Why (chat)bots are so exciting?

In my earlier posts, I barely scratched the surface of chatbot revolution in customer service. There are ultimately various reasons why chatbots have become to dominate the discussion on the future of customer service, and why engaging the revolution of conversational user interfaces is so important. Customer service, per definition, requires one to assume a generalist role in the organizational matrix, i.e. it’s not just about receiving inputs and generating outputs based on logically construed rules but rather it requires one to be able to offer service (not a service). It’s no wonder that customer service roles are often perceived as stressful, and of course, different client-facing service positions require a different set of personal and organizational measures to prevent excess stress (Sidle 2004St-Vincent, Denis, Imbeau & Trudeau 2006; Julian 2008). As a 2005 study published by British scientists points out, “Of the 26 occupations included in the research, … customer services – call centres … were identified as having worse than average scores on each of the three factors [i.e. physical health, psychological well-being, and job satisfaction]” (Johnson et al. 2005). Also, individual temperament trait, namely optimism, plays a key role in mitigating the effects of stress in customer service (Tuten & Neidermeyer 2004).

As some previous research has acknowledged, there is “strong evidence that an increasing number of service areas need to cope with challenging customer groups.” (Mäki & Kokko 2013). Also, if organizational boundaries are blurry and customer service is responsible for almost all client-facing choirs, there are several other requirements for the customer service employees, e.g. familiarity with new channels and their functions, good knowledge of internal processes and procedures, and understanding the real possibilities to resolve even the most difficult situations. This means that the work is not just behaviorally, emotionally and cognitively demanding but also requires people to continually learn new things and be more aware of contextual and environmental cues. In the end, the amount of valuable work a human being can do is somewhat limited but thanks to (process) automation, digitalization, robotics and other forms of productivity enhancing technology, more work can be accomplished than ever before. Relying purely on the human workforce is not reasonable nor desirable.

Unfortunately, the automation of customer service is not a technical problem that could be brushed aside just by upgrading existing IT systems or moving heavily towards different forms of self-service. Just as two of my favorite customer service authors, Bill Price and David Jaffe, pointed out in their eye-opening book The Best Service is No Service: How to Liberate Your Customers from Customer Service, Keep Them Happy, and Control Costs the fundamental problem is the notion of treating demand for customer service as something exogenously given. Few people are willing to step up to the challenge and ask the critical question: what is driving the demand for customer service in the first place? The rise of new forms of self-service technologies, significantly enhanced by chatbots, advanced analytics, video technologies, real-time messaging, connected devices, etc., create new customer experience pressures for customer service. As Accenture’s

As Accenture Interactive’s recent report highlights, the recent growth in interest in chatbots is attributable to two main factors, namely the growth of messaging services (consumer demand) and further advances in the field of artificial intelligence. The importance of self-service, as pointed out by Bill Price and David Jaffe in their book mentioned above, is often underappreciated by companies as they really don’t seem to figure out why, how and when to offer convenient access to the valuable services customers need. Price and Jaffe claim that most companies neither understand the overarching idea of self-service nor how to create self-service solutions which customers would use. [1]

According to Gartner, 89% of businesses expect to compete mostly with the client experience, but fewer than half of companies perceive their current capabilities as superior to their peers. And by 2020, customers are expected to manage 85% of their relationship with companies without interacting with a human. Whatever interactions do take place will have to be quick and convenient. But often online services don’t work as we expect them to and relying solely on people for personalized service is not economically viable or operationally scalable.

Self-service as a differentiator

The basic idea of 24/7/365 customer service is fascinating and embraced by many. Many of us want to serve ourselves for the sake of convenience, fastness, and ease from a personal point of view; whether we are talking about self-check-in for travelers, self-service gas stations or ATMs, we have witnessed a steep rise in self-service. If self-service is designed poorly, yes, of course, I will prefer some other option to solve the problem at hand. If I am offered this possibility to skip the queue and explaining the problem over and over again, I will try to avoid it at all cost. I am just a one person, but typically I don’t want to have overly long conversations about the problem I am having, and in most cases, transactional, high volume issues can be solved by following a relatively simple linear, step-by-step process.

In fact, I think that there are various reasons why people should be encouraged to use self-service, and companies, on the other hand, should seize this opportunity to really understand what’s going on in customer service. Self-service, whether it’s based on customer service automation, engaging community-based FAQs, focusing on SEO or a new conversational IVR solution, can really be a great driver for customer satisfaction (Buell, Campbell & Frei 2010; Beard 2014; Chowdhury 2016; Considine & Cormican 2016). Sure, it just has to be done right (easier said than done). The financial services industry has been especially active in developing various forms of self-service for transaction review, payments, and knowledge sharing. In Finland, Inderes, an independent equity research company, has it’s own relatively simple transactional bot nicknamed “Rasse.” Rasse is a beautiful example of how simple bots can actually be, i.e. mostly Rasse only pushes Inderes’ content on-demand or by subscription.

Chatbots, on the other hand, are not just a technology, but rather chatbots clearly demonstrate one potential direction for digital customer service. Every organization faces numerous constraints that force them to optimize service delivery to control costs, enhance customer experience and optimize the service offering. Thanks to technological advances, customer service is made more adaptable and scalable, and the number of people directly involved in customer service can be reduced. It was announced today that a Finnish pizza chain Kotipizza teamed up with OP Financial Group to introduce its new “KotiBotti,” another transactional bot that allows consumers to place and pay orders through the Facebook messaging app for pizzas and salads. It’s not perfect but nicely demonstrates to what direction we are heading, and why not all the bots should not be treated as the same.

Customer expectations liquified

The “liquidization” of customer expectations, “when customer experiences seep over from one industry to an entirely different industry” as put by Baiju Shah and John Greene, is a remarkable phenomenon. As Erik Flowers and Megan Erin Miller furthermore point out, “customers expect the same level and quality of service regardless of the channel, medium or industry.” This is both a scary and exciting development, but it’s clear that not every service can be (digitally) self-serviced. Most importantly the convergence of expectations highlights the importance of having user experience as an integral part of overall business strategy and acknowledging that convergence happens at multiple levels (whether it’s intentional or not).

Ubisend’s 2017 Chatbot Survey, based on a survey of 2000 UK consumers, shows that 75% of surveyed have not yet interacted with a chatbot, almost 60% are aware of the existence of chatbots, and 35% would like to interact with chatbots. A Facebook-commissioned study of 12 500 people around the world published about a year ago found out that 59% of surveyed said that they message more today than they did two years ago, and 56% expect they’re messaging to increase shortly. Also, 57% plan to use messaging apps more for communicating and 53% said they prefer to interact with a business they can message directly over a messaging application. Moreover, a recent report from BI Intelligence titled The Chatbots Explainer: How Chatbots are Changing the App Paradigm and Creating a New Mobile Monetization Opportunity estimates that there are potential savings of $23 bUSD can be achieved in the U.S. alone as approximately 30% of tasks currently performed by customer service can be automated with the help of chatbots.

These figures are not very surprising as messaging as such is possible almost always (but getting an answer, depending on the operations, might be the issue as we tend to expect to receive an answer quickly), and messaging is often much more convenient than taking a call, sending an email or paying a visit (people’s time is freed to do something more valuable). I firmly believe that when transactional, repetitive routine tasks are automated (or even more preferably eliminated altogether, e.g. simple answers, offers and deals, recommendations, purchasing, etc.), people working in customer service actually can pay more attention to more difficult and complex inquiries and tasks (which might turn out to be more demanding and stressful than everyday transactional tasks previously handled by humans). [2]

Where are we heading?

We’ll see if the chatbots are able to redeem at least some of the expectations set for them shortly. As chatbot technologies advance and become more mainstream, the costs of implementing, maintaining and developing new forms of chatbots are expected to decline. Mainstream messaging platforms will bear most of the costs but developing chatbots on top of them will be much easier and cheaper as network effects kick in as well. In the end, companies and consumers might not be willing to extend their presence on all possible messaging platforms out there and will stick to the most popular solutions instead.

Does it make sense for a company to have it’s own (white-label) messaging app downloadable from the app store if there are standardized and streamlined platforms (offering chatbots and ) available? Personally, I don’t find this as a winning strategy (if there are not significant benefits associated), and I would instead turn to my friends and immediate personal network for more information. Chatbots won’t replace mobile apps in the foreseeable future, and they can’t be compared head-to-head as pointed out by Varun Deo. Matt Schlicht, on the other hand, argues that bots will actually eliminate apps and websites altogether.

So it’s no wonder that various types of bots (and especially more intelligent chatbots) are perceived so interesting, and I think that bots are one essential element in realizing the idea of service-dominant logic. Bots should be demonstrably reliable, scalable and repeatable, and if this turns out to be the case, they should be part of any appropriate organization’s agenda to strive for customer-centricity.

[1] In the meanwhile there is more and more discussion on the importance of self-service in the era of liquid expectations, e.g. The Value of Customer Self-service in the Digital Age (SuperOffice, 6.6.2017), Why The Future Of Customer Service Is Self-Service (Fast Company), Why Self-Service is the Future of Customer Support – and How You Can Get it Right Read (Business 2 Business Community, 11.2.2016), Great Expectations: Why Self-Service Is the Future of Customer Service (19.5.2017).

[2] Chatbots can also be used effectively for advertising purposes, see Lunch Bot, Anyone? How Brands Can Use Chatbots in Advertising (Advertising Age, 22.7.2016), Brands Can Now Promote Their Chatbots With Targeted Facebook Ads (Adweek, 8.11.2016), CMO’s Guide to Chatbots (Advertising Age, 3.1.2017), Embracing the bots: How direct to consumer advertising is about to change (18.3.2017), Advertising in Chatbots: How to Do It Right — And Wrong (Chatbots Magazine, 6.4.2017), Your advertising stinks. Chatbots can help (TechRepublic, 4.5.2017).

Photo credit: John Jackson via Pexels.com / CC0

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