What is a virtual agent?

AI-powered virtual agents — which are common in customer service, employee assistance, and sales — can serve customers without human interaction. Virtual agents can track a package, reschedule an appointment, reset a password, and more.

Outside of customer interactions, virtual agent AI has become popular for personal use. Just think about the common smart assistants from Amazon, Apple, and Google.

How do virtual agents work?

Virtual agents use natural language understanding (NLU) to recognize the way humans engage in common conversations. A typical virtual agent, such as a customer service function, can then engage with people in a natural way.

This natural flow is important because customers demand a positive experience — regardless of who or what answers the call.

It’s important to add customer-specific insights by integrating virtual agents with back-end systems. This allows for more personalized responses. Just like when a human is reached, an intelligent virtual agent will automatically know the purpose of the customer call. Also, virtual agents have learning capabilities to expand their capacity and address more tasks or requests.

Virtual agent use cases

You now know what virtual agents are, but how exactly will using one work for your company? Let’s look at some examples together across a number of industries to see how this technology could help you:

Customer service

Here’s the thing about customer service: one mistake and those customers? They’re already halfway out the door. In fact, in our 2025 Global Customer Engagement Report, we found that 75% of them said they’d likely take their business elsewhere after just one bad interaction.

But that’s OK, right? Because most customers don’t feel like they’re getting bad interactions from their customer service reps?

Unfortunately that’s not quite the case. In that same engagement report, we found that customers are in fact feeling frustrated with 63% of them citing long wait times as an issue and 61% saying they have to explain their issue multiple times to different agents.

Now, virtual agents (especially those powered by AI) are able to assist with common requests, adding information, automation, and self-service to conversations, with options for next steps. Plus, if you introduce a new product or service to your company, your team has the time to train while virtual agents (who immediately understand it) can address customers.

Ecommerce

If you’re running an ecommerce business, you already know the stakes are sky-high. One tiny hiccup in your customer’s shopping journey (say they’re experiencing a confusing checkout process or an unanswered question) and abandoning their cart faster than you can say “free shipping.”

Virtual agents don’t just answer questions; they anticipate them. They do so by analyzing shopper behavior, picking up on trends, and knowing when someone’s about to bail. Before you even realize there’s an issue, they’re jumping in with solutions. Need to check product availability? Track a return? Book or reschedule an appointment? Your virtual agent, powered by advanced conversational AI, can manage all of this over text or voice, all while reducing the average handle time and operational costs.

Finance

In finance, everything boils down to trust. Customers want instant responses, secure transactions, and zero room for error. Their money is quite literally at stake, after all.

Statistia conducted a global survey across 33 markets worldwide, and every single market rated trust as the most important aspect of banking.

You can operate at scale with virtual agents, especially when new financial services are launched. Virtual agents using natural language understanding can instantly respond to customer queries, no matter how many come in. This means you can quickly ease a customer’s mind, answering any questions they have instantly, resulting in better trust.

Productivity

If you’re not maximizing productivity, you’re falling behind. Virtual agents can also help you become your most productive selves.

They’re built to handle the work that bogs down your team—repetitive, time-consuming tasks like answering basic customer queries or processing routine transactions. Suddenly, they’re free to focus on solving complex issues, strategizing for growth, and engaging with your high-value customers.

Virtual agents also get smarter over time. They learn from every interaction, continuously improving their efficiency. You don’t have to keep hiring more staff as your company scales.

Virtual agents vs. chatbots

Now, all of these terms are constantly being used interchangeably. But we’re here to tell you that although they’re all extremely similar, they’re not exactly the same. Let’s get into their differences:

Chatbots operate on basic automation - think keyword matching and simple responses. They’re great for answering straightforward questions, like checking an order status or getting FAQs. Virtual agents, however, can offer more personalized, nuanced support and engage in more complex, dynamic conversations with customers.

Virtual agents vs. human agents

Although there are differences in how intelligent virtual agents and human agents work, the goal is the same — to elevate the customer experience:

Benefits of using virtual agents

Customers have needs all day, every day. Virtual agent software helps companies to:

• Operate at scale: A new product, feature, or benefit offering is sure to generate questions. You can be prepared with virtual agents that use natural language understanding to immediately address customers (and more of them).

• Offer 24/7 customer service: Customers are no longer tied to store or office hours. That’s because a virtual agent can quickly answer frequently asked questions 24/7.

• Reduce overtime costs and staff stress: With virtual agents handling common tasks and initial triage, human staff can enjoy normal work hours. This provides the dual benefits of less stress and lower costs.

• Free up staff to address more pertinent matters: Since virtual agents can minimize the customer queue, this allows staff to better focus on customers with more complex tasks.

Boost the experience with speed: It’s no secret that customers want faster resolutions — and virtual agents are up to the challenge.

Benefits of using human agents

There are instances when humans simply are better, especially when you need to:

• Boost the experience through empathy and understanding: The ability to look, listen, and learn is huge. Just as important, a calm and comforting voice can do wonders for the customer experience.

• Handle complex issues: There are issues that only humans can properly address. This is where emotional intelligence can save the day.

• Offer creative solutions: Humans can think creatively and remove themselves from a linear script, which helps them to thoughtfully problem solve.

• Cultivate and maintain customer relationships: Over time, humans naturally develop a history and points of reference. These are invaluable when building all-important customer relationships.

Why virtual agents and humans work better together (BFFs)

Virtual agents and humans share obvious differences. Some of these feed into the fear factor of AI eliminating jobs. But by working together, intelligent virtual agents and human agents can form a classic complement on a collaborative team.

That’s because both share the same goal — to elevate the customer experience.

And elevating the customer experience should start with the basic customer desire to be engaged and understood. This often begins with being present. But if humans are inundated with work, it’s difficult for them to even reach the customer.

Virtual agent software helps by taking care of high-volume, simple, and repetitive tasks. And they do this around the clock, which boosts efficiency and strengthens customer relationships. Automation also streamlines the staff’s workflows so they produce their best work by providing personalized customer service.

Virtual agents work 24/7, so human agents can deliver five-star service. They’re BFFs in the customer experience world.

How to choose virtual agent software

Every business is different. What works for one company might not work for another. So, when choosing a virtual agent, you want to make sure it ticks all the right boxes for your specific needs.

1. Define business needs: Start with a clear idea of what you want. What exactly do you want a virtual agent to do for your company? Some common objectives include speeding up service response times, reducing costs, and making employees happier. But ultimately, only you know what you want it to achieve. 

2. Evaluate technical capabilities: In the same way every business is different, so is every virtual agent software provider. Some are more advanced than others. So make sure you work out if it uses natural language processing to understand and reply to all customer queries. Or if it can integrate with your current systems and tools. You don’t want to work with a provider that can’t do this because you’ll lose money.

3. Consider scalability: You need a solution that grows with you. Will it scale as your team grows? Will it work smoothly with other tools if you switch things up later?

4. Think about onboarding support: Adopting new tech can be tough, especially when your team worries about job displacement. When picking a solution, consider the kind of ongoing support you’ll get and how fast you can get it up and running.

Key virtual agent software metrics

At Vonage, we work with some of the world’s biggest companies. We've found that leaders track the effectiveness of their virtual agents using the following metrics:

• Resolution rate: How many service desk problems the virtual agent handles on its own.

• Time to value (TTV): How quickly you start seeing results from the virtual agent.

• Time to resolution (TTR): How long it takes the virtual agent to fix employee issues.

• Issue prevention: The percentage of issues the virtual agent stops before they even happen.

What the future holds for virtual agents

As consumer demands continue to grow, so will the need for 24/7 service. Given the popularity and usage of AI-enabled engagements, interactions with virtual agents will also increase.

That’s why it’s important to embrace AI technologies now so that you can monitor customer usage. This helps you identify where AI can help and where the human touch is most needed.

Equally important is emphasizing the connection of AI with your staff. After all, AI is only as smart as the humans who train it. For example, with a little training to define requirements, desired outcomes, and metrics, a virtual agent can initially handle what was once deemed a complex request. This further streamlines the workflow, which allows your team to dedicate even more time to in-depth tasks.

How to start implementing virtual agents for your business

With the omnipresent AI chatter and benefits, your business may be ready to dive in. Or you might be overwhelmed and unsure how to move forward.

But an all-in (or nothing) approach is a huge undertaking and perhaps not necessary. That’s because you can ease into AI and virtual agent integration. And Vonage is here to help.

Vonage AI Studio

Our low-code conversation designer empowers developers and non-developers alike to create and deploy AI virtual agents that operate in natural language on multiple channels. This enhances the multichannel experience across voice, SMS, WhatsApp, website chat, and more.

Use cases

AI Studio allows you to communicate with customers across various channels by creating and deploying end-to-end conversations in real-time. This relieves the pressure on agents during high-demand times. Some of the more prominent use cases include:

• Virtual agents: Enable inbound and outbound conversational AI capabilities over text and voice, all powered by proprietary Vonage technology. With the help of a virtual agent, businesses can automate many interactions across their operations, which reduces the average handle time and costs — while increasing human agent productivity.

• Automated campaigns: Turn notifications into conversations to deliver optimized, personalized experiences while maximizing customers' long-term value.

• Fallback to channel: Use various rules to switch between different communications channels across voice, SMS, WhatsApp, website chat, and more.

• User segmentation: Implement semi-supervised or unsupervised user segmentation capabilities. These can be defined and assigned to end users from various data sources.

• Integrations: Add third-party services through webhooks or a dedicated service.

Industries, companies, and departments

AI Studio provides automation to multiple industries, such as airlines, hotels, retail and ecommerce, education, utilities, healthcare, banking, and insurance, just to name a few. Our solution is also scalable for different company sizes and departments, for example:

• Contact center: Track packages and returns, check product availability, or book or reschedule appointments

• IT services: Manage service requests, such as password resets, installations, and incident support; create tickets; and provide status updates

• Marketing: Broadcast outbound campaigns, send reminders and surveys, and support lead generation

Vonage Natural Language Understanding (NLU)

Vonage AI Studio uses our in-house solution to interpret messages, classify intent, and capture conversational context. This includes multi-language support and leverages seamless voice conversations through text-to-speech (TTS) and automatic speech recognition (ASR). In addition, you can integrate custom code to allow tailored conversations — which is helpful when seamlessly transferring the virtual agent call to a human agent through call routing (across the voice and text channel).