Conversational AI combines natural language processing, machine learning, and speech recognition to enable human-like interactions across chat, voice, and digital channels. It supports customer service, sales, and internal workflows by automating responses, reducing wait times, and personalizing engagement. Core benefits include scalability, cost efficiency, and consistent 24/7 availability. Challenges include ensuring data privacy, managing integration with legacy systems, and training AI for context-specific accuracy. Best practices: define goals, design for omnichannel use, train with diverse data, and continually optimize. Done right, conversational AI improves CX, employee productivity, and business outcomes.

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