Understanding Conversational AI


Conversational artificial intelligence (AI) is everywhere. In fact, global consumers will spend $142 billion through conversational AI-facilitated retail transactions in 2024, and current estimates project the conversational AI market will be valued at $72 billion by 2028. Even employers are turning to AI technology to enhance employee engagement and experience. Today, 70% of white-collar workers interact daily with AI platforms as tools expand in the workplace. 

Conversational AI helps businesses reduce costs and improve the customer experience (CX) in multiple ways.

What Is Conversational AI?

Conversational AI is a type of artificial intelligence that simulates human conversation. Natural language processing (NLP) makes this possible by enabling computers to understand and process human language. Conversational AI recognizes human language and text, picks up on customer intent and responds in a way that mimics human conversation.

You may have encountered this technology in automated messaging and speech-enabled apps like Google Assistant and Amazon Alexa.

Unlike traditional chatbots, conversational AI needs no script. Instead, AI technologies teach themselves over time through machine learning. Conversational AI uses significant amounts of data, NLP, machine learning and deep learning to:

  • Recognize speech and text.
  • Understand customer intent of text or speech.
  • Interpret different languages.
  • Respond in a humanlike manner to continue dialogue.

How Does Conversational AI Work?

Conversational AI uses multiple technologies to understand and respond to customers’ speech or text: 

  • Automatic speech recognition
  • Natural language understanding 
  • Natural language processing 
  • Natural language generation 
  • Machine learning  
  • Advanced dialogue management 


These technologies allow conversational AI to recognize and predict conversation patterns. Here’s a step-by-step breakdown of how conversational AI works:


1. Customer or User Provides Text or Speech Inputs

A human engages with the AI platform by talking to it or typing a text-based query.


2. Conversational AI Platform Analyzes the Input

The AI platform analyzes the text or speech. AI technology uses natural language understanding to interpret the meaning of written communication. The conversational AI uses automatic speech recognition to analyze voice- or speech-based queries.


3. AI Technology Formulates a Response

After analyzing the user input, conversational AI uses natural language generation to develop a response to the human. Natural language generation is a subcategory of natural language processing.


4. Conversational AI Learns From the Interaction

Finally, the conversational AI platform analyzes the interaction to see how it can improve future engagements. 

Use Conversational AI Across Multiple Departments and Functions

Fortunately, you don’t need specialist skills, significant resources or a large time investment to create conversational interfaces. CSG’s conversational AI platform provides an enterprise-grade solution that seamlessly integrates with third-party and back-office applications. This AI platform enables you to deliver intelligent and engaging customer experiences.

CSG’s conversational AI is a platform that gathers and leverages a trove of customer data to support operations across multiple departments and functions:

  • Virtual customer assistants: Automate customer service and improve operational efficiency across  the customer’s channel of choice, with personalization and contextual awareness.
  • Virtual sales assistants: Support interactions throughout the sales funnel, including  awareness, interest, decision and action. 
  • Virtual enterprise assistants: Supplement your employees in areas like HR, IT help desk, second-line support and recruitment initiatives.
  • Virtual agent assistants: Improve contact center agent performance and efficiency and decrease call resolution time by placing a conversational front end on a knowledge base.


Voice of the Customer (VoC): Interpret large volumes of unstructured conversational data (gathered through surveys) to deliver personalized experiences.

CSG’s Conversational AI Solution for Your Business

Human language is complex and nuanced, and context is a critical factor in comprehension. CSG’s solution leverages the power of continuous machine learning to elevate your conversational AI interactions. 

Our conversational AI understands everyday speech, phrasing and context to deliver humanlike, natural responses in customer interactions. 

CSG’s platform will help you rapidly develop, deploy and analyze conversational AI applications across all your channels in ways that are applicable to multiple use cases. The CSG conversational AI platform enables you to:

  • Rapidly build a broad range of conversational solutions: A single platform streamlines operations across all your channels. 
  • Deliver personal interactions: Advanced capabilities like multi-intent, contextual reasoning, conversational persistence and memory help you design the most intelligent and humanlike interactions possible. We pair these capabilities with back-end and third-party databases to offer rich custom reporting. 
  • Collect and learn: Our AI solutions collect structured and unstructured data from free-format dialogues, offering greater flexibility to engage with customers in a more natural and open-ended way. 
  • Analyze and adjust: The custom-built conversational analytics tools give you a snapshot of what your customers or employees say and think. These insights help the AI continuously improve and adjust conversational flows, further enhancing communication. 
  • Utilize and differentiate: The unique customer insights you gain from conversational AI allow you to optimize customer interactions and deliver first-rate CX that makes your business stand out from the competition. 

4 Steps to Planning and Implementing Conversational AI

Conversational AI is all about your customers or users. You want them to benefit from this innovative technology and get the support they need fast. Consider how users interact with your business and the pressing questions they have. You can then leverage AI tools to give them the necessary information quickly. Follow these four steps to plan and implement conversational AI:


1. Create a List of Frequently Asked Questions

Frequently asked questions (FAQs) are the base of conversational AI development. FAQs help you understand and define your users’ primary concerns and needs. Addressing these needs proactively will alleviate pressure on your support staff and reduce call volumes. 

You can use existing FAQs as a basis for your conversational tool. If you don’t have any existing documentation, speak to your customer service team. Support teams know what customers typically want or need from your business. 

If you are operating a bank, examples of FAQs may include:

  • How do I access my account online?
  • Where can I get my account number?
  • How do I find a branch near me?
  • When will my debit card be delivered?
  • How do I order checks?


With time, you can add to your questions and build a more robust library of responses. All you need are a few questions and answers to kick off the development process. 


2. Use the Frequently Asked Questions to Set Goals in Your AI Tool

Your FAQs are the foundation of user goals or intents. The conversational AI uses these questions to determine a customer’s intent when they engage with your business. For example, a user asking about account access most likely wants guidance on how to log in to their account or view their information. 

Once you outline your goals, you can use CSG’s innovative AI solution to connect them to intent and teach your conversational AI tool alternative ways a user may phrase questions. Returning to the access account example—a user may ask how to sign in, sign up or reset their password. 

If you are uncertain how your customers may phrase queries, partner with your support team or leverage analytic capabilities. Our experts can set up CSG’s solutions to monitor and mine web data from site search queries, transcripts and other resources.  


3. Review Goals to Determine Relevant Keywords

Use keywords, entities or nouns to establish your goals or intentions. Keywords are the words users mention within the main question, and they categorize topics or information related to what users are asking. Under the account information entity, you can house passwords, account numbers, logins and forgotten usernames or passwords.

Use the information from support staff or data collected from AI tools to identify keywords.


4. Bring It Together to Create Meaningful Interactions With Users

FAQs, goals and keywords work together to create a valuable, humanlike interaction with your customers or users. 

The goals you set enable your AI platform to understand what the user is asking, while the entities connect to relevant information. The result is a logical and helpful conversation that helps solve customer queries fast and with little to no intervention from your personnel. This automation gives your support staff the time to resolve more complex issues.

How Will Conversational AI Help Your Business?

The rapid return on investment (ROI) is why conversational AI should be a top priority for your business. Some of the best benefits of CSG’s conversational AI platform include:

  • Reduced call volume: Conversational AI reduces call volume to agents by 40%.
  • Increased customer satisfaction: Make customers happier by resolving 74% of conversations in real time with AI technology. 
  • Operational efficiencies: Our AI platform identifies trends, allowing you to engage with customers and enhance interactions with them proactively with automatic learning.
  • Consistent service: CSG’s conversational AI integrates with your business systems and databases, delivering consistency across channels. 
  • Preferred channels: Serve your customers in their channel of choice by using natural language processing across your platforms. You can use AI for SMS, chat, IVR, social and smart home devices. 
  • Language capabilities: Conversational AI is available in more than 35 languages and 26 countries to enhance customer experience on a global scale.
  • Enhanced contextual awareness: Our AI solution offers contextual understanding, providing your customers with frictionless dialogue even when they change the direction of the conversation.
  • Multi-intent comprehension: CSG’s innovative platform possesses multi-intent understanding, which means it can pick up on more than one customer intent and act upon it. This feature allows computer intelligence to reach a point where customers will be unable to tell if they’re engaging with a human or AI. 

Partner With a Leading SaaS Provider

If you’re ready to start using conversational AI, CSG’s expert team is here to simplify the process and help you see results–and ROI–quickly.  

CSG is an award-winning software-as-a-service (SaaS) provider. We use our four decades of experience and partnerships with thousands of clients to develop solutions that will impact your business’s bottom line. We provide: 

  • Extensive experience: CSG has an experienced global team. We will partner with you to help you make a meaningful contribution to your industry and deliver seamless, cohesive CX.
  • Innovative tech: Our conversational AI platform solves some of your most demanding business challenges with creative, future-forward solutions. 
  • Accelerated growth: We’re driven by purpose and dedicated to helping you see measurable growth. 

Speak to an Expert About Streamlining Your Operations and Enhancing Your CX

In a digital economy, adopting conversational AI is a must for your organization to remain competitive, continue to evolve and stay ahead of your competition. The CSG team will help you revolutionize customer interactions and drive business growth. 

Our conversational AI platforms are easy to integrate with your existing business processes, giving your customers a unified experience across all touch points. Speak to an expert today about streamlining your operations, boosting efficiency and creating memorable customer experiences.

Ready to take the first step towards integration?

Conversational AI software delivers results for your company & provides a seamless experience for your customers.

Learn more about Conversational AI

Understanding Conversational AI