• January 1, 2017
  • By Donna Fluss, president, DMG Consulting

The AI Revolution in Customer Service

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Artificial Intelligence (AI) is the hot topic of the year for many enterprise functions, and customer service is no exception. Combine AI with machine learning, and the results sound highly innovative and exciting. While the pairing is proving to be beneficial, especially when supported by fast servers, the truth is that neither of these technologies is new to enterprises or to their customer service or contact center departments; vendors have been trying to sell AI-based contact center solutions for more than 25 years.


There’s no doubt that contact center self-service applications, particularly interactive voice response (IVR) systems, need a major overhaul or even a replacement. The market appears to be ready for virtual bots (also known as intelligent bots), which was not the case back in 1998, when these types of solutions were introduced. Back then, bots failed to catch on because they were considered unrealistic, impractical, hard to use, and not very effective. Moreover, many of the bot applications were offered as a concierge-type service on websites, and consumers didn’t like them.

The current generation of intelligent bots comes in all types of channels and styles. They’re being heralded as the next generation of self-service applications, more accurate and smarter than natural language processing (NLP)–based IVR systems. Intelligent bot solutions are supposed to be so much more effective because, for starters, they use AI and are self-learning. This is compelling, but when you look beneath the surface, it’s a bit hard to see the difference between bots and IVRs—particularly since some of these solutions come from the same vendors.


Clearly, there must be more to the story, and there is. The market needs better self-service technology and applications. Touch-tone-based IVRs are ineffective in this era of hands-free, mobile-enabled conversations. Many enterprises want to use speech-enabled self-service applications but are not willing to pay high prices for the software or implementation. Speech-enabled IVR remains very expensive, and much of the speech recognition software intellectual property is owned by one company, which has limited innovation and kept the cost too high for many companies. For more than 10 years, there’s been a reluctant acceptance of the lock on speech recognition software for contact centers, but bots now offer companies an alternative approach to building advanced speech-enabled self-service solutions that are more cost-effective and very likely more intelligent.

Self-service IVR applications in many companies range from 10 to 20 years old. While some companies have put money and effort into keeping their self-service voice applications up to date, a surprisingly large number have not, as their existing IVR systems seemed to work adequately enough. In many companies, the IVR applications and underlying technology are so old that it would be more cost-effective to replace them than to try to update them. If bots can deliver on their promise and automate a few percentage points of additional calls (or emails) that previously had to be handled by live agents—while also delivering an excellent service experience—adoption will be higher and more rapid than it is for most new IT segments, and certainly higher than speech-enabled IVRs.

Even though virtual intelligent bot technology is conceptually similar to advanced IVR, the underlying science is newer and has the potential to leapfrog traditional speech recognition. Intelligent bots run on faster virtual servers, most of which are in the cloud, which gives them the processing power to better meet customer needs. And since this is a “new” solution, a growing number of competitors are investing in innovation and prospects have many options.


There is a lot of hype surrounding the new AI-based intelligent bots, much of which can be attributed to marketing. But even if these bots are only slightly better than the current generation of speech-enabled IVRs, they are going to catch on. Enterprises are in great need of enhanced self-service capabilities that are more flexible and cost-effective, and it’s past time for many companies to update their self-service systems. Great value can be gleaned from AI-enabled bots, and they are well worth a look.

Donna Fluss is president of DMG Consulting LLC. For more than two decades she has helped emerging and established companies develop and deliver outstanding customer experiences. A recognized visionary, author, and speaker, Donna drives strategic transformation and innovation throughout the services industry. She provides strategic and practical counsel for enterprises, solution providers, and the investment community.

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