The State of Automated Customer Service in 2023

Before we dig in, let’s first be clear on what we mean by automated customer service. Customer service automation is the process of adding artificial intelligence (AI) into customer service operations to automate routine tasks and processes. Some of these AI tools are fully automated, meaning that customers receive a response without any human intervention. Other customer service automation may provide agents with AI tools to help them provide faster or more accurate support.

In customer service, automation is commonly seen in the form of chatbots. Chatbots can respond to customer queries, answering the common requests, immediately and 24/7. This speeds up support for the customer as they don’t need to wait for an agent to become available. With the common requests handled by a bot, it also reduces agent workload which can either increase support capacity or allow agents to spend more time on complex or sensitive queries – ultimately improving the customer experience.

Chatbots used as customer service automation tools include:

• AI Chatbot integrated within live chat, powered by natural language processing (NLP) to understand human intent and speech. They are capable of resolving up to 80% of all queries.
• Task Bot that can be quickly built without code to replace forms and automate manual processes. They are capable of capturing leads, booking meetings, routing chats, and more, in a conversational way that feels natural for customers.
• Voice Bot that communicate with customers through digital voice and telephony channels using the latest machine learning AI to eliminate long wait times. They can be configured to understand and answer hundreds of inquiries.
• Agent Assist tools that monitor customer conversations to seamlessly recommend solutions and responses. They can drastically cut down the time agents spend looking for answers while improving the accuracy of responses.

We’ll see examples of each automation in customer service later. Next, however, we’ll look at the state of automated customer service in 2023.

As the capabilities of AI have improved, the popularity of automated customer service has continued to expand. This has created new opportunities for organizations to reduce support costs while meeting the needs of today’s customers.

According to a study on chatbot impact, overall market preference for chatbots as the primary mode of communication for customer service now sits at 45%. The top markets currently profiting from chatbots include:

• Real estate: 28%
• Travel: 16%
• Education: 14%
• Healthcare: 10%
• Finance: 5%

Chatbot usage has doubled since 2020, and is currently estimated to be worth $641.1 million USD in 2022. Many have also predicted the market to make huge gains in the years ahead, including growth of the global chatbot market to $3.99 billion USD by 2030.

In this chapter, we’ll look at developing trends in customer service and how we expect that will shape the landscape of automation in the years ahead.

1. Younger generation increasingly prefers customer service automation

Much has been written about the difference in generational attitudes towards customer service. In 2023, we expect that age will continue to matter as customers expectations can vary wildly depending on preference for service delivery and availability.

In customer experience research sponsored by Amazon, we can see generational preferences in the customer service space emerge. Perhaps the most pronounced differences among generations came in attitudes toward digital self-service tools like chatbots. While just 14% of Baby Boomers say they prefer digital self-service, 49% of Gen Z and 41% of Millennials prefer to use a digital self-serve option.

Another 1000-person study found that Gen Z consumers prefer interactions with a chatbot at a rate four times higher than Baby Boomers. With such a pronounced difference in attitudes around customer service delivery, it’s important for organizations to provide a variety of service options to customers. Organizations should also understand who their customers are when developing their automated customer service delivery models.

2. Automation becomes a win for companies focusing on employee experience

The initiative for automation often begins with a desire to cut support costs but can see significant overall improvements in both customer and agent satisfaction. By automating simple, repetitive tasks, agent workloads are reduced, and job satisfaction improves. Research data increasingly shows that AI used responsibly can improve job quality for workers.

In research conducted by the non-profit organization Partnership on AI, employees were surveyed after experiencing AI in different workplace scenarios. Following constructive coaching and suggestions provided in real-time by AI, employees reported the suggestions were helpful for quality assurance. When AI was used to offload a tedious process, a strong majority preferred working with AI software over more manual processes.

A report by Forrester also showed high interest among workers and managers for the ability of AI tools to improve knowledge work. 51% of those surveyed believed that automation of routine tasks would improve employee satisfaction. More impressively 59% said they believed automation of mundane tasks would improve employee retention.

In a time of notoriously high employee turnover, it’s this last stat that may draw the most attention. With employees looking to offload their mundane tasks for better job satisfaction, additional research has shown that employee retention is directly related to the work employees are doing. 81% of employees say they’d be willing to work longer in their current position if their employer allowed them to focus on work they enjoy.

3. Personalization through automation

Providing personalized customer service has become a major differentiator for organizations, and for good reason. 80% of consumers surveyed say that they would be more loyal to brands that understanding them. Thanks to the introduction of AI in customer service, it’s now easier than ever to bring personalization to customers.

Introducing automation to customers doesn’t need to mean also losing a human touch. Without automation facilitating regular touchpoints throughout the customer journey, both customers and organizations benefit. An example of this is the automation of appointment reminders for patients in the healthcare industry. Missed appointments currently cost the healthcare industry an incredible $150 billion annually. With these appointments automated through SMS messages and automated calls, organizations can see significant savings, and patient outcomes improve through regular appointments.

While it can be challenging to best leverage the data collected through automation, the benefits are worth the effort. Harvard Business School has found that through personalization efforts of more than 100 leading global companies over the past five years, large-scale personalization efforts have resulted in increases of net revenues between 40% to 100%.

4. Customers look for 24/7 convenience

A key area where automation shines is in the ability to offer around-the-clock service. As customer expectations expand to include 24/7 availability, this has become a crucial aspect of automation in customer service. When customers were asked what customer service experiences they expect to be essential in the near future (3-5 years), 24/7 availability ranked the highest, at 57%.

The impact of 24/7 customer service is so significant that research suggests it is the key driver for the global chatbot market. As chatbots allow organizations to fully automate routine functions, introducing a chatbot extends beyond simple query resolution and allows organizations to offer new services to new customers. For industries like higher education, 24/7 service can greatly benefit international recruitment efforts targeting potential students in other time zones.

By automating routine tasks and providing immediate responses, AI can help organizations improve their support and meet customer expectations for speed and availability. In this chapter, we’ll explore the benefits of AI in customer service in detail.

1. An immediate response

Customer expectations have expanded, and 83% of customers now expect immediate engagement with someone when contacting a company, up from 78% in 2019. Additionally, 90% of customers surveyed consider an immediate response to be “important or very important” for customer support.

Only automated customer service can provide the kind of immediate support that customers now demand. Unlike human agents, chatbots respond to inquiries immediately and have unlimited capacity. Chatbots are ideal for responding to the simple but common questions such as:

• What are your hours of operation?
• What is your return policy?
• Can you provide an update on my order status?
• How can I change my password?

2. Cost-effective, 24/7 support

Today’s customers want 24/7 support that’s always available, whenever they need it. However, the expense associated with hiring additional staff creates a barrier for many organizations in their ability to offer 24/7 support. This is where automation in customer service can offer ways for organizations to meet customer needs.

With a chatbot providing automated customer service, customers can receive support at any time of the day or week – all without any human intervention. This 24/7 availability is so valued by customers that is drives 51% of positive willingness by customers to use chatbots, and 64% say that 24-hour service is the best feature of chatbots.

When a chatbot is unable to resolve an issue on its own, it can take a message so that agents can respond at their earliest availability. With automated customer service now offering a cost-effective way for organizations to offer around-the-clock support, it’s little wonder that 24/7 support is often cited as the key driver for the growth of the chatbot market.

3. Lower service costs and substantial ROI

Automation in customer service can generate a substantial return on investment for businesses. For example, Insider Intelligence estimates that the adoption of chatbots could soon save the healthcare, banking, and retail sectors $11 billion annually.

With a chatbot handling up to 80% of queries, organizations can increase their support capacity without hiring additional agents. Calculating the exact return on investment for automated customer service can be difficult, but this chatbot ROI calculator can help you understand just how much you could save with a bot.

4. A better experience for customers

It may seem counterintuitive that automated customer service would improve the customer experience, but not all customer interactions are the same. Chatbots excel at handling simple and repetitive requests and can resolve up to 91% of queries without human intervention.

When a chatbot handles the simple requests, everyone benefits: Customers with common and basic questions get an immediate response and resolution. On the other hand, customers with more complex questions experience shorter wait times and more agent attention as agents have more time to focus on their request.

Automation provides the best of both worlds: immediate responses to simple requests and better agent availability when customers need more attention. These benefits can be appealing to customers, particularly as 70% of customers currently use or are interested in using chatbots for simple customer service.

5. Self-service option

Customers often have difficulty finding information among various FAQs and knowledge base articles, and they may not have the time to speak with a human agent. For these customers, automated customer service is an ideal self-service option. In a survey of US citizens interacting with Federal agencies, more than 65% said they preferred self-service options over speaking with someone.

By introducing customer service automation software, customers can quickly find the information they need without the need to navigate complex support materials or wait for a response from a human agent. 90% of customers surveyed want a convenient experience when they interact with a brand online, and chatbots can provide that convenience by removing barriers to information.

6. Reduces monotonous work for agents

Chatbots can have a major impact on the work of customer service agents. By automating repetitive tasks, chatbots free up agents to focus on more fulfilling work, which can improve their performance and reduce stress levels. When surveyed on the benefits of automation in completing day-to-day tasks, 68% of knowledge workers cited the ability to prevent employee burnout.

87% of contact center agents report high or very high levels of stress, and improving working conditions for these staff members is crucial to reducing turnover and improving overall performance. With the cost of hiring an employee estimated around $4,000 USD, reducing employee turnover should be a focus for every organization.