How Chatbots are Transforming Customer Service

Good customer service is all about getting the right information to customers as quickly as possible, while also making them feel like their concerns have been validated. Traditionally, humans have been the best and only way of doing this efficiently, but recent advancements in chatbot technology may be the catalyst that changes the business landscape.

We’re FWF, a world-class provider of digital consulting and AI solutions. In this article we’ll discuss the role and impact of chatbots for customer service, their benefits for businesses, and the industries that can make the most out of them – along with how to implement them.

Get in touch today for expert support on chatbots and all the latest digital technologies.

What is the role of a chatbot?

A chatbot, also known as a conversational agent (CA), is an AI model that’s been trained using machine learning (ML) and natural language understanding (NLU) to speak as if it were human.

While the use of chatbots can vary from industry to industry, they do have a variety of standard uses. Their main purpose is for dealing with customer service inquiries, such as through replying automatically to customer direct messages (DMs).

An AI chatbot can help customers resolve their issues without requiring a human element, taking several steps further than alternative methods like FAQ pages. They can also serve as an intermediary, sending customers to the appropriate contact after successfully identifying their issue.

All kinds of industries use chatbots, from major retailers and social networks to digital software providers and e-commerce platforms. Any industry that has customers will likely want to use chatbots, which due to the nature of business means that every industry could benefit from them.

The reason why chatbots are so in-demand can be attributed to their impact on the customer experience.

The impact of AI chatbots on the user experience

A 2020 report on the effects of chatbots on user compliance suggested that modern advancements in artificial intelligence have “paved the way for systems that are capable of more human-like interactions”.

Chatbots in the past have been indicative of a clunky, awkward experience. They were notorious for their use in spammy pop-ups and low-quality interactions. So why have businesses taken a U-turn and started implementing CAs across their customer interactions?

This is because the human element is one of the most important aspects in any communication. Modern chatbots can closely resemble a person, making the interactions with them feel much more natural. If a customer doesn’t feel like they’re speaking to a human, as it was with the chatbots of the past, they will feel a disconnection. It can also end up making them feel un-valued, leading to a more negative customer experience than they started with.

The 2020 report went on to say that “humans tend to also attribute human-like characteristics, behaviours, and emotions to the nonhuman agents.” This means the closer a chatbot resembles a human, the more people will be willing to believe it is one. Coupling this with a real human presence such as on social media or a second point of contact past the initial chatbot and you’ve got the recipe for a better customer experience than ever before.

Lego’s chatbot, Ralph, is proof of the positive impact of chatbots on user satisfaction and the customer experience. A study showed that with its fun personality, Ralph managed to support the brand’s Christmas sales, driving 25% of the sales from social media. Additionally, it reduced the cost per conversion by over 70%.

With such a large positive impact on the user experience, it is no wonder that businesses are taking advantage of the many benefits that the chatbots and conversational agents of today can offer.

Ai and chatbot customer service support

The benefits of chatbots for businesses

What are the benefits of a chatbot? More than just their impact on customer experiences, chatbots can assist with a variety of tasks to help businesses elevate their day-to-day operations.

Some of the core benefits of a chatbot include:

  • The automation of repetitive tasks
  • Resolving customer queries
  • Providing a 24/7 point of contact
  • Reducing response times
  • Integrating with different communication channels e.g. email, mobile, website, social media
  • Assisting with the sales process
  • Potential for multilingual support

Of these, there are some more specific reasons as to why chatbots in particular offer the greatest benefits to businesses and the customer experience.

The ability to respond immediately

Customers want to be acknowledged. Having a chatbot that can immediately respond to their concerns will contribute to goodwill, helping to clarify their issue and give them a rough timeline of what happens next.

Modern chatbots which can mimic human-like qualities serve this role well, offering immediate acknowledgement while assuring customers that their concerns will be handled with care.

Completing simple tasks

Chatbots, and AI in general, serve as a way to make business operations easier by helping navigate simple tasks than can be automated. This allows you to use human resources on more complicated tasks, safe in the knowledge that your routine processes are being completed efficiently in the background.

Enhancing customer service education

When a user interacts with a new platform, program, or portal, there may be features they’re unfamiliar with. Running a tutorial for new users can help with this, but may lead to frustration for more competent users that understand the majority of the system already or other users that have difficulty understanding certain aspects.

Chatbots and AI can resolve this by observing how the user interacts with the systems and then responding in kind, adjusting the educational program to suit their needs.

Are chatbots appropriate for your industry?

Despite their wide-reaching potential, chatbots might not be the ultimate solution for every industry. They do have the potential to elevate any business, but there can be situations where a greater human element is required. Using chatbots in the right way is imperative to unlocking their true benefits for your business, so knowing when and where to use them is key.

Chatbots for telemedicine

A study on the accuracy of AI chatbots in telemedicine showed that the average accuracy of four different chatbots ranged from 66% to 86% when diagnosing medical conditions. While 86% is a good success rate, any failure in the medical industry could be disastrous.

Sensitivity is also an important factor for medicine and related industries. A human touch is often required, and a chatbot could result in a negative customer experience in industries such as medical, funeral homes, or psychiatric care.

Chatbots for B2B

Generally, B2B businesses are slower to adopt new technology. This is due to the cost and complexity of implementing tech into their existing systems. New features must be rigorously tested to ensure there won’t be any integration issues, that all regulations will be complied with, and that staff are appropriately trained to understand the new system.

Chatbots for retail

Retail is one of the most ideal industries in which to use chatbots. Customer queries in this field tend to be quite formulaic, meaning that responses can be tailored well in advance. This can then be integrated with resolution measures like refunds and coupons, or it can direct users to human operators for further support on complex issues.

Explore other ways the retail industry can benefit from new technologies >

Chatbots for e-commerce

When you’re thinking about digital industries, e-commerce will probably be the first thing that comes to mind. As such, they’re in a great position to benefit from the digital technology of chatbots. Everything from managing orders to responding to user queries on delivery times or concerns on order quality/fulfilment can be easily managed with an automated AI solution.

Chatbots for banking & finance

Banking and finance are great areas for chatbots, with major banks already utilising them to help direct users to the right area for support. However, regulatory considerations must be met as user data in this area is protected and important. Chatbots are a great way to help with the support services involved in banking, but the actual banking processes might be better left to humans.

Find out more about the role of AI in banking and finance >

How to successfully implement chatbots for customer service

There are many organisation factors that can implement the successful implementation of chatbots for customer service. A study on this topic outlined some of the key factors, which include:

  • Work and team organisation
  • Managing changes
  • Skillset and the ability to adapt
  • Resources
  • Metrics and performance

By having the appropriate resources and skills in place, along with managing the integration process of the chatbots efficiently, you can ensure a smooth adoption of this new technology.

There are any number of reasons you’d want to implement a chatbot to support your customer service efforts. From resolving high volume or repetitive questions and meeting expectations for improvements to customer service, to meeting internal pressures to reduce costs and resources or digitalising service offerings and adding value to the customer service process, businesses can benefit greatly from the adoption of AI chatbots into their organisation.

To properly integrate chatbots and AI into their operations, there are three key things that businesses must do:

  1. Grow their understanding of chatbot technology
  2. Acknowledge that chatbots work best in combination with customer service personnel
  3. Understand the lack of one-size-fits-all solutions

You’re not alone in the process of adopting this new technology. We’re here to help you find the right solution to your customer service issues, utilising AI and intelligent automation to help you boost your business into the future.

AI-powered intelligent automation from FWF

Chatbots have had a significant impact on customer service and the user experience over the last few decades. From their initial presence as nothing more than a cheap way to deal with customer issues, to their current status as the go-to customer service solution for major businesses across the globe, the future is bright for AI-based chatbots.

Get ahead of the trends with automation solutions from FWF. We’ll help you to adapt these new technologies into your operations, giving you the support you need to elevate your day-to-day. Contact us today to find out more.

Meet the Authors

Eric Hook

Eric Hook

Head of Power Platform

Eric is a highly professional, adaptable and flexible technology expert with over 15 years experience in the financial services, pharmaceutical and retail industries. Eric is Head of Power Platform at FWF, leading our Power Platform strategy and ensuring the best results for our clients.

Contact Eric
Daniel Young

Daniel Young

Consulting Director

Has over 20 years of consulting experience at global system integrators across Europe, US, Middle East and Asia. Prior to FWF, Daniel led Intelligent Automation Consulting Practices supporting organisations across Financial Services, Banking, Insurance, and Energy sectors to achieve value from Intelligent Automation.

Contact Daniel