Chatbots: Are they meeting the needs of today’s customers?

Chatbots are pervasive and have altered how customers engage with brands – but are they working, and do they meet the needs of today’s digital consumer?
Chatbots: Are they meeting the needs of today’s customers?

In this article


Despite best intentions, virtual agents may not always deepen customer relationships.

The COVID-19 pandemic has only accelerated digital commerce and the pressing need for brands to service new and far-flung customer relationships. More people are interacting with products and services from the comfort of their own homes today. Visit a brand’s website, and you’re likely to experience something relatively new: within seconds, a chatbot will introduce itself and ask how it can help you. These chatbots are pervasive and have altered how customers engage with brands – but are chatbots working, and do they meet the needs of today’s digital consumer?

The first chatbot was developed at MIT in 1966. Developers primarily created successive chatbots as a means of finding new ways to communicate with computers. The explosive growth of chatbots came with the arrival of Siri in 2010, and with the application of artificial intelligence in 2016, they have become commonplace in the customer service industry. Companies have taken advantage of the improvements in chatbot capabilities to help manage customer relationships. The hope was to have chatbots have conversations with humans so that companies could be more responsive to customers and reduce strains on call centers and cut costs. And, to a degree, chatbots have served companies in those goals. Companies that use them reduce wait queues and provide customers with helpful options for common questions and solutions. But we live in a new world, where every interaction with customers matters. The ability to listen and truly understand needs is critical to winning the hearts of consumers. Have chatbots met this essential demand?

Chatbots: What’s Under the Hood?

Chatbots rely on technology that can translate commonly-known customer needs and questions into personalized interactions to answer questions, offer solutions, and – if needed — route questions to the right customer service agent. They are equipped with artificial intelligence and machine learning, which allow them to recognize familiar words and phrases and gather information to resolve issues or assist agents once a call is transferred. There are two types of chatbots: keyword-driven chatbots and AI-driven chatbots. Keyword-driven chatbots are the most common today: they are hardcoded with a set of terms triggered to resolve basic requests such as a password reset or account balance. These chatbots may be partially effective in answering more common customer needs but often leave customers dissatisfied and still in need of additional help when more sophisticated customer inquiries arise.

With an AI-driven chatbot, a customer often doesn’t even know they are talking to a chatbot. These chatbots, which include the likes of Alexa and Siri, are configured to be more human-like, and generate more natural responses and resemble real human conversations. The intelligence is driven by data intelligence that can identify changing patterns and evolving customer needs. And in this way, the application of AI and customer service can make for a more satisfying customer interaction and help deepen customer relationships. Nevertheless, there are limitations on what they can do. Still, AI-driven chatbots fail to answer every customer question that comes their way.

Coming Up Short

Increasingly, chatbots are the first point of contact for customers. But is that a good thing? Take banking, for example. Sure, answers to basic questions such as: “When is my next payment due?” or “What’s my account balance” can be provided. Chatbots can also handle simple transactions such as account transfers and even provide information on banking products such as loans and credit cards. They can also help collect data and point customers to services that may be of interest.

But despite these functionalities, chatbots often fail to understand what customers say. Building trust with customers is vital in today’s environment where brand loyalty is tough to come by. Chatbots can fall short on delivering the personal touch that’s critical to building trust. Despite the advances, many customers still prefer to speak with a real person. Chatbots don’t yet have the sophistication and empathy of a human being. Also, most chatbots cannot recognize nuances in language such as tone. And because they often cannot understand elements of human language such as sentiment, they often fail to deliver the service that a customer requires.

Finally, every customer is unique. Yet chatbots cannot offer personalized responses or express empathy based on a customer’s particular situation. A customer that has experienced a problem with a product or service and has grown frustrated, for example, wants to be heard. Chatbots are by design programmed and cannot yet improvise to a great extent, so if the conversation doesn’t follow a specific pathway, the customer will have a negative experience. Questions that fall outside defined rules cannot be answered appropriately. In these instances, the customer will have a poor experience, which can adversely impact a brand. Despite advances in technology over the past two decades, nothing has replaced a customer’s desire to speak to someone.

Voice Recognition and The Power of Artificial Intelligence

AI and machine learning are already reshaping the customer experience. Amazon’s checkout menu provides customers with product recommendations. Facebook Messenger uses AI to deliver the right content to users, including personalized ads that help marketers reach Facebook’s users.

In customer service, AI and machine learning are enabling call center agents to understand customer needs better. Live voice calls are monitored in real-time with great accuracy. Machine learning assists agents by identifying patterns and providing agents with sophisticated solutions for today’s digital customer needs. Armed with AI-provided information, agents can resolve simple issues or de-escalate a call by referring it to a supervisor. With each new customer, AI machine learning continues to improve, further enhancing the ability to meet a customer’s needs in the future.

Companies are just beginning to utilize AI to engage their customers, achieving high first-call resolution and reducing average handle times. However, these benefits are just the tip of the iceberg. What is most important is the ability for brands to deepen and sustain remote relationships. In today’s environment, digital commerce has accelerated at a rapid rate. Neobanks have supplanted brick and mortar banks. These are but two examples of customer relationships being forged where you may never meet the customer.

Where to from Here?

Without question, chatbots have delivered new benefits to companies and some customer service benefits. They can help companies provide quick answers to some customer questions, offer convenience, and deliver cost benefits. Service can be streamlined as humans spend more time on complex tasks rather than basic questions. Chatbots have added a new element to serving customer needs; they have enabled brands to remain connected to remote relationships previously forged. However, they are not a panacea. Using chatbots to resolve every customer problem or failing to integrate human contact at intervals of the customer journey can damage a brand. A poorly designed chatbot that leaves customers frustrated can discourage them from using it again.

Whether you’re running a start-up seeking to contain costs or a global brand with multiple call centers with thousands of agents, chatbots are here to stay and form a vital part of responding to customer service needs. Business leaders should consider how a chatbot may fit into a broader customer strategy to keep up with today’s digital customers. As technologies improve, the power of AI and machine learning in enhancing customer service will only increase. Every brand should consider ways to integrate AI into its customer program.

Building and Deepening Brand Loyalty

For brands, the stakes are high. With the acceleration of e-commerce and remote work, many companies will never meet their new customers. Being able to find ways to delight and satisfy them will define the customer experience. How you interact with customers will go a long way to determining whether they will remain loyal. If done right, these interactions can help strengthen relationships and preserve and generate new revenue. In an environment where customer loyalty is increasingly mercurial, trialing and adopting new technologies to engage customers are more critical than ever. If brands miss, customers are likely to feel frustrated and not come back. Though all signs point to chatbots’ continued growth and development, will brands feel confident that automated tools can provide meaningful interactions that can deepen customer relationships? Probably not.

Your Brand. Our Expertise. Infinite Possibilities.

Ubiquity empowers you to redefine customer engagement. Are you up for the challenge?

To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.