Is Conversational AI For Customer Service Worth Investing? (5 Reasons Inside)

When I first saw Iron Man’s Jarvis, I was completely flattered. I mean, a conversational AI (Artificial Intelligence) working like a personal assistant that can respond to you just like a human would do. And not just that, it can just carry out most complex tasks such as rendering thoughts into a reality (Yes, Iron Man’s suit), analyzing situations and giving a perfect solution, controlling multiple appliances with voice command, etc.

Well, it’s 2022 and the fictional character of Jarvis has turned into reality. Conversational AI is the talk of the town. In fact, we just use some of them to do our-day-to-day tasks such as Alexa, Google Assistant, Siri, etc.

But, do you know that such apps can help in improving business as well? Yes, that’s true. In this blog, I’ll tell you how implementing conversational AI for customer service can help you in enhancing your user experience and give your business a required boost.

What is conversational AI?

Conversational AI is an app or a tool that allows users to communicate with systems (phones, laptops, desktops, etc.) and give them executable commands either through voice, text, or gestures. You might wonder that this seems similar to chatbots, but it’s not.

Chatbots work on a set of algorithms which are either rule-based or operate with the help of machine learning. On the other hand, conversational AI works on a combination of NLP (Natural Language Processing) and machine learning that enables it to understand human behavior, process it and share the response just like any human would do. The responses are given through a voice assistant such as Siri, Google Assistant, etc.

The technology behind conversational AI can be used to power chatbots for making them highly efficient and smarter. Let me explain this in a simple way.

Have you ordered food from any online food ordering app? If you have any problem with your order, you can raise a complaint. Now, a chatbot is an initial point of contact for helping you out. So, you can simply select your issue (delayed order, spillage, cold food, etc), upload the pictures, select the refund option, and voila it’s done.

However, if the resolution is not satisfactory, it connects you with a customer service expert. This person further looks into the matter and suggests an alternative resolution. 

In this case, the chatbot has certain restrictions that refrains it from providing a smarter resolution. And that’s where conversational AI comes into the picture. With the help of machine learning, NLP, and other such factors, it can analyze human emotions, words, and behavior and suggest the best deal to customers.

This kind of intellectual automation is not only intriguing but also improves your customer experience and helps in increasing your retention rate.

What is the position of conversational AI in today’s market?

The launch of speech-based assistants like Siri and Google Assistant brought a new revolution in AI technology. This boom was elevated when Amazon introduced the world with Alexa, a talkback enabled speaker that can even control functions of your home.

As per the market report shared by Markets and Markets,

The global conversational AI market is growing at a CAGR (Compound Annual Growth Rate) of 21.8%. In fact, the market size of conversational AI in 2021 was $6.8 Billion. And it is expected to reach around $18.4 Billion in 2026.

Although people know just three brands (Google, Apple, and Amazon) having conversational AI tech, you may be surprised to know that various other top IT development firms including Microsoft, IBM, Oracle, Baidu, etc are making progress in this field too.

Considering these facts, you can say that the future of the conversational AI market is going to be no less than a trillion dollars.

How can conversational AI for customer service help businesses improve overall user experience?

You might wonder, “Is it really the same Alexa that I’m using just to play songs, that much important and useful?”

Yes, that’s true. As I said earlier, using conversational AI for customer service is a revolutionary step. For instance, these days if you call customer service, you don’t have to use a number pad for providing input. Instead, you just need to speak out the option and the IVR would direct you as per your query.

This has reduced a considerable amount of time users spent in getting a resolution for their problems, thereby improving customer satisfaction.

This is just a sheer example of how implementing conversational AI for customer service can improve user experience. Let’s take a look at other benefits as well.

●    Lower TAT with quick resolution

The first and foremost benefit is lower TAT (Turn Around Time) due to features such instant response, 24*7 availability, continuous learning and upgrading, etc. One factor that cannot be ignored is machine learning.

With the help of methods like supervised learning and unsupervised learning, the conversational AI apps keep on evolving. This helps in providing quick resolutions next time any customer faces a similar problem.

●    Better recommendations and upselling

Since AI is capable of understanding human behavior, it can interpret your buying patterns and send you suggestions accordingly. And trust me, the suggestions are so relatable that you will end up spending more. In fact, I do have a case study for it.

A couple of years ago, The Cosmopolitan Hotel in Las Vegas introduced their customers to an AI-based chatbot that can converse like an actual human. Developed by hotel’s digital agency R/GA, Chicago, Rose acts like a digital concierge.

As per Tom Evans, Chief Marketing Officer, The Cosmopolitan Hotel, Las Vegas,

Rose’s playful, witty, and mischievous personality has won the hearts of our guests. In fact, the guests that interacted with Rose were 33% more satisfied and spent around 30% more during their stay at the property.

If you don’t believe me, here’s a screenshot of a guest’s chat with Rose:

Interesting, isn’t it? You can also deploy such conversational AI for your customer service and experience growth in your business.

●    Easy data collection and in-depth analysis

If you have manual (human-based) customer service, you must be aware that data capturing is a difficult task. Often the employees end up noting incorrect details or miss out on some of them.

That’s where conversational AI has an upper hand. Basically, whenever a user interacts with any conversational AI, it records each and every activity, be it search terms, tone, emotion, personal details, or anything that can be analyzed to improve customer experience.

Further, with the concept of unsupervised learning it segregates the data into different categories for marketing and providing better resolution in the future.

●    Automated and smart marketing

 One of the prime benefits of having a conversational AI for your business is that it can market your services automatically at regular intervals and that too with relevant content.

Conversational AI utilizes the collected and analyzed data to send promotional messages to customers from time to time. In fact, it remembers special occasions such as birthdays or anniversaries which enables it to send personalized wishes and deals to customers.

This kind of personalized marketing is a unique strategy to enhance the customer satisfaction and improve your client retention rate.

●    Cost-saving

Implementing conversational AI for customer service has definitely reduced the level of human intervention required in this process. That’s due to the benefits it offers such as quick resolutions, smart processing, intellectual thinking, data capturing and maintaining, personalized marketing, and so on.

So, instead of having a full-fledged customer service department, you can cut down on your staff and implement conversational AI on your website or app.  First of all, it’s a one-time process to build conversational AI. Once implemented, it’ll keep on learning and evolving on its own depending upon the input.

Secondly, your customer service staff will only need to intervene when the situation is a bit too complex for the system to process. Which means you don’t need to pay an entire team every month a hefty amount for attending your customers.

Also, with its smart learning, it’ll understand how to deal with such situations and implement the same tactics if a similar situation arises in future. So, just by investing once in conversational AI, you’ll have an ample amount of money to invest into making your services better.


1. Are conversational AI apps and chatbots the same?

–        No, they are not. Let me put it in one line,

‘Every conversational AI is a type of chatbot, but not all chatbots are conversational AI.’

2. What are different types of conversational AI that can be beneficial for businesses?

–        Here are top three conversational AIs implemented by well-known brands:

o  Voice assistants

o  Mobile assistants

o  IVRS (Interactive Voice Recognition Systems)

3. What are the examples of conversational AI?

–        Some of the most used conversational AIs are Siri by Apple, Google Assistant by Google, Alexa by Amazon, Cortana by Microsoft, etc.


AI is one of the trending technologies in the world. It has found its way into each and every sector such as hospitality, IT, healthcare, etc. And the customer service segment is one of them.

For every business, customer service is an important department as it deals with clients’ grievances and enquiries. Additionally, it also helps them form a customer database for marketing purposes.

This process was carried out for a long time by humans and for humans. But it had a gazillion issues that impacted the customer experience of businesses, such as delayed resolution, long waiting time, connectivity issues, etc.

That’s where conversational AI came into play and changed the customer service industry forever. And owing to its plethora of features including quick resolution, easy connectivity, smart response, low-cost maintenance, self-evolution etc. it has become a popular choice among businesses.

If you are not among them, it’s time to change it. Get a conversational AI for your business and take the first step towards enhancing your customers’ experience.

If you don’t know how to do it, contact Coditation right now. Just tell them your requirements and see the final results for yourself. Do give it a try and let me know your experience in the comments. Till then, happy learning.

Author Bio:

Siddharth Joshi

Siddharth Joshi, aka Sid, is a professional blogger with an experience of 7+ years in various industries including travel, hospitality, education, and IT. In free time, he loves to cook, write poems, and travel to find hidden gems of India.