex to develop and deploy
Their operation can be frustrating for users if they cannot understand or respond to their requestsTheir operation can be frustrating for users if they cannot understand or respond to their requests
They can be used to spread misinformation or scamsThey can be used to spread misinformation or scams

How to choose the best for your business?

The best method to decide between conversational AI and chatbots is to thoroughly analyse your industry, clients, budget, and business goals. You can select the technology that is best for your company and your clients by considering these aspects.

Your business Objective: A few things to think about are your company objectives, which we must specify before implementing a chatbot or conversational AI system.  Once we’ve decided on the objectives, we may begin to reduce our possibilities.

Your spending plan: Price ranges for chatbots and conversational AI systems span from a few hundred to tens of thousands of dollars. To avoid going over budget, it’s critical to establish a spending limit before we go shopping.

Your clients: We must determine who your clients, are and how they communicate with us. While older adult consumers mostly favour more conventional means of contact like phone calls or email, new-age customers tend to favour chatbots or conversational AI.

Your industry: Chatbots and conversational AI are more appropriate for certain sectors than for others. For instance, chatbots for customer care are widely used in the e-commerce and retail sectors. But in sectors like healthcare and finance, where the risks are higher and clients might rather deal with real people, chatbots and conversational AI are less frequent.

Industry-specific insights:

Retail and e-commerce: Product recommendations, order processing, and customer service can all be handled by chatbots and conversational AI leading to an increase in the happiness of customers and sales may increase.

consumer service: We can utilise chatbots and conversational AI to address consumer inquiries, offer 24×7 assistance, and fix problems. This can free up human customer support agents to concentrate on more complicated problems.

Sales and marketing: Chatbots and conversational AI can be employed to qualify leads, schedule appointments, and create demos. The effectiveness of marketing and sales may be enhanced by this.

Healthcare: Patients can ask inquiries, receive advice on symptom management, and even arrange appointments with the help of chatbots and conversational AI. Both cost and patient care may benefit from this.

Finance: Conversational AI and chatbot AI can be used to answer customer questions about financial products and services, help customers open accounts, and process transactions. This can help to improve customer satisfaction and reduce costs.

Future of Customer Interaction

Conversational AI and chatbots are quickly changing how companies communicate with their clients. These technologies are anticipated to become even more integral to client interactions in the future, offering individualised, practical, and effective experiences.

In future, we can anticipate the following trends in the way how customer interacts with Chatbots and conversational AI

More individualised experiences: Customer data may be gathered and analysed through chatbots and conversational AI, which can then be utilised to give users more individualised experiences. For instance, a chatbot may suggest goods or services to clients in light of their interests or previous purchasing patterns.

More convenient experiences: Conversational AI and chatbots can be utilised to offer customers round-the-clock help and support. Consumers no longer need to wait on hold or speak with a live agent when interacting with chatbots and conversational AI systems.

More effective encounters: Many of the duties that are now completed by human customer support representatives can be automated with the use of chatbots and conversational artificial intelligence. This can allow human representatives to concentrate on more intricate issues and provide customers with a higher level of support.


Conversational AI and chatbots are becoming more and more crucial in today’s commercial environment. They can be applied to cut expenses, boost productivity, and enhance customer service. For instance, chatbots can be used to provide customer support around-the-clock, even in the absence of live customer support agents. Though they are still in the early stages of research, conversational AI systems have the power to completely change how humans communicate with computers. Modern businesses can boost efficiency, lower expenses, and provide better customer service by implementing chatbots and conversational AI. Businesses can utilise this knowledge to make well-informed decisions on how best to adopt these two technologies in order to get the desired outcomes.

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Content Marketing Strategist at Chatbot.team

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