Article of the week 8 – 2023

Chatbots in customer service: A brief overview

Chatbots have quickly become an integral part of the customer service landscape, offering companies a cost-effective and scalable way to handle large volumes of customer inquiries. By automating routine and repetitive tasks, chatbots free up human employees to focus on higher value activities and improve overall customer service efficiency.

The topic of „chatbots in customer service“ can quickly become confusing and seem impenetrable due to its potential complexity of details, especially for small and medium-sized companies. In this article of the week, I would therefore like to provide a brief, quickly usable overview of the benefits, limits, costs and potential quality challenges.

Benefits

The use of chatbots in customer service has increased dramatically in recent years as companies seek to increase efficiency and reduce costs. Chatbots are well suited for handling basic customer inquiries, such as checking account balances, resetting passwords, and providing product information. By automating these tasks, chatbots can respond quickly and accurately to customer inquiries, reducing response times and increasing customer satisfaction.

Chatbots offer several advantages for companies. For example, chatbots are available around the clock and provide customers with access to support at any time. This helps improve the overall customer experience, as customers get the answers they need at the right time without having to wait on hold or navigate through complicated phone menus. Chatbots are also highly scalable, allowing companies to handle large volumes of customer inquiries without having to increase staffing levels. This helps reduce costs and improve the bottom line.

Chatbots can integrate with other systems such as CRM and knowledge bases to provide more customized and accurate responses. By leveraging customer data and feedback, chatbots can also help companies better understand their customers‘ needs and preferences and use this information to create tailored and meaningful experiences. This can include targeted promotions, tailored product recommendations, and personalized communications and support.

The use of chatbots in customer service has been shown to have a positive impact on reducing contacts. By automating routine and repetitive tasks, chatbots can help reduce the number of calls and inquiries handled by human employees. This frees them up to focus on more complex and higher-value tasks, improving overall efficiency and reducing response times.

Contact reduction also has several benefits for customers. For example, customers can get the answers they need quickly and easily, without having to wait on hold or navigate through complicated phone menus. This helps to improve their overall experience and reduce frustration levels. Contact reduction can also help to improve the efficiency of customer service operations, reducing response times and improving the overall quality of service.

Limitations

Despite the many benefits of chatbots, there are also some limitations and challenges associated with their use. For example, chatbots are not well suited for handling complex or sensitive customer inquiries, such as billing disputes or complaints. In these cases, it is often better for human employees to handle the request, as they can better understand the customer’s needs and provide a more personalized response.

Another challenge associated with chatbots is the risk of customer frustration or dissatisfaction if the chatbot is unable to provide an accurate or appropriate response. For example, if a chatbot gives an incorrect answer or does not understand a customer’s request, it can lead to a negative customer experience. Companies need to take steps to minimize these risks, such as providing clear and accurate information and allowing customers to escalate issues to human agents when needed.

Cost effects

Chatbots can help companies reduce costs in several ways:

Personnel costs: by automating routine and repetitive tasks, chatbots can help reduce the need for human employees to handle these types of inquiries. This can lead to lower labor costs, as companies can handle larger volumes of customer inquiries without having to increase staffing levels.
Training costs: chatbots can be programmed with a wide range of information, including product information, FAQs and support procedures. This can help reduce the need for extensive training programs, saving time and resources.
Operational costs: chatbots are available 24/7 and provide customers with access to support at all times. This helps reduce the need for extended hours and night support, which lowers operating costs and improves efficiency.
Infrastructure costs: chatbots can be deployed in a variety of ways, including mobile apps, websites, and messaging platforms. This helps reduce the need for expensive call center infrastructure and hardware, which positively impacts the bottom line.
Response time costs: chatbots can answer customer queries in real time, reducing response times and improving the overall customer experience. This can help reduce costs associated with longer response times, such as lost sales or increased dissatisfaction.

It is important to note that while chatbots can help reduce costs, they also come with costs associated with their deployment and maintenance. These costs must be carefully considered when evaluating the overall return on investment of chatbots in customer service.

Quality challenges

There are several potential quality issues associated with the use of chatbots in customer service:

Limited understanding of context: Chatbots may have difficulty understanding the context of customer queries, making it difficult to provide accurate and relevant responses. This can lead to customer misunderstanding, frustration, and dissatisfaction.
Limited ability to handle complex issues: chatbots have limited ability to handle complex customer inquiries and issues, such as technical support questions or account-specific concerns. This can result in customers having to contact a human agent, which reduces the chatbot’s efficiency gains.
Inconsistent or inaccurate responses: chatbots are only as good as the data and programming driving them. If that information is outdated or incorrect, the chatbot may provide inconsistent or inaccurate responses, leading to customer confusion and frustration.
Personalization challenges: chatbots are nowadays mostly still programmed to handle general inquiries and not designed to provide a personalized experience. This can lead to a lack of empathy and connection with customers, which can reduce satisfaction and trust.
Technical issues: chatbots rely on technology to function, and technical issues can disrupt service and lead to downtime. This can lead to missed opportunities and lower customer satisfaction.
Privacy and security issues: The use of chatbots raises privacy and security concerns, as customers may be unwilling to share personal or sensitive information with a machine. This can lead to lower trust and satisfaction, which can affect the overall customer experience.

To overcome these challenges, it’s important for companies to invest in high-quality chatbot technology and continuously monitor and improve their performance. Through regular training and updates, companies can ensure that their chatbots provide accurate, relevant, and timely responses, improving the overall customer experience.

Summary

So, in summary, the use of chatbots in customer service has the potential to deliver multiple benefits, including improved efficiency, reduced costs, and fewer contacts. By automating routine and repetitive tasks, chatbots can help companies handle large volumes of customer inquiries, allowing human employees to focus on more complex and higher-value activities. Despite the challenges and limitations that certainly (still) exist with their use, chatbots can help companies provide better customer experiences and improve overall performance.

Gerhard Klose – Principal Consultant

junokai