How customer service chatbots can reform an industry

Upon purchasing a new phone, you return home to discover a malfunction in the operating system. You call customer service and immediately, an automated voice directs you to “press 1 for technical support, press 2 for billing, or press 3 for all other questions.” After making the appropriate selection — assuming the option is offered — the system then asks you to click through a series of additional numbers, until, out of frustration, you repeatedly dial “0” until you’re finally connected with a human agent.

We’ve all been there.

In what Forrester Research has termed the “Age of the Customer,” brands can no longer be content with ineffective customer service platforms of the past. According to Zendesk, a staggering 82 percent of consumers have stopped doing business with a company because of bad customer service and 95 percent of customers share bad experiences with others. In our personal lives, the customer care experience is crucial, and oftentimes it defines a brand.

From an investor’s perspective, there’s a massive market opportunity for companies that improve the customer experience. One specific sector playing a major role is artificial intelligence (AI), which, when properly deployed, will not only improve the customer experience, but also reduce operating and infrastructure costs.

With such a strong need for smarter customer service, some of the top companies are resetting their consumer expectations. Major brands such as Hyatt, Fabletics, and Humana have recognized the need for technology that combines voice recognition software with artificial intelligence to process, understand, and respond to conversational customer interactions, just like communicating with a live agent. (One good example of such technology is Interactions.)

Imagine calling into a customer service center and immediately getting an automated greeting that allows you to speak naturally and state your issue, as if you were face to face with an attentive employee. Quick, easy, and efficient.

For customer service agents, a role with notoriously high turnover, AI technology can improve engagement, retention, and productivity as it frees agents from repetitive tasks, empowers agents in more complex interactions, and improves the quality and tone of the interactions with customers. For consumers, this technology provides a natural and efficient way of handling a customer service call. And for the enterprise, this all translates to cost savings and increased customer satisfaction and brand loyalty.

As investors, we expect this type of technology to excel in industries such as retail, banking, hospitality, and healthcare, to name just a few. For example, many online retailers without brick-and-mortar stores build their brand reputation and trust entirely on customer interactions by phone or internet. Without a smart and reliable system to handle customer service issues in a convenient and accessible manner, many ecommerce businesses would struggle to retain customers.

Furthermore, we’re seeing a global shift away from the traditional mentality of treating customer call centers simply as a cost center, instead seeing them as a valuable point of differentiation and a critical lever to build brands, improve retention, and take advantage of upsell opportunities. As conversations are captured during these interactions — whether through calls, chats, texts, or emails — AI enables companies to analyze the vast inflow of unstructured data and provide insights that feed into areas such as sales and marketing strategy, product development, and forecasting.

While AI technology is still in the early adoption phase, we fully expect it to continue to improve and evolve to create a seamless customer experience. As investors, we’re optimistic about the exciting new investment opportunities this sector will offer.