By: Cameron Weeks

In the past few years, chatbots—products fueled by Artificial Intelligence (AI)—have emerged as one of the most popular technological advancements and are irrevocably transforming the business landscape today, especially within the contact center industry. And it’s easy to see why. These intelligent digital assistants are driven by the promise to resolve customer requests quickly, cheaply and consistently—at all hours of the day (or night).

This hot-button trend will only continue to gain momentum in the customer service space. According to a report by Grand View Research, the global chatbot market is expected to reach $1.23 billion by 2025, an annual growth rate of 24.3 percent. In addition, rumors are circulating that chatbots could eventually replace human agents altogether. It’s clear that there are equal parts interest and confusion surrounding the issue.

While this fast-paced growth has been exciting and fascinating to see, it has also been extremely eye-opening. That’s because chatbots have massive potential to both enhance and ruin the customer experience. So what will be their ultimate effect? The answer requires more digging than you might expect. 

Chatbots: What are they & what do they do?

To determine how chatbots are hurting the customer experience, let’s first go back to the basics. A chatbot is merely a computer program you can interact with through messaging apps, chat windows and—increasingly—by voice. Using the same applications, chatbots send human-like responses to create a back-and-forth conversation with users.

Although chatbots are surging in popularity, they have been around for quite some time. But more recently, chatbots have incorporated sophisticated techniques to better understand user questions. This is thanks largely to AI and the significant strides it’s made in the past few years. With techniques like machine learning and cloud platforms, chatbots are able to use vast amounts of data and processing power to dramatically improve the quality of understanding and decision-making. 

As AI makes them smarter, chatbots grow in their power to deliver outstanding benefits to customer service teams—such as reducing wait times, improving self-service and optimizing contact center costs—depending on how they are used. Benefits of chatbots include: 

Reduced wait time: Customers do not like to wait for help, and any amount of wait time can to lead to frustration. At the same time, it does not make fiscal sense to have an oversupply of live agents waiting to respond to each incoming chat instantaneously. As a solution, chatbots can be used as a smarter way to ensure customers receive the instant response they demand. 

Improved self-service: Self-service is nothing new, but when layered with machine learning and the chatbot interface, it adds a new level of value. Historically, chatbots have received a bad reputation for inaccurately routing and responding to customers. But with improved data, chatbots can more efficiently direct customers to answers that will actually help them increase customer satisfaction.  

Cost optimization: Yes, chatbots help reduce costs by reducing manpower. But it goes beyond cost reduction. According to a recent Forrester report, enterprises should focus on cost optimization instead. By taking advantage of the opportunities chatbots offer for large cost optimization, companies can create new customer service models. In these scenarios, they’re not making humans expendable, they’re making human hours a smarter investment.

So, if chatbots are so great and deliver amazing benefits, how could they possibly tarnish customer experience? Poor experience happens when chatbots are poorly implemented. 

Customers Want More Humanity, Less Automation

As noted, chatbots deliver several benefits, especially when it comes to resolving issues faster. However, while they’re programmed to act human, customers know they are not, which can be detrimental to customer retention.

According to a new study from PwC, 71 percent of customers in the U.S. “would rather interact with a human than a chatbot or some other automated process.” This is largely because when something goes wrong, they trust a human rather than technology to fix it. For instance, when a bot fumbles an interaction and cannot find the appropriate solution, the customer instantly loses faith and becomes aggravated. A human then must step in to fix the problem, which is frustrating for both the customer and the agent cleaning up the mess.