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Chat-bots: The Intersection of Digital Disruption and Customer Experience


Whenever we visit a website that has been updated in at least the last 5 years, more often than not the site will have a chat-bot feature welcoming you to the site, offering assistance and sporting a wholesome generic name.

Chat-bots profess to be at the nexus of using digital capacity to enhance the customer experience – leveraging the AI behind chat-bots to deliver instant reply and help to customers and clients.

Essentially, the chat-bot feature acts as the primary digital communication channel between the customer and the organisation.

Most of the chat-bots we come across in our regular web browsing are automated to respond to FAQ’s or act as the support team tending to your enquiries as long as your keywords meet its database criteria.

However, many firms have failed to properly consider the customer experience in their use of digital tools – considering chat-bots to be a resource saver rather than a value creator.

Is the Chat-bot a modern trope of digital capability?

The chat-bot feature has taken the digital world by storm. It is now a staple of the modern-day digital service and accounts for almost 85% of initial customer interactions online.

Organisations that have implemented a chat-bot feature find them beneficial and those who do not have one think they need one.

As often occurs with digital disruption, the hype has front-run what is certainly a valuable tool, which has the potential to both damage or enhance the customer experience.



The Inside-out perspective of chat-bots

From the inside-out, to an organisation without a keen eye on the customer experience, a chat-bot can sound like a no brainer.

An automated AI system that can tend to customer enquiries any time and any where without the need for an employee behind a computer screen. The chatbot has been shown to cut operational costs by about 30%, save billions of customer service hours and reserve human resources for more complex issues.

It has become a stand-out feature to prioritise for organisations looking to embark on a digital transformation or enhance their digital capability.

For smaller businesses and entrepreneurs, chat-bots can serve as a feasible resource to maintain consistent communication through online channels.

For medium and large sized businesses, chat-bots can be allocated to deal with simple customer service requests and reserve human resources for more complex situations.

From an inside-out point-of-view, there aren’t many downsides if you’re looking to add internal efficiency and profitability to your digital portfolio.

But what about from the outside-in? Do customers perceive the same value in chat-bots as businesses do?


Chat Bots from an outside in perspective

Firstly, chat-bots cannot replace the customer experience that humans can provide. Although chat-bots alleviate the time it would take for a customer to call an employee only to ask a simple question, most AI chat-bots skew towards simplistic and formulaic answers which fail to grasp the nuance of customer needs in the same way humans can.

Implementing a chat-bot seems to be more of a temporary solution for poor user experience, or to keep up with trends in digital design. Whilst firms might consider AI to allow customers a direct path to solutions, inadequately or poorly designed chat-bots can in fact add another layer of frustration to the problem the customer is trying to solve.

For example, often users will encounter an issue which they believe to be quite common and general, and yet chat-bots will reply with an apology or error message, a customer support phone number, and “warm regards”.

More often than not, the first-level nature of chat-bots greatly limits the value added to a customer’s journey if the interaction adds an additional step or obstacle.

That is why chat-bots must be designed based on actual user research or prototyped and tested to a state which adds value for the customer as well as the company.

Is there a customer need from the outside in?

Secondly, is there a customer need for a chat-bot? We know a lot of organisations developing a digital strategy often point to AI as a viable solution. But despite over 80% of people interacting with chatbots, 67% of them would still rather talk with a human.

AI may help scale communication, but it doesn’t encourage it.

Chat-bots can only fulfil about 30% of requests without human intervention, so if we think about it from the outside-in, in seven out of 10 cases chat-bots add another channel or step to the customer journey rather than fulfilling their need.

For many potential customers, engagement with the chat-bot may be an incentive to exit rather than to engage with a firm’s product.

So why then are they such a trendy solution for digital and customer strategies? For some customers, the almost instantaneous response time is one benefit, for others, especially younger customers who are more accustomed to texting than calling, not having to talk to someone over the phone can be a significant benefit.

There is real potential, but without an effective strategy behind it, a chat-bot is not a customer-centric solution but just another tool searching for a problem.

What Chat-bots tell us about digital customer strategy

What is clear is that chat-bots, like most digital tools, are only as good as the strategy, research and customer centric culture which underpins them. If you’re an organisation deploying a digital customer strategy or looking to scale sustainably and thought about introducing a chat-bot feature, there are a couple things to consider before pushing the green button.

Firstly, does it add value to the customers experience? In order to answer this question, organisations must conduct user research and identify not only whether it’s feasible and viable, but whether it’s desirable.

Organisations must also consider whether the AI has sufficient data to support customer enquiries and requests and determine the key indicators to measure its effectiveness. The feature should transparently communicate its limitations and capabilities at first contact in order to meet the expectations of the customer.

There is potential for growth in the AI Space

There are many growth opportunities in AI that should be considered when developing a digital customer strategy.

AI features often present an efficiency and profitability benefit that wins organisations over before actually assessing whether customers will find value in it or, whether they find it to be an obstacle for engagement.

It takes years to build a reputation, but it only takes a couple bad experiences for it to crumble.

Thus, organisations must strive to delight customers by placing them at the centre of their business models and value propositions so they can co-create value and stimulate growth sustainably. Chat-bots are a case in point of both the incredible benefits of a customer-centric leveraging of digital tools and the potential negative impact of using those tools without a customer experience lens.

Here at the Strategy Group, we work with organisations to develop, define, and execute meaningful customer strategies that place digital technologies, customer experience, and human-centred design at the forefront of innovation.

If you’re looking to deploy a customer strategy, whether it’s through an acquisition, engagement, or digital lens, please do not hesitate to reach out to us to find out how you can maximise growth opportunities whilst staying relevant in the future of digital disruption.

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