Not All AI Chatbots are Equal: The 3 Generations of AI Chat, Part 2

In this two part series, we’re taking a closer look at AI chat and how it has evolved over the generations. Specifically, we’re talking about chatbots designed to serve businesses—in other words, virtual assistants.

Last week, in Part 1, we examined the first and second generations of AI chat, including: 1) how much time it takes to roll them out, 2) how much you can expect to pay upfront, and 3) how much control you’ll have once they’re up and running.

This week, we’ll be getting up close and personal with third generation chatbot technology.

3rd Generation AI chat features a major backend upgrade

At the outset, third gen AI chat might sound similar to second gen in that it’s rules-based and it can learn from labeled data. But there are some pretty significant differences, which translate into huge benefits for businesses in terms of time-to-market and long-term cost savings.

For starters, the backend data systems don’t actually need to be coded, and data doesn’t need to be manually labeled. Instead, existing data—like CRM system data, FAQs, live call transcripts, and email histories—can simply be uploaded into the system. This takes a few hours, tops. Without the need for engineering resources to connect with custom APIs, all the usual backend labor is significantly reduced, which keeps upfront build costs low.

Machine learning practically eliminates maintenance

With so much valuable data sources at its disposal, and response-matching algorithms running behind the scenes, virtual assistants can adaptively become more and more “intelligent” the longer they’re in place. Moreover, maintenance costs are kept to a minimum because all of this learning happens automatically.

The number of a third gen chatbot’s supported use cases is practically limitless—it’s only bound by the amount of data that’s available for uploading. Use cases scale up in line with the number of use cases. Essentially, they grow as the data grows.

Real-time control protects the customer experience  

Many companies find it difficult to make the leap of faith and turn over their customer interactions to a virtual assistant. With the first and second gen chatbots, that’s really what they have to do. On-the-fly control of system responses is simply not possible.

In contrast, third gen chatbots feature a user-friendly management console. With it, managers and executives can control real-time system responses according to internal best practices. It’s as easy as opening an easy-to-use interface and replacing the system’s current response with a new one.

It’s a chatbot that truly deserves to be called “virtual assistant”

Compared to their first and second gen cousins, third gen virtual assistants excel by leaps and bounds. Customers can communicate with them in natural language, rather than just single words like “yes” and “no.” This is possible because on the backend virtual assistants run every communication through language models. As a result, not only do they understand conversational language but they can also respond to customers in a way that mimics natural speech.



The best can mimic a business’s top customer service representatives, salespeople, and IT support agents. When they work well, they can not only answer questions but also perform numerous transactions, like scheduling meetings, checking shipping information, paying bills, and making purchases with credit cards. Needless to say, customer satisfaction skyrockets.

Today’s virtual assistants can be deployed on almost any interface, including voice response, mobile apps, SMS, the web, and instant messaging. In particular, third gen virtual assistants are ideal for businesses that don’t have engineering resources to devote to maintenance. Plus, with a typical rollout time of a few hours to a couple days, they’re perfect for businesses that are eager to test out the technology to see if it’s right for them.

AI chat has come a long way

It’s important to understand what the various generations of AI chat technology can actually do. If you invest in a solution that becomes too costly over time, you’ll end up scrapping it anyway. Or, if it disappoints your customers, you’ll set yourself back. We all know how quickly customers reject automated IT when their initial experiences are poor. It can take many years before they’ll regain confidence.

Do yourself a favor. Learn how cost-effective and low-maintenance third generation AI chat can be for your business.

Its more than just good sense for customer service. Done right, setting up technology for a conversational user interface (CUI) can have long-term benefits for your entire company.

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