The chatbots are coming! The chatbots are coming! The chatbots…are already here.
What’s a chatbot?
A chatbot is a service [computer program], powered by rules and sometimes artificial intelligence, that a user interacts with via a chat interface.1
Chatbots are easy to use and many customers prefer them over calling a customer service agent on the phone. Interacting with chatbots tends to be faster and less invasive for the customer. Chatbots can also save money for companies deploying them, and are easy to set up, because chatbots use messenger apps already found on smartphones.2
As a result, chatbots are rapidly becoming the interface between businesses and their customers.
There’s a chatbot in your future
Business Insider recently reported3 on a survey conducted by Oracle of senior marketing and sales leaders. Eighty percent of survey respondents stated that they were already using or planned to use chatbots by 2020. The survey found that these business leaders are turning to automation technologies, like chatbots, for things like sales, marketing, and customer service. Forty-two percent of survey participants believed that automation technologies will most improve the customer experience. Forty-eight percent said that they already use automation technology for these business functions.
Chatbots will also save businesses money.
Business Insider also reported significant cost savings opportunities through automating customer management and sales positions in the US. Twenty-nine percent of customer service positions in the US could be automated through chatbots and other tech, translating to $23 billion in savings from annual salaries, which does not even factor in additional workforce costs like health insurance.4
How are chatbots being used?
The findings indicated by the Oracle survey are already being realized in businesses that have deployed chatbots.
One example is “GWYN”5, the chatbot from 1-800-Flowers.com. GWYN helps the customer search for and place their gift order online. Using natural language, GWYN interprets customer questions about a product or service; “she” can then follow up with additional questions about the intended audience, occasion, and sentiment in order to suggest best-fit gifts for a particular customer. While the company has not revealed specifics, the 1-800-Flowers.com CEO stated, “our …business recorded positive same store sales as well as solid eCommerce growth, reflecting the success of the initiatives we have implemented to enhance its performance”. This is reflected in first quarter results for 2017 that showed total revenues had increased 6.3 percent. Seventy percent of customers ordering through the chatbot were new customers as of June 2016.
Amtrak, the National Railroad Passenger Corporation, reports similar successes following its implementation of its chatbot, “Julie”.6 Julie, a newer version of Amtrak’s original telephone-based customer service agent, is designed to help users of Amtrak.com using natural language capabilities and a broad knowledge base. Julie can help customers make a reservation, find station and route information, and provide assistance in a number of other areas. The implementation of Julie resulted in 25 percent more bookings, 30 percent more revenue generated per booking, 50 percent year-over-year growth in user engagement with Julie, and $1 million in customer service email costs saved on an annual basis.
Customer experience is the new competitive battleground
As customer expectations continue to rise, it is no longer enough for companies to compete based on innovation, pricing, or quality. In today’s highly competitive and commoditized marketplace, customer experience has become the differentiator. Customers expect a personalized, differentiated, yet timely experience when interacting with companies.
Enter the chatbot.
Shep Hyken, a customer service and experience expert recently stated, “The idea behind a chat or text service solution is that it is a quick connection and much faster than emailing. One of our clients recently said the average customer service issue using emails can take ten days to resolve. Chat takes 12 minutes. Now there is an automated or bot solution that is taking instant chat or text to the next level. First the obvious. A computer/bot can handle more customers at one time than a customer service agent. Second is that the customer doesn’t know he or she is talking to a bot. It can seem human. And, based on the customer’s reaction and questions, the computer can tell if the customer is frustrated. At that point, the computer switches the conversation over to a human. It’s seamless. Regardless, the customer is taken care of. All of this points to a better experience for the customer.”7
Does this mean “goodbye” to the traditional model of business customers interacting with customer service agents? In a word, yes. As much as we may not want to admit it, we as customers value our time more than we value interacting with others when it comes to customer service. That means that the model for delivering a positive customer experience is changing, with chatbots or other AI-driven technology taking the front-line contacts with customers. If we as consumers can resolve our own issue or get the answers we’re looking for by interacting with a chatbot, we’re happy. If we cannot, then we want to talk to someone – but only when we have to. Digital era businesses are recognizing this and are quickly moving to augment the customer experience through the use of chatbots.
Compete with, not against, chatbots.
Chatbots and other self-service enabling technologies present a distinct opportunity for businesses to drive a differentiated and positive customer experience, which in turn will differentiate a company from its competitors. Here are four things to do to prepare to compete with, not against, chatbots.
- Develop your customer journey maps – These maps depict the customer experience with a business, from initial engagement through completion, whether that engagement involves a product, retail experience, service, or any combination. Developing these maps not only help identify and correct any customer “dead ends,” but also help ensure that the customer can have a positive experience while engaged with a business.
- Streamline your business processes – Business processes must be data-driven, effective, efficient, and transparent as possible. The more that a customer experience is negatively impacted due to a poorly designed or executed business process, the higher the likelihood that the customer will go to a competitor.
- Leverage, but don’t lead with technology – Having the right technologies certainly is critical, but don’t make the classic mistake of buying technology before having mapped the customer journey and streamlining business processes. Not only does this increase the risk of harm to the customer experience, it also becomes more likely that you will not get the right tool to meet your organization’s specific needs.
- Invest in and train the right number of customer service agents – Chatbots, artificial intelligence, and automation will not be able to solve all customer service issues. This means that companies will have to invest in and train the right number of customer service agents. Moreover, this customer service agent must be competent, not only in the operations of the business, but also in areas such as using good judgement, negotiation, and rapport building.8 Why is this important? Because when a customer cannot resolve her issue via a chatbot or other self-service method, it’s likely that the issue is more complex or unusual. This means that having well-trained, knowledgeable, enabled, and digitally-savvy customer service agents become critical to a positive customer experience.
1 Schlict, Matt. “The Complete Beginner’s Guide to Chatbots”. Chatbots Magazine.
4/20/2016. Web. Retrieved 7/5/2017.
2 Morgan, Blake. “What is a Chatbot, and Why is it Important for Customer Experience?”. Forbes. 3/9/2017. Web. Retrieved7/5/2017.
3 Business Insider. “80% of Businesses want Chatbots by 2020”. 12/14/2016. Web. Retrieved 7/5/2017.
5 Faggella,Daniel. “7 Chatbot Use Cases That Actually Work”. Techemergence.com 11/15/2016. Web. Retrieved 7/5/2017.
7 Singla, Lalit. “How Chatbots Are Disrupting Customer Experience Across Industries”. Netsolutions.com. 8/8/2016. Web. Retrieved
8 Dixon, Matthew, et al. “Kick-Ass Customer Service”. January-February, 2017. Harvard Business Review. Web. Retrieved 7/7/2017.
About the Author:
Institute Fellow Alumni
Doug Tedder is the principal of Tedder Consulting LLC. Doug is an accomplished and recognized leader who is equally adept in interactions from senior leadership to day-to-day practitioners. His attention to detail, industry knowledge, emotional intelligence, and the ability to “see the big picture” and make it actionable has resulted in a track record of success in helping IT organizations transform into business partners in value delivery.
Doug holds numerous industry certifications in disciplines ranging from ITIL, COBIT, Lean IT, and Organizational Change Management. An active volunteer within the IT Service Management community, Doug is a frequent speaker and contributor at local industry user group meetings, webinars, and national conventions. Doug is a member, former president, and current board member for itSMF USA as well a member of HDI.