What is an AI Chatbot?

The evolution of customer service is seeing people shift towards text-based interactions and expect always-on, 24/7 responses. This poses a significant challenge for businesses looking to maintain seamless customer experiences, gain deeper customer insight and keep costs down. As a result, more organizations are turning to an innovative solution to boost customer satisfaction across all channels, improve response times and streamline operations: the AI chatbot

Evolution of the AI chatbot

Chatbots are computer programs that use artificial intelligence to simulate human conversation through text messaging and voice-based capabilities. Internet users can interact with a chatbot to quickly find the necessary information, get automatic responses to their queries and complete tasks without speaking to a human agent.

Traditional chatbots have been around for a long time. ELIZA, widely considered the first chatbot, was developed in 1966 and simulated human interaction using pattern-matching and substitution methodology. The program paved the way for more advanced chatbots like A.L.I.C.E., developed in 1995 and capable of more human-like interactions. The rise of artificial intelligence changed the chatbot landscape yet again, leading to the development of the AI chatbot, capable of near-human conversation. Examples of this technology include Alexa, Cortana, Google Assistant and Siri.

Today, enterprises use chatbots for a variety of purposes—and it’s easy to see why. Designing chatbots for your website or social media profile can boost customer engagement by assisting users, gathering information from large user groups and pulling data from online resources. Enterprises that incorporate AI in their chatbot initiatives amplify these capabilities and more, leveraging data to gain a deeper understanding of their customers and create highly personalized experiences.

Generative AI chatbots

Early text-based chatbots could only respond to limited queries and couldn’t handle more complex questions. However, introducing tools like artificial intelligence (AI), natural language processing (NLP) and natural language understanding has helped the technology become more advanced and understand the more complicated nuances of human interaction. That level of understanding grew exponentially with the advent of generative AI.

Generative AI chatbots go beyond the capabilities of essential tools to provide intelligent responses and truly human-like interactions. The technology is contextually aware, self-learns and improves over time and can anticipate issues or topics that users may be interested in.

AI chatbots that leverage generative AI can understand language beyond the data or pre-programmed commands that businesses previously had to supply to chatbots. As a result, website visitors can drive the conversation effortlessly and naturally. Generative AI chatbots can also identify sections of speech and sentences to formulate more informed responses and generate follow-up actions. This is particularly beneficial during customer service interactions, where customers may respond to prompted questions in variable ways or change subjects throughout the conversation

AI chatbots in customer service

Deploying a chatbot in customer service can significantly benefit your organization, from improving user and employee experience to cutting operational costs. The customer service benefits of chatbots include:

Enhanced customer engagement

You can deliver customer expectations with effective chatbots that help users find the information they need and purchase products more efficiently. Chatbots can offer website visitors personalized content and product recommendations based on what the organization knows about the user and their purchase history. They can also provide contact center agents with insights and recommendations that increase the likelihood of a sale.

Global adoption and interaction growth

Chatbot adoption rates have spiked over recent years. For example, the International Data Corporation (IDC) projected spending on cognitive and AI systems would reach $154 billion in 2023—a 26.9% increase from that of 2022. Furthermore, Juniper Research data reveals retail chatbot interactions were expected to reach 22 billion in 2023, up from 2.6 billion interactions in 2019. As a result, McKinsey research estimates that generative AI could generate $2.6 trillion across 63 use cases, increasing AI’s impact by 15% to 40%.

Improved cost efficiency

AI chatbots can also help contact centers to reduce costs across their organization. They enable companies to provide 24/7 customer assistance at a fraction of the price of deploying agents through the night or on public holidays. The more chatbots learn, the more customer issues they can resolve—and the more your company can save as a result.

Enhanced employee experience

Keeping employees happy and preventing burnout is essential for combatting high turnover rates among contact center agents. Chatbots enable you to remove tedious or monotonous tasks from agents, allowing them to focus on more complex and challenging work. For example, a chatbot can help pull together FAQs, screen documents for keywords and provide insights into consumer trends, helping your employees be more effective and happier in their roles.

Chatbots can also help you with the time-consuming challenge of onboarding and training employees. They enable you to automate tasks, help new users get up to speed and start working effectively as quickly as possible.

Technological innovations driving change

The capabilities of AI chatbots are rapidly increasing in the face of technological innovation. Examples of cutting-edge tech driving chatbot change include:

Arrival of large language models

Large language models (LLMs) are deep learning algorithms that can perform multiple NLP tasks. As a result, they can supercharge your AI chatbots to carry out complex tasks that would take humans significant amounts of time to complete manually, such as writing software code or analyzing massive datasets.

Evolution of conversational AI

Conversational AI helps chatbots process, understand and simulate human conversation and use that insight to communicate with website users. It utilizes technologies and techniques like AI, machine learning and NLP to teach machines to recognize and respond to elements of speech and text patterns.

As a result, evolving chatbot capabilities help you to develop better customer interactions and build stronger connections with customers and employees. For example, conversational AI systems respond to customer requests in the same way as human agents, assist agents with real-time insight, bolster lead generation and enhance customer understanding.

Analyzing the impact: key metrics improved by AI chatbots

AI chatbots offer many business benefits, from enhancing customer experience to increasing efficiency across the organization. Key chatbot metrics include:

Customer metrics

The growth of chatbots enables internet users to get the answers they need when they need them. As a result, chatbot technology can improve key customer metrics, including:

of internet users

prefer to interact with chatbots when they have a straightforward problem. 

Source: PSFK Data

of millenials

Interact with bots daily

Source: 3CInteractive research

Employee performance metrics

AI chatbots are crucial to helping human agents work more effectively and handle incoming queries or complaints as quickly as possible. They allow employees to analyze vast datasets, assist HR teams with tasks like requesting employee feedback and suggesting potential strategies and improve recruitment by filtering applications and scheduling interviews. By capturing relevant data and automating time-consuming tasks, AI chatbots can help improve key call center agent metrics, like average handle time (AHT), average hold time and more.

Customer service challenges and how AI chatbots address them

AI chatbots can help you address the most significant challenges affecting your organization, including:

Complex query comprehension

Customers struggling with complex queries can be frustrated by human agents taking a long time to solve their issues. Chatbots use techniques like cognitive comprehension, knowledge AI and NLP to quickly navigate complex problems and deliver the level of service that users increasingly expect.

24/7 availability expectations

Even the most dedicated customer service agent can’t handle incoming calls 24/7. But chatbots don’t get tired and maintain exceptional service around the clock. That means you can respond to customer queries immediately, regardless of where they are, which channel they contact you on and whether they get in touch outside of office hours or on public holidays.

Scalability amidst growing demand

AI chatbots offer scalability that a team of customer service agents couldn’t dream of. Chatbots can simultaneously engage with thousands of customers without changing your underlying infrastructure, offering significant benefits if you need to scale customer service or meet sudden spikes in traffic.

Maintaining human-like interactions

The growing capability of AI chatbots enables you to offer engaging interactions at all times. Technological advances, like conversational and generative AI, allow chatbots to converse with consumers using contextual, human-like dialogue.

Uniphore’s AI chatbot solutions: a closer look

Uniphore helps enterprises gain the full potential of conversational AI and chatbots through its innovative X Platform. The platform combines automation and next-generation AI capabilities to optimize every customer interaction, reduce response times and remove mundane tasks from employees.

The Uniphore X Platform is the first enterprise AI platform of its kind to leverage Emotion AI to accurately recognize customer intent and tone. This lets you fully understand customer requirements, help agents deliver on those expectations and improve engagement. As a result, you can build deeper relationships with customers and enhance first-time resolution. For example, U-Self Serve, our customer self-service AI solution, helps you to personalize every customer interaction and understand the emotional drivers that shape customer experience.

AI chatbot examples: real-world case studies

Engaging financial customers Uniphore’s conversational AI solution enabled a global financial services company to achieve self-service excellence, reduce AHT and reduce the customer effort required to complete an interaction.

Boosting manufacturing self-service Uniphore helped a manufacturing firm to deliver end-to-end self-service for 96.1% of online customer requests. This drastically reduced contact center staffing needs, boosted business outcomes and improved the customer experience.

Improving healthcare outcomes National healthcare leader AmeriHealth Caritas used Uniphore’s conversational AI technology to address care gaps and deliver quicker, more personalized services. Uniphore’s technology replaced the existing legacy system to reduce AHT by 60 seconds and reduce agent training time by 20%.

Automating mundane telecom tasks Uniphore's technology has helped a leading telecom provider automate tasks. The Uniphore platform helped the company save over $23 million annually, reduce AHT by 45 seconds, and improve net promoter score, average call handle speed and FCR.

Embrace the future of AI chatbots

The next generation of AI chatbots delivers new levels of customer service to meet user demands and solve their challenges as quickly as possible. Powered by multiple AI modalities, the self-service capabilities available on Uniphore’s X Platform allow enterprises to fully understand what drives customer engagement, help call agents to be as effective as possible and build deeper relationships with their user base.

See firsthand how AI is creating better chatbot experiences