How Conversational AI Impacts Customer Service - Analyst Review

5 min read
Jessica Gopalakrishnan
Authors name: Jessica Gopalakrishnan March 11, 2021

Conversational artificial intelligence (AI) is a topic that research analysts are watching avidly, particularly in light of how the pandemic has impacted business operations. Gartner predicts that in just one year from now, in 2022, 20% of customer service interactions will be handled by Conversational AI agents. The market for this technology is expected to grow from $4 billion to $15 billion by 2024. The demand is high, and expectations even higher.

On the never ending quest for greater efficiency, organizations of all sizes are naturally drawn to conversational automation. But it's not all about managing operational costs. Over the past year, contact centers and support teams have shifted their focus to technology that could alleviate the extreme levels of overwhelm agents were experiencing - automation tools, specifically. Customer service satisfaction took a nosedive for many companies in 2020 because they could not meet consumer expectations. 

Looking at the big picture, companies seek to make customers happy, improve efficiency and keep agents happy. Is omnichannel automation the answer? 

IDC's View of Conversational AI

IDC's Global AI Research Lead, Ritu Jyoti, thinks so. She recently published an analyst brief on how Conversational AI impacts customer service. Beyond definitions, Jyoti shares her expert insights into why organizations should consider Conversational AI as a core part of their contact center or customer service operations.

Examining the impact of automation on support teams, given their current challenges and needs, Jyoti points out that the adoption of chatbots in the broader set of industry applications will continue to grow. By 2023, IDC reports that rather than continue to move away from the voice channel, over 30% of organizations will have added AI capability to their inbound call handling environment.

At its core, excellent customer service is about having useful and effective conversations with customers so that companies can meet their needs. A reliable and productive conversation leads to higher customer satisfaction, quicker response times, increased loyalty to brands, and reduced effort from the customer. Conversational AI is at the heart of addressing this requirement and will increasingly play a critical role in making that happen.

Customer Service Business Drivers

"According to IDC Research, the #1 business driver for conversational AI for customer services is providing better customer experiences," says Jyoti. "Additional business drivers are reducing average handling time and improving call deflection, all without compromising on operational efficiency. Businesses can use virtual agents to provide a seamless conversational AI experience for customers to resolve issues easily 24x7; handle more common issues, which helps with containment and call deflection; and leverage virtual agents as a part of interactive voice response (IVR)."

Improvement in customer satisfaction is the top success metric cited by businesses for using Conversational AI virtual agents, followed by average handling time and accuracy of the response. Early adopters of conversational automation have seen 15-22% improvements across the board.