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The Evolution of AI Agents: Beyond Chatbots and Prompt Engineering​Artificial Intelligence (AI) is undergoing a major transformation.

Image by Igor Omilaev

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Date - 03.11.2024                                                                                                                         3 mins read​

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We’ve moved past the era of simple chatbots and into a world where AI agents and agentic AI systems are automating decision-making, handling complex workflows, and even collaborating like human teams. This shift is changing how businesses operate, making AI a true partner in problem-solving rather than just a passive tool.​

 

Demystifying AI Agents, Agentic AI, and Large Language Models (LLMs)

 

LLMs like GPT-4 are not agents—they are language-processing models that generate human-like text. They can answer questions, translate languages, summarize content, and even simulate conversation, but they lack true autonomy.

  • Example: An LLM can generate an email response or summarize a legal document, but it won’t independently decide to send an email or file a report.

  • Limitations: LLMs require prompts and do not perform actions on their own. They rely on external agents or workflows to integrate into real-world applications.​

 

AI agents are software programs that perform specific tasks with minimal human intervention. They often work within predefined rules and operate in controlled environments.

  • Example: A chatbot that helps users reset passwords or an AI assistant that schedules meetings. These agents follow programmed workflows, but they do not independently make high-level decisions.

  • Limitations: AI agents typically require human-defined instructions and are not fully autonomous. They may struggle with tasks outside their pre-trained scope.​

 

Agentic AI takes things further by acting autonomously, making independent decisions, and adjusting strategies in real-time. Unlike standard AI agents, agentic AI has reasoning capabilities, can plan multiple steps ahead, and adapt based on evolving data.

  • Example: A financial AI that monitors market trends, adjusts investment portfolios in real-time, and takes corrective actions without human intervention.

  • Key Feature: It doesn’t just execute tasks—it thinks, plans, and optimizes to achieve long-term objectives.​​

 

Agents Are More Than Just Prompt Engineering​

 

One common misconception is that AI agents are all about prompt engineering—crafting the perfect input to get a desired response. While prompt design is important, real AI agents go far beyond that.Modern AI agents use tool-use frameworks, modular reasoning, and self-improving algorithms. They can plan multiple steps, access databases, interact with APIs, and make adjustments based on real-time data. For example, an AI customer service agent doesn't just reply to queries—it retrieves past purchase data, verifies refund policies, and even schedules follow-ups, reducing human workload significantly.

 

​Agents Are Not Just LLMs: The Role of Knowledge Graphs, ML, and RAGs​

 

Another common myth is that AI agents rely only on LLMs. In reality, their intelligence comes from a combination of technologies that work together.Knowledge Graphs – These structured databases help AI understand relationships between entities (e.g., linking a customer's past orders to their preferences).Machine Learning & Neural Networks – AI agents continuously learn from data, refining responses and improving accuracy over time.Retrieval-Augmented Generation (RAG) – Instead of just relying on pre-trained data, AI agents retrieve real-time information from external sources to ensure up-to-date, contextually relevant responses.Multi-Modal Inputs – Some agents integrate text, speech, and vision, allowing them to process images, voice commands, and sensor data in industries like healthcare and manufacturing.AI agents combine these elements to act proactively rather than just reacting to prompts. This allows them to make decisions based on real-world data instead of just generating text.​

 

The Rise of AI Agents: Business Applications​

 

Businesses across industries are rapidly integrating AI agents, and for good reason—they streamline operations, improve customer interactions, and enhance decision-making.Healthcare – AI agents assist doctors by summarizing patient histories, scheduling appointments, and even suggesting potential diagnoses based on symptoms.Finance – AI agents detect fraud, automate loan approvals, and personalize investment recommendations.Retail & E-commerce – AI-driven shopping assistants provide personalized product suggestions, track shipments, and handle customer queries without human intervention.Supply Chain Management – AI agents predict demand fluctuations, optimize inventory levels, and ensure efficient logistics.​

 

Final Thoughts​

 

The shift from chatbots to intelligent AI agents is more than just a tech upgrade—it’s a paradigm shift in how businesses and people interact with AI. As AI agents become more sophisticated, they will move beyond automation and into true decision-making roles, transforming industries at a rapid pace.To stay competitive, companies must embrace AI agents not just as response generators, but as strategic tools capable of reasoning, planning, and improving over time. The future of AI is here, and it’s far more powerful than just a well-crafted prompt. 

Developing Dynamic AI Agents and Agent Graphs for Personalized Customer Engagement

Case Study: Large e-commerce client in Middle East

Image by Kanhaiya Sharma

Case Study 

Date - 11.02.2025                                                                                                                   4 mins read​

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Business Problem

Modern businesses struggle with effectively utilizing customer feedback to provide personalized offers, discounts, and incentives aimed at maximizing sales and customer satisfaction. Traditional recommendation systems often lack the ability to dynamically adapt to customer preferences, leading to inefficient marketing strategies. Some customers may respond better to discounts, while others prefer gift coupons or loyalty points.

We studied the business problem and proposed a multi-agent system was needed to intelligently process customer feedback, analyze purchasing behavior, and dynamically select the most effective engagement strategy. The objective was to maximize customer retention, reordering rates, and revenue growth, leveraging AI-driven recommendations tailored to each individual customer.

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Solution: AI-Driven Multi-Agent System

To achieve this, we developed a multi-agentic system that utilizes a combination of Machine Learning (ML) models, Reinforcement Learning (Q-Learning/Multi-Agent Reinforcement Learning - MARL), and LLMs to dynamically invoke specialized agents. The system uses LangChain's Agent Graph for real-time decision-making and ensures personalized offers are sent based on customer behavior and sentiment analysis.

 

Technical Implementation

The system was architected using the following technologies:

  • Azure OpenAI & Locally Trained LLMs (DeepSeek-Tiny, Gemma-2B) for conversational intelligence and context understanding.

  • DistilBERT for sentiment classification to gauge customer satisfaction.

  • Multi-ML Models, including Gradient Boosting Decision Trees (GBDT) for customer segmentation, Transformer-based models for sentiment analysis, Neural Collaborative Filtering (NCF) for recommendation, and Reinforcement Learning (Q-Learning/MARL) for offer optimization for customer profile analysis and purchasing behavior prediction.

  • Q-Learning & MARL for dynamic agent invocation based on engagement effectiveness.

  • CosmosDB for storing customer interactions, historical feedback data, and real-time engagement metrics. To enhance retrieval efficiency, embeddings were created from textual feedback using Sentence Transformers, enabling similarity-based searches and contextual recommendations.

  • FastAPI for managing agent communications in a distributed environment.

  • T4 for email summarization and other efficiency improvements to optimize engagement processing and offer personalization.

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1. Dynamic Agent Invocation Based on Customer Behavior

When customer feedback is received, multiple agents are activated:

Purchasing Behavior Analysis Agent - Determines previous buying patterns.

Offer Selection Agent - Fetches the most suitable offer (discount, coupon, loyalty points, etc.).

Sentiment Analysis Agent - Evaluates the likelihood of a positive response.

Engagement Strategy Agent - Chooses the optimal engagement type (email, SMS, push notification).

Reinforcement Learning Agent - Continuously improves offer targeting based on success metrics.

 

2. Reinforcement Learning for Optimization

The system employs Q-Learning/MARL to optimize agent activation. Over time, it learns which engagement strategies work best for different customer segments, ensuring maximum sales and retention.

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3. Cost Efficiency with Locally Trained LLMs

The locally trained LLMs refer to models that were fine-tuned and optimized in-house rather than relying entirely on cloud-based APIs. This was done to reduce dependency on expensive cloud services, improve inference efficiency, and maintain control over data privacy.

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The key techniques used for training these LLMs locally include:

  • Quantization (INT4, INT8): Reducing model size while maintaining performance.

  • Fine-tuning on domain-specific data: Adapting pre-trained models for customer engagement.

  • Optimization for edge deployment: Ensuring the models run efficiently on local hardware, such as Mac M4.

  • Using DeepSeek-Tiny: A small-scale MoE (Mixture of Experts) model tailored for customer support tasks.*

 

By training locally, we achieved lower latency, reduced cloud API costs, and better adaptability for personalized engagement strategies.

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Business Impact & Cost Savings

  • Increased Sales: Personalized offers resulted in a 15-20% increase in conversions.

  • Higher Retention: Customers who received tailored incentives had a 25% higher reordering rate.

  • Lower AI Costs: Training LLMs locally saved 40% in cloud API expenses compared to fully cloud-hosted models.

  • Faster Response Time: Optimized inference with DeepSeek-Tiny reduced offer processing latency by 30%.

Conclusion

By implementing a multi-agent AI system using reinforcement learning and dynamic agent invocation, businesses can achieve a highly adaptive and cost-efficient customer engagement strategy. This solution not only maximizes sales and retention but also optimizes AI costs through local training, quantization, and efficient orchestration using LangChain Graphs. The future roadmap includes real-time speech interaction and further reinforcement learning enhancements to improve personalization effectiveness.

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