Virtual Agents

What is a Virtual Agent?

A virtual agent is an AI-powered software designed to simulate human conversation and perform tasks typically handled by customer service representatives. These agents interact with users via text or voice, leveraging technologies like natural language processing (NLP), machine learning, and robotic process automation (RPA) to understand queries and provide relevant responses.

The Basic Idea

We are increasingly seeing a new employee supporting companies’ customer service efforts—virtual agents. You have likely run into them before. They often include those “Let’s talk” or “chat with us” functions on the bottom right corner of a website or the automated voice in phone calls asking you to summarize your problem in a few keywords. You probably find them annoying, yearning for a human customer service representative who can recognize the nuance of your problem. Despite our frustration, these virtual agents are quickly becoming our first point of contact with any organization. So, what are they, exactly?

Virtual agents are, in essence, a software or bot that mimics human actions through automation without needing human involvement. They achieve dialogue, text, or voice, to interact with users through the direction of pre-set rules and data that is fed into the software. The capabilities of virtual agents are thanks to natural language processing (NLP), machine learning, and robotic process automation (RPA). So, their ability to maintain an interaction with humans makes them useful for routine customer service. 

In addition to virtual agents, you may have also heard the term “chatbot.” A chatbot is a subset of a virtual agent describing a computer program that can mimic a text-based conversation in real-time. An example would be Bank of America’s Erica, an AI-powered chatbot designed to assist customers with a range of banking-related services like transaction history inquiries. The interactions are instructed by a set of pre-programmed inputs that lead to a corresponding answer in the flow of a decision tree. Virtual agents are not just extremely sophisticated chatbots. They have the power to understand the intention behind a freeform text or speech from users and automate a response while continuously improving its performance. In a nutshell, chatbots respond while virtual agents comprehend, learn, and perform.

Sometimes, the term “virtual agents” is also mixed up with “virtual assistants.” Virtual assistants are what we describe as digital products like Apple’s Siri or Amazon’s Alexa. Obviously, they aren’t humans providing service remotely.

From your experience with these digital products, you are probably thinking that virtual agents and virtual assistants are the same thing. Yes, they are both self-automated systems that imitate human activity. But on a technicality, a virtual agent works for an enterprise with commercialized systems.1 So, while Siri or Alexa functions as a personal assistant on your device, a true virtual agent functions as a business assistant, automating services for customers and employees. But for this article, we are going to talk about all types of virtual agents, including virtual assistants.

Here is a table summarizing the different tasks they complete:

Virtual agent technology is powered by a mix of natural language processing, robotic process automation (RPA), and intelligent search. But more recently, AI technology and machine learning have been incorporated into virtual agent technology. Integrating machine learning with virtual agent technology opened an avenue for virtual agents to continuously grow and improve their understanding of human language. We have since passed the era of scripted responses and have stepped into a time in technology where unpredicted human queries can be analyzed and genuine responses can be provided.

Advances in AI technology make virtual agents capable of responding to a wider range of requests compared to traditional virtual agents. It is especially thanks to natural language processing technology that AI virtual agents can analyze any form of text or speech with greater accuracy. Interactions with traditional chatbots, on the other hand, are limited to a predetermined set of rules and predefined terms. This makes conversations with AI agents seem natural and feel almost as though you are speaking to a human.

Given just how powerful virtual agents are nowadays, it makes sense that businesses opt to use them to support and enhance their operations. Virtual agents come in types and can be customized based on the business’s specific needs and the resources available to maintain them. For example, a company can combine virtual agents with their customer service department as an integrated solution to address long waiting times for a human agent. Or, a company can use a virtual agent in the onboarding of new hires as an end-to-end solution to address the shortage of available trainers. 

The real problem is not whether machines think but whether men do”


– B.F. Skinner

About the Author

A person in a graduation gown smiles, standing in front of a pillar with a partially blurred outdoor setting in the background.

Samantha Lau

Samantha graduated from the University of Toronto, majoring in psychology and criminology. During her undergraduate degree, she studied how mindfulness meditation impacted human memory which sparked her interest in cognition. Samantha is curious about the way behavioural science impacts design, particularly in the UX field. As she works to make behavioural science more accessible with The Decision Lab, she is preparing to start her Master of Behavioural and Decision Sciences degree at the University of Pennsylvania. In her free time, you can catch her at a concert or in a dance studio.

About us

We are the leading applied research & innovation consultancy

Our insights are leveraged by the most ambitious organizations

Image

I was blown away with their application and translation of behavioral science into practice. They took a very complex ecosystem and created a series of interventions using an innovative mix of the latest research and creative client co-creation. I was so impressed at the final product they created, which was hugely comprehensive despite the large scope of the client being of the world's most far-reaching and best known consumer brands. I'm excited to see what we can create together in the future.

Heather McKee

BEHAVIORAL SCIENTIST

GLOBAL COFFEEHOUSE CHAIN PROJECT

OUR CLIENT SUCCESS

$0M

Annual Revenue Increase

By launching a behavioral science practice at the core of the organization, we helped one of the largest insurers in North America realize $30M increase in annual revenue.

0%

Increase in Monthly Users

By redesigning North America's first national digital platform for mental health, we achieved a 52% lift in monthly users and an 83% improvement on clinical assessment.

0%

Reduction In Design Time

By designing a new process and getting buy-in from the C-Suite team, we helped one of the largest smartphone manufacturers in the world reduce software design time by 75%.

0%

Reduction in Client Drop-Off

By implementing targeted nudges based on proactive interventions, we reduced drop-off rates for 450,000 clients belonging to USA's oldest debt consolidation organizations by 46%

Read Next

Notes illustration

Eager to learn about how behavioral science can help your organization?