Live Chat vs Chatbot vs Conversational AI

Live Chat vs Chatbot vs Conversational AI

Posted on: April 21, 2021 | Written by: Richard Parr, Digital Hitmen

What’s Best for Your Business?

Advances in technology offer businesses unique opportunities that would sound like science fiction to anyone from just a generation ago. With changes coming at a break-neck pace, it is easy to feel uninformed or left out of the loop. Those in business must have a solid understanding of the technological options prior to investing in a system that cannot provide the anticipated results or worse, damages the company’s reputation. This knowledge is essential for those considering adding online chat. It is easy to become lost in the arena of online chat. However, choosing which option (or combination of options) is best for your needs is crucial if you want to see the positive changes you desire.
In this post, we outline the differences between live chat, chatbots and conversational AI, so you can choose the best option for your business.

Understanding Live Chat and Components

To become familiar with the overarching principles of systems that facilitate a chat online in the 21st century, a look back in time is helpful.
  • Online chatting began as text-based conversations held in ‘chat rooms’ like IIRC where interactions were walls of text with no visual components
  • Programs like MSN Messenger followed and soon became a mainstream part of human communication
  • The online communication we enjoy today is the product of technology enhancing capability to a point where what was once impossible is now commonplace

An example of what a decision tree looks like.


The 3 Main Branches of Live Chat:

To clear up any possible confusion, the following are the foundational segments of online chat.
    1. Decision Trees

      The first iteration of chatbots used decision tree’s to guide a user towards a particular goal such as booking a callback or registering to opt-in to a mailing list. These bots were rigid and force users to stay within a confined dialogue. These bots are still widely used today, Facebook launching their own bot for Messenger in 2016 is based on a decision tree style model.
    1. Conversational AI

      Recent advancements in AI technology has started to see much smarter bots than we’re used to. These bots are able to understand user inputs based on NLP (Natural Language Processing) and NLU (Natural Language Understanding). Enabling the bot to understand the nuances of the English language and the different ways a user could be forming the same intent.  
      For example, if you were trying to decide on where to eat and was asked “What about Mexican food?”. Answering “I don’t want Mexican food today” is the same intent as “I just had that for lunch”. The intent being “reject recommendation”.
      The bot would need to be smart enough to understand that having something yesterday also means no, along with all the various ways someone could say no. It’s not perfect yet, but with the advancements in ML (machine learning) we will start to see smarter bots, the difficulty still lies in understanding emotion through text, however, with even humans sometimes misinterpreting the meaning of messages.
  1. Live Chat

    Just as the name implies, a live chat is a conversation with a human being representing the company you are contacting. Frequently, an agent will inform the customer that they are conversing with a real person. Each of these methods of communicating online warrants a closer look.

What Is a Chatbot?

A chatbot is a program that exists to hold limited conversations with an end-user. In the late 1960s and early 1970s, A chatbot called ELIZA was created to answer very basic decision tree type questions, then s. The earliest bots used pre-programmed scripts to respond to user inquiries that would respond to any input and did not deviate from the original path response. While the chatbots could give fundamental replies, the bots had no programmed learning process; thus, the responses could not deviate from the script. Advances in technology offer the opportunity for chatbots to have enhanced capabilities. The improvements allow some bots to operate within the context of keywords as well as understanding queries despite poor grammar or misspelled words.  

Three Key Business Applications

It is easy to imagine the many uses for chatbots in a business setting. These three are the framework that surrounds other possible applications:
  1. Sales – Chatbots can fill a number of roles in the sales process within a business. By offering potential customers access to information and the opportunity to place orders, the bots are a 24/7 solution to many fundamental customer service/sales issues. Chatbots engaging with a customer have the advantage of closing the sale and preventing a consumer from looking elsewhere for similar products.
  2. Operations – Whether engaged in customer-facing tasks such as booking deliveries or answering frequently asked questions to manage logistics or maintaining a warehouse, chatbots can simplify and streamline a variety of operations.
  3. Marketing – Generating revenue and leads, raising product awareness, and conducting research, are just a few of the diverse ways a chatbot can improve a company’s overall marketing.
Video Player
Video Player

What Are Some of the Marketing Benefits of Chatbots?

The chatbot is particularly well suited for various marketing applications. Here are the top benefits of using a bot:
  • Chatbots direct the user to a good outcome by delivering sought after information after a series of critical questions
  • Customers get immediate responses from chatbots, and this lowers frustration and ups satisfaction
  • Frees crucial staff from mundane and repetitive tasks allowing employees to focus on pressing matters
  • Chatbots give companies the advantage of a 24/7 response team without employing a human staff all day, every day.

What Is Conversational AI?


Conversational AI between a bot and user.

  The concept of conversational AI differs from a chatbot in that conversational AI is an algorithm, not a program. As such, the algorithm can engage in learning and improve its function over time. In essence, conversational AI is the technology that allows for the bridging of the gap between human and machine interaction. In the case of conversational AI in the business world, technology continues to refine it. This helps conversational AI to mimic human conversation, which in turn creates an improved customer experience. Two factors greatly influence the evolution and improvement of conversational AI:
  1. NLU (Natural Language Understanding)
  2. NLP (Natural Language Processing)
NLU and NLP work together to add understanding and interpretation to a conversational AI platform. For example, humans conversing will use the word car and vehicle interchangeably, knowing they are talking about the same general thing. NLU and NLP allow the algorithm to see both words as exchangeable. This avoids the confusion that would occur if a bot using a script responded to the word car but not the word vehicle. The same idea is true for misspelled words. The result is a conversation online that flows and satisfies the users’ needs. NLU and NLP allow the algorithm to operate using reactive engagement (responding to a customer query) and proactive engagement (anticipating a customer’s question) seamlessly addressing queries.  

What Is Live Chat and Its Benefits?

Live chat is a way of conversing back and forth with customers on an online channel. It is one of the fastest ways to interact with those who visit a website or use a mobile application. It is highly effective for customer interactions and business to business (B2B) transactions. While live chat has numerous benefits, here are the top three:
  1. Swift Response Times Make Visitors Into Customers – One of the easiest ways to build rapport with a potential customer or business is by providing the answers and responses they need as close to immediately as possible.
  2. Dedicated Responses Even After Hours – A well trained live chat agent can be on task 24/7 if necessary. As long as the person representing a business has a solid understanding of the products and procedures, this is an ideal way to free up other staff as well as expand reach and availability.
  3. Replace Forms While Generating Leads – It is common for visitors to a website to navigate away if they face a long form to fill out before getting the information they want. A live chat representative can converse with a visitor and gather the same information in a friendly way that leaves the visitor satisfied instead of annoyed.

Decision Tree Chatbot vs Conversational AI Chatbot

Both the chatbot and conversational AI have limits based on design and technology. The most significant difference between a decision tree chatbot and conversational AI is that a chatbot is a programme and has limitations based on its design. Not all chatbots can engage in machine learning or deviate from the script. Conversational AI is an algorithm, capable of producing a more human-like response. Additionally, these algorithms can use machine learning to expand the database and improve future performance.  

Potential Pitfalls of Online Chat

While all of the options for online chat have various benefits, there are a few pitfalls business owners should understand before employing one or more as a part of their business.
  • Make sure all facets of the business are able to respond to what the service provides. Appropriate support staff for queries is essential. Many times, a company will set up a chatbot to gather information and promise the customer a company associate will contact them. However, the staff is unable to keep up with these requests and customers are unhappy with the lack of response. This makes the company look bad and often sends a customer to the competition.
  • Have clear goals in mind so you use the best option for the business. Not only will you see the changes you are anticipating, but you can also avoid wasting resources on a system that offers much more than you need.
  • Word limits can create problems if a customer needs more space to voice their enquiry.

The Top Three Customer Frustrations of Customers

Customers are quite forthcoming when prompted about the things they feel frustrate them the most when chatting online. The top three annoyances are:
  1. Unpersonal and Scripted Responses – The way online chat sounds were the top dissatisfaction of 29 per cent of respondents
  2. Long Wait Times – Waiting for responses caused frustration for 24 per cent of those with a complaint
  3. The Need to Repeat – Having to repeat oneself was the top annoyance for 15 per cent of those with complaints

The top reasons for customer dissatisfaction with online chat.


How to Make a Great Chat Experience for Customers

Making sure customers have a positive experience is vital in all aspects of business, and the chat experience is no exception. Whether a company’s online chat is a mixture of all available chat options or a single chatbot, the result must be an excellent experience to grow and succeed. When looking at the top frustrations associated with online chat, it is easy to find the road map to successful interactions.
  • Be able to engage the customer no matter what type of interaction. Some businesses program their bots with the personality of an employee or the owner and give the bot a name. By bringing an authentic sense of the brand to the chatbot, customers will feel more comfortable during interactions
  • Eliminate long wait times to ease annoyance. Typically, a response to the initial contact should take no longer than 15 seconds. Once acknowledged, most customers will gladly wait a few minutes for the information they need
  • Prevent repetition by installing a trigger so the bot knows when to ask a customer if they would like to speak with a representative.
*By optimising in these three areas, you have a 68 per cent improvement*  

How Chat Agents and Chatbots Can Work Together?

When well organised, chatbots and chat agents can make an excellent team. For example, if a chatbot operating from a script gathers necessary contact information and answers general questions it can have a repetitive trigger where it will redirect queries to a chat agent capable of providing the customer with the requested information in a timely manner.  

Three Tips for Training a Good Live Chat Agent

Just as chatbots or virtual chat agents are only as good as the information provided, a live chat agent needs proper training to excel in the service they provide your customers.
  1. Give agents access to the most comprehensive and up to date information. When agents have vast knowledge about a company, they can offer excellent customer service
  2. Encourage agents to allow their personality to come through in their chat. This does not mean they are angling for a dinner invite, but it does mean that there is no need to be aloof and stiff when dealing with customers
  3. Prepare your agents with mock-chat exercises. As confidence builds, you can increase the chat’s complexity so that agents learn ways to assist customers in various situations.

Our top tips for training a live chat agent.


Is a DIY Online Chat System for You?

Keeping costs down where possible is vital to all businesses. So, the idea of setting up and maintaining a DIY chat system can sound like a bargain. However, companies frequently discover that running a DIY system is difficult and time-consuming. In many cases, the time spent with the chat system cuts into time spent operating the business. By providing customers with a good experience, online chat can streamline businesses workload while still offering users the level of service they deserve. The Chat Agency understands what makes a great chat experience and their team respond to thousands of chats every month.   About the author: Based in Perth, Digital Hitmen is a leading Australian digital marketing agency whose mission is to provide brands with impeccable digital execution and guaranteed results. Our team of experts will expand your brand’s digital footprint, increase traffic, and convert that traffic into sales. We work tirelessly to remain the most innovative and results driven digital marketing agency in Australia. Utilising our extensive knowledge in the digital space, and a passion for providing executional excellence, we work with you to execute a customised foolproof plan for digital domination.  

Leave a Reply

Your email address will not be published. Required fields are marked *