Customer service in the digital age. Do we still need human

Key takeaways

• Customer service has been of utmost importance for businesses for a long time, given how critical customers are to help a company reap successful long-term results and distinguish its brand from the competition.
• Building customer relationships ensures increased employee morale, reduced customer attrition, excellent sales, and high turnover.
• It is more than likely that customer service in the digital age may be characterized by a mixture of efficient bots and human staff, harnessing the best of both and helping businesses retain as many consumers as possible.

Customer service has been of utmost importance for businesses for a long time, given how critical customers are to help a company reap successful long-term results and distinguish its brand from the competition. What commenced in the form of written communication and telephone conversations to face-to-face interaction has today transformed into a full-fledged, value-driven service portfolio for customers.

Conventional strategies are no longer sufficient to address the changing needs of today’s market. With changing customer behavior, the stakes are significantly higher, and businesses need to work harder to provide increasingly beneficial yet cost-effective and, to a considerable extent, personalized services to customers.

In today’s world, driven by consistent digitalization, ensuring that customers are happy is more of a challenge than ever. With happier customers comes better trust in the brand and, consequently, more loyalty and advocacy. As per reliable reports, people may be four times more likely to buy a product referred by a known person. There’s an 18% increase in loyalty from a referred customer instead of the one obtained from a different method.

As of today, there are almost 4.4 billion active internet users worldwide, a number that will only serve to increase in the coming years. With a considerable percentage of the global population going online, businesses have access to a wide number of digital customers, paving the way for successful strategies to be coined – such as interacting with customers via live chat, virtually enhancing purchase experiences, and so on. Digitalization has revolutionized customer experience and can have a profound impact on customer behavior, in turn, impacting the brand value of a business.

Statistics About Companies Adopting Digitization #

Businesses had been adopting digitization way before the pandemic; however, it cannot be denied that the onset of COVID-19 acted as a tremendous trigger, pushing companies to rapidly scale up the deployment of digital strategies to accelerate their business. At present, digital transformation is at its peak and has led to the deployment of new business models implementing modern technologies such as machine learning, chatbots, data analytic, and blockchain. Companies across major end-use sectors have been rapidly integrating IT solutions in their ecosystem, generating new challenges and opening up numerous growth opportunities.

Back in 2021, IDC predicted that 30% of organizations would increase innovation and generate new models to digitize their companies. According to IDC, 60% of enterprise executives are of the opinion that IoT will have a major role to play in their companies’ digitalization.

Gartner had predicted that by 2023, close to 70% of organizations will use value stream management to enhance development and operations pipeline flow, leading to better, faster customer service. In addition, the highest growth of digital transformation was expected to be from devices (close to 14%) and enterprise software (approximately 10.8%), owing to companies providing innovative workplace solutions.

InformaTech predicts that AI software revenues may cross USD 100 billion globally by 2025. Close to 60% of companies may deploy artificial intelligence solutions to help employees in the near term, states Deloitte, while Forester says that digital transformation investments rose at over 3X the rate of overall IT expenditure.

With speedy internet becoming rather commonplace, more and more companies have been adopting digitization, investing heavily in business intelligence platforms to enhance customer experience. In 2021, Flexera claimed that around 37% of IT initiatives undertaken by companies globally focus on improving customer experience. The software company had also stated that 49% of companies across the globe prioritize cybersecurity when it comes to technology initiatives, while around 54% prioritize digital transformation.

According to a survey of 1,200 mid to large-scale US companies, the average digital transformation budget was pegged at USD 14 million in 2018, while digital transformation expenditure worldwide may cross USD 1.78 trillion in 2022. In addition, IDC claims that around 65% of global GDP may be digitalized by 2022.

With most industrial enterprises and startups having already adopted strong digital transformation strategies and a substantial percentage planning to adopt one soon enough, the digital ecosystem worldwide is set to proliferate at an appreciable rate. As customers form the nucleus of digitalization, businesses are expected to continue the adoption of digital solutions to enhance the customer experience in an increasingly competitive marketplace.

How Has Pandemic Affected Digitization and Its Adoption? #

The impact of the coronavirus pandemic on the adoption of digitization has been overwhelming. Many companies had strong security and IT mechanisms in place and had already been working to transition to a digital ecosystem. For these establishments, the onset of the pandemic made it easier to transition to a virtual working environment quickly. For many others, especially the ones with rigid legacy systems in place, an aging infrastructure, and bandwidth constraints, the pandemic was a brutal wake-up call to quickly digitalize their business models and create a new ecosystem in place for the future. This rang true in the case of government firms with severe capacity issues and the lack of a mobile-friendly presence. In effect, the pandemic forced several companies to accelerate the adoption of digital solutions, which included the deployment of virtualization and the cloud.

According to a report by Celerity, around 63% of industry leaders claimed that the pandemic prompted them to adopt digital transformation strategies sooner than they had planned. A similar report by IBM states that a mammoth 96% of leaders reported COVID-19 to fast-track their digital transformation plans by around 5.3 years.

One of the biggest changes sparked by the COVID-19 pandemic was observed in the payments industry. With social distancing becoming the norm due to nationwide lockdowns, the online payments sector depicted a meteoric rise, paving its way to becoming one of the fastest-growing markets worldwide. Having observed consumer interest in virtual payment models, several companies, even the ones with an originally conventional model, transformed their payment systems into consumer-friendly, digitalized versions.

In essence, the pandemic played a crucial role in speeding up the adoption of digital solutions, as contactless payment volumes witnessed an exceptional rise in demand across retail outlets, pharmacies, grocery stores, departmental stores, vegetable and fruit sellers, recharge vendors, and many others including prominent players across the and EdTech sector.

Given the dire situation of the healthcare ecosystem post the onset of the pandemic, the demand for telehealth and online consultations depicted an upsurge as well. Hospitals and medical establishments raced ahead to embrace digital transformation to monitor the increasing influx of patients. As per McKinsey, during 2020, the use of digital tools for health support by customers saw a rise of 15%, while it was predicted that around 37%of consumers might very well use telehealth in the future.

In addition, the research firm asserted that around post the pandemic, the use of telehealth increased from 11% to 76%. While it has had devastating effects overall, the pandemic has certainly helped push the implementation of digital tools across several industrial sectors.

Importance of Relationships with Consumers #

As the popular old adage goes, ‘The customer is always right’. Well, technically, this need not be true; however, it brings home an important point – customer satisfaction is highly critical for a business to be successful. At the end of the day, retaining consumers for your product/service is essential if you want the business to make money at all. Establishing strong, loyal relationships with customers, to that end, is one of the most vital strategies companies must adopt.

Building customer relationships ensures increased employee morale, reduced customer attrition, excellent sales, and high turnover. However, just establishing a liaison with the customer does not produce successful results – maintaining customer relationships is important. To that end, it is critical that companies increase focus on customer relationship management (CRM) as a vital tool. Customer acquisition is important, yes, but customer retention is more critical today.

Having good relationships with customers mandates consistent improvisation in company services. Customer behavior and expectations change periodically with changing trends and a transforming marketplace. Alongside, continual improvisation is vital so as understand changing consumer needs and fulfill them accordingly. A single negative experience or a seeming lack of concern can completely phase the customer out of the transaction ecosystem and negatively impact the company as well.

According to a survey conducted by PwC a year ago, 1 in 3 customers out of the 15,000 that were surveyed, chose to abandon a good brand after just one bad experience, while close to 92% may completely abandon the business after two negative experiences. In consequence, sour customer relationships can very well kill the brand sooner than one may realize.

A vital point that forms a part of good customer relationship management is paying attention to customer support. Customer feedback about a product/service, no matter how trivial, must be placed on a high pedestal. At the end of the day, customers want to feel heard, want to feel that they matter. A company that ensures appropriate customer satisfaction has more of a chance of retaining customers than a company that ignores customer feedback.

In today’s bustling work culture, paying attention to changing customer needs and behavior is more important than ever before. Businesses need to adopt suitable CRM software to understand customer requirements and how to fulfill the same effectively while maintaining brand awareness. As per estimates, using effective customer relationship management tools can help increase sales conversion rates by an astonishing 300%.

How Have Chatbots and Other Services Taken Over Customer Services? #

With an increasing number of brands trying to make their presence felt amid a cutthroat marketplace, the landscape of customer service has entirely changed in the last half a decade. Companies across myriad industry verticals are leveraging AI to ensure effective customer support. To that end, chatbots – virtual assistants, have made quite a reputation for themselves by handling multiple customer service pain points at the same time. For instance, chatbots are used today to resolve customer queries without human intervention, help customers 24/7, and handle multiple customers at once.

These AI-powered bots are suitably developed to use existing information and resources to help resolve customer questions. They are designed to recognize and answer query variations and can also be trained to provide instant responses in various voices and tones.

Because of their 24X7 availability, chatbots have quickly become a popular channel for customer inquiries. Users can promptly engage with chatbots in a live session and get all their questions resolved without having to meet an actual customer service executive face to face. This also enables customers to get their queries quickly resolved on demand, reducing the load on companies’ service teams. In effect, chatbots can take over simple question responses that usually take up 70%-80% of customer service representatives’ day. This time can be efficiently spent on resolving a more detailed customer query, leading to proactive customer support.

A vital reason why chatbots are taking over customer support is the financial strain. By installing a chatbot just once, businesses are able to save tons of money by not having to hire numerous customer service personnel. This comes as a cost-effective solution for understaffed teams in companies.

The increasing proliferation of digitization indicates that the humanizing technology trend is well on its way to becoming mainstream. Take Alex, for example, the virtual assistant that has probably had more conversations with customers than they may have had with actual people. To that end, companies are finding a way to revolutionize customer service by adopting digital solutions and making them as personable and empathetic as possible.

Chatbots are thus being carefully programmed to understand the customer’s pain points and voice changes and then resolve queries accordingly, in a deeply sympathetic voice that resonates with the brand in question. Chatbots are reshaping the entire dynamics of customer services by discarding redundant traditional messaging platforms and being available round the clock to transform even first-time visitors into permanent customers.

Are Human Interactions Still Needed? #

Contrary to popular consensus, digitized tools and virtual assistants may not exactly phase-out actual customer service entirely; human interactions may still be the need of the hour. In the aftermath of the pandemic, numerous companies turned to computerized customer service platforms and chatbots; however, it has been observed that many users are getting increasingly annoyed at having to communicate with a mechanized voice.

As per a survey comprising 2,000 consumers by outsourcing company CGS, almost 40% of British survey respondents claimed that speaking with a human customer service representative was preferable to having to converse with a virtual assistant. The same viewpoint was shared by United States survey respondents, 38% of which wanted companies to bring back human customer service.

Despite convenient online access and reliability, close to 83% of consumers claim that they prefer human interaction as opposed to digital assistants, according to the Global Consumer Pulse Research study from Accenture Strategy. This is because no matter how efficient and knowledgeable a virtual assistant is, it cannot match the convenience and understanding provided by a human customer service representative. Many are of the opinion that bots may have ready-made answers for standardized questions, but they will never be able to fully understand what the customer wants or solve the query the way the customer asks.

The biggest reason, however, for the retention of human customer service is the fact that users still want to feel needed, understood, and valued. Personalization is important, and so is active listening and empathetic communication that will help a company understand their customers well. Human interactions not only resolve the query in hand, but also help establish a long-term, personal relationship with users, thereby helping to increase customer satisfaction by up to 20% or more. It is more than likely that customer service in the digital age may be characterized by a mixture of efficient bots and human staff, harnessing the best of both and helping businesses retain as many consumers as possible.

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Questions and answers

How Has Pandemic Affected Digitization and Its Adoption? #

The impact of the coronavirus pandemic on the adoption of digitization has been overwhelming. Many companies had strong security and IT mechanisms in place and had already been working to transition to a digital ecosystem.

How Have Chatbots and Other Services Taken Over Customer Services? #

With an increasing number of brands trying to make their presence felt amid a cutthroat marketplace, the landscape of customer service has entirely changed in the last half a decade.

Are Human Interactions Still Needed? #

Contrary to popular consensus, digitized tools and virtual assistants may not exactly phase-out actual customer service entirely; human interactions may still be the need of the hour.