conversational AI

Mastering Conversational AI: DRUID’s Guide for Practitioners – Part 1

This two-part series offers a guide for practitioners in creating effective conversational AI applications to unlock myriads of benefits for organizations.

AI is not just a mere enhancement to our lives; it has the power to transform them fundamentally.

Every aspect of our existence is poised to undergo a profound reshaping as individuals are empowered with tools of unparalleled power, adaptability, and personalization. These tools will be easily accessible through simple natural language interactions, paving the way for AI to become our exceptional ally and superpowered collaborator in various domains.

Conversational AI stands out among these transformative technologies, enabling natural and engaging interactions between humans and machines through images, videos, voice, or text. Its applications range from chatbots to voice assistants and conversational AI agents. By harnessing the potential of conversational AI, businesses and organizations can unlock numerous benefits such as improved customer service, increased sales, enhanced employee productivity, cost reduction by 15%-70%, and a driving force for innovation.

This two-part series article is written to provide a practical practitioner guide to anyone who wants to learn how to create effective and engaging conversational AI applications. The series will cover the following topics:

  1. What are the key components of conversational AI, and how do they work?
  2. What are the best practices for designing conversational AI applications?
  3. What are the common challenges and pitfalls of conversational AI, and how to avoid them?
  4. What are the key roles you need to build conversational AI applications?
  5. What are some examples of successful conversational AI applications in different domains and industries?
  6. What are the benefits customers and businesses are reaping from Conversational AI?

This is part one of a two-series article that will address the key components of a Conversational AI solution and the design part. So, let’s jump in!

What Are the Key Components of Conversational AI, and How Do They Work?

Conversational AI applications typically consist of a few main components: a user interface, natural language processing (NLP), context awareness, dialogue management, dynamic text-to-speech, context awareness, personalization and backend application integration.

By combining these components, conversational AI applications create an interactive and natural conversational experience, enabling users to interact with AI systems in a human-like manner and obtain valuable information or perform tasks more efficiently.

conversational AI NLP NLU

User Interface (UI) – The Window That Is Used to Interact with a Conversational AI Platform

The user interface is the component that allows users to interact with the conversational AI application using voice or text. The UI is responsible for displaying the user's input, displaying the conversational AI's response, and providing feedback to the user. It can be a web-based chat widget, a mobile app, a smart speaker, a social media platform, or any other channel that supports voice or text input and output.

In order to create an engaging experience, a user interface should be designed to provide a smooth and intuitive user experience that matches the expectations and preferences of the target audience. It should be able to handle different types of user input, such as commands, questions, statements, feedback, or emotions.  The user interface should provide clear and consistent instructions as well as unambiguous feedback to guide the user through the conversation by using appropriate language style, tone, and personality to match the brand identity and the user's mood.

In addition, the user interface should allow for the use of rich media elements, such as images, videos, emojis, or buttons, to enhance the interaction and provide more options.  And importantly, it must provide error handling and recovery mechanisms to handle unexpected or ambiguous user input.  After all, no one wants to deliver an ‘a computer says no’ experience!

Intent Recognition – The Ability to Understand What the User Is Requesting, Even If It Is Phrased Unexpectedly

Intent recognition involves identifying the user's intent or purpose behind a given input, query or statement. It plays a vital role in conversational AI systems by enabling them to understand and interpret user intentions. By accurately identifying the user's goals, conversational AI systems can provide more relevant, helpful, and personalized responses, improving the overall user experience.  Excellent intent recognition is critical if you don’t want to annoy your users with roadblocks during their conversational experience.

By identifying the user's intent, conversational AI systems can route the user to the appropriate department or agent who can address their specific needs, improving efficiency and customer satisfaction. In addition, intent recognition enables the system to understand user requests and automate tasks accordingly. For example, if a conversational AI platform user wants to schedule a meeting, the system can extract the relevant information and perform the scheduling automatically.

Furthermore, understanding the user's intent allows the system to provide personalized assistance and recommendations based on their specific needs and preferences.  Intent recognition is a crucial component of natural language understanding, as it helps bridge the gap between user inputs and system responses, enabling more effective and meaningful interactions.


Natural Language Processing (NLP) – The Ability to ‘Read’ or Parse Human Language Text

Natural language processing (NLP) is the component that enables the conversational AI application to understand and generate natural language. It consists of two subcomponents: natural language understanding (NLU) and natural language generation (NLG).

NLU is the process of analyzing the user input and extracting its meaning and intent. For example, if the user says, ‘I want to book a flight to New York’, NLU will identify that the user wants to perform a booking action with a destination parameter of New York.

NLG is the process of producing a natural language response based on the dialogue context and the system logic. For example, if the system needs to confirm the booking request with the user, NLG will generate a response such as ‘Okay, I have found a flight to New York for $500. Do you want to book it?’

NLP relies on various techniques and models from machine learning (ML), such as deep neural networks (DNNs), recurrent neural networks (RNNs), transformers (e.g., BERT), or generative pre-trained language models (e.g., ChatGPT). These techniques and models enable NLP to learn from large amounts of data (e.g., text corpora) and improve its performance over time.

Dynamic Speech-to-Text

These components enable the AI system to convert spoken language (audio signals) into written text (speech recognition) and generate spoken responses from written text (speech synthesis) whilst supporting a variety of languages, voices and accents. This functionality is crucial for voice-enabled conversational AI applications.

Speech recognition systems utilize acoustic models, language models, and pronunciation dictionaries to analyze and interpret spoken words and phrases. These models are trained on large amounts of data to improve accuracy and account for variations in speech patterns, accents, and background noise. In addition, models may be trained on multi-languages as today’s businesses operate across borders in a multi-lingual world. It enables users to interact with the AI system through speech, making it convenient for hands-free or voice-driven interactions in various scenarios like virtual assistants, voice-controlled devices, or call centre automation.

Dialogue Management - The Component That Controls the Logic and Flow of the Conversation Between the User and the System

It determines what the system should do or say next based on the user input, the system state, and the system goals. Dialogue management can be rule-based or data-driven.

Rule-based dialogue management uses predefined rules and scripts to guide the conversation along a fixed path. It is easier to implement and debug, but it is less flexible and scalable. It can handle simple and predictable conversations, but it may fail to handle complex or unexpected situations. 

Data-driven dialogue management uses ML models to learn from data and generate dynamic responses based on the dialogue context. Its management is more flexible and scalable, but it is harder to implement and debug. It can handle complex and diverse conversations, but it may generate inconsistent or inappropriate responses.

Context Awareness – Ability to Follow Conversation History, Translate, Recall and Memorise Information Over Multiple Conversations

Conversational AI platforms aim to maintain and utilize relevant information about the ongoing conversation to provide more natural, meaningful, back-and-forth personalized interactions. In the context of conversational AI, it includes details such as the history of the dialogue, previous user inputs, system responses, user preferences, and any other relevant contextual information such as system responses to ensure a seamless and personalized interaction.

Context awareness allows conversational AI systems to understand and remember previous interactions, providing a more seamless and natural conversation flow. It enables the system to keep track of the conversation's progression over time, maintaining continuity whilst understanding user intents and preferences. By understanding and utilizing context, conversational AI systems can deliver more accurate, relevant, and personalized responses, leading to more engaging and effective interactions with users.


Personalization and User Profiling

The ability to interact with internal applications or external data sources to AI applications can leverage user-profiles and historical data to personalize the conversation and provide tailored recommendations or responses based on individual preferences and past interactions.

Personalization involves adapting the conversational AI system's responses, recommendations, and overall experience to align with the specific needs, preferences, and context of individual users. They are crucial components of conversational AI systems as they contribute to enhancing user satisfaction, engagement, and overall user experience. By understanding individual users and delivering personalized interactions, conversational AI systems can provide more meaningful and effective support, recommendations, and information increasing user satisfaction and engagement.

Entity Extraction – Necessary to Understand Complex Commands and Analysis

Entity extraction is a natural language processing (NLP) technique that involves identifying and extracting specific pieces of information, known as entities, from unstructured text data, from the user's input. Entities can be various types of information, such as names of people, organizations, locations, dates, product names, or any other predefined item(s) of interest.

The goal of entity extraction is to automatically recognize and classify these entities within the text, making it easier to understand and analyze the information.  It helps transform unstructured text data into structured, machine-readable formats, enabling further processing and analysis to tailor the AI system's responses or trigger specific actions.

Backend Integration – The Ability to Connect a Conversational AI Platform to a Company’s Internal Applications or to Relevant External Data Sources

Backend integration is the component that connects the conversational AI application to external data sources and services, e.g., Salesforce CRM, a company’s support database, or OpenAI’s ChatGPT. It enables the system to access and update information, perform actions, or trigger events based on user input and system logic.

For example, if the user wants to book a flight, the system needs to integrate with a flight booking service to check availability, prices, and options. If the user wants to pay for the flight, the system needs to integrate with a payment service to process the transaction.

And whilst there are some challenges to backend integration, including ensuring data quality, security, and privacy, the ability to grab existing data personalizes and speeds up the ability of the conversational business application to better serve the end user, e.g., draw forward historical data, such as credit card data, purchase data, credit scores, etc.


What Are the Best Practices for Designing Conversational AI Applications?

Designing conversational AI applications is not only a technical task but also a creative and human-centric one. It requires understanding the needs and expectations of the users, as well as an understanding of the capabilities and limitations of the technology. Here are some of the best practices for designing conversational AI applications.

Start With User Research

Understand who your users are, what they want to achieve (intents), how they communicate, the words or phrases they use and what challenges they face, and most importantly, what outcomes they want to achieve. Use methods such as interviews, surveys, personas, or journey maps to gain insights into your users.

Define Use Cases

Identify what problem(s)s you want to solve with conversational AI, what value you want to provide to your users, what goals you want to achieve, and what metrics you want to measure. Use methods such as problem statements, value propositions, or OKRs (objectives and key results) to define your use case.

Design Your Flawless Conversation Experience

Sketch out how your conversation will flow from start to end, what topics you will cover, what questions you will ask or answer, and what actions you will perform or suggest. Use methods such as dialogue trees, flowcharts, or scripts to design your conversation.

Prototype, Test and Iterate Your Solution

Build a low-fidelity prototype of your conversational AI application, i.e., a minimum loveable product. Test your prototype with real users using methods such as usability testing, user feedback, or A/B testing. Evaluate your solution based on user satisfaction, task completion, and solution performance. Then iterate and improve your conversational AI solution over time by constantly checking and acting upon the data analytics provided by the platform and feedback from the platform users.



Conversational AI is a transformative technology that can enable natural and engaging interactions between humans and machines 24/7. It can provide huge benefits for businesses, such as improving customer service, increasing sales, enhancing employee productivity, reducing costs, and driving innovation.

With this series, we are trying to provide a comprehensive guide for practitioners who want to learn how to create effective and engaging conversational AI applications. We have covered the key components of conversational AI and how they work, the best practices for designing conversational AI applications, the common challenges and pitfalls of conversational AI development and how to avoid them, the tools and platforms that can help you build conversational AI applications, and some examples of successful conversational AI applications in different domains and industries.

Stay tuned for part 2 coming up next week!

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