The Future of customer service – Chat Bots v Live Chat

Publish date: 2023-10-17

Author: Diane Scally

The Future of customer service – Chat Bots v Live Chat

No one enjoys being put on hold for hours waiting to speak to the next available customer services agent, so if consumers can get the help they need from a chat function on a company website, then this is likely to be a popular place to start if it saves time and solves the problem. 

Over 5.3 million websites now utilise some form of online chat technology, and as companies look for ever more innovative ways to improve customer experience and the trend for digitalisation of services continues, the global live chat software market is anticipated to reach $1.7 billion by 2030. 

However, there can be a big difference in customer experience between interaction with a chatbot and live chat with a human being, and businesses should be mindful of how effective their offering is and whether the end user receives it well.

How do people feel about chatbots?

Recent data shows that around 68% of consumers have used chatbots, but when given a choice, 77% of those surveyed would prefer to interact with a human being when it comes to fulfilling their customer service needs, citing that they find chatbots frustrating as the technology often can’t understand the questions it is being asked and customers end up having to repeat themselves several times before they can proceed or decide to give up, leading to a poor customer experience either way. 

Consumers also say that chatbots only resolve their problems effectively around 35% of the time, with as little as a quarter of those who had used chatbots saying that they would use them again, suggesting that an unhelpful interaction with an AI bot could be damaging to customer satisfaction, brand reputation and repeat business.

Do customers feel the same about live chat?

Conversely, people favour live chat, not just over chatbots, but over other types of customer support, including phone and email. 41% of consumers now say that they prefer real-time customer service via live chat over other methods, with this number predicted to grow further in coming years with increasing digital transformation of services and the growing expectation, especially amongst Gen Z, for instant results and information.

Studies also show that satisfaction, effort and repurchase rates are higher when a human is involved in the interaction than when chatbots act alone. Chat functions where a human joins the conversation within 30 seconds similarly have higher satisfaction rates.

Live chat is so successful that customers who ask questions over live chat are five times more likely to complete a purchase and 60% more likely to return to the website again. When you consider that around 15% of website visitors will use a live chat function if it is available, that could be a sizeable difference in sales and positively affect customer retention.

Know your audience

Of course, while many people like the immediacy of online chat functions and find waiting in a phone queue extremely irritating, it is essential to be aware of the preferences of your target market and existing client demographic. For instance, online consumers aged 18 – 34 are 21% more likely to select live chat as their favoured method of customer support than those between 35 – 54, so brands should certainly be considering the audience their products and services are aimed at before committing to offering one form of communication over another.

Companies should reflect on what their chat function will likely be used for to determine its success and whether to opt for live chat or chatbot technology. AI has been shown to resolve around 58% of returns and cancellations but only 17% of billing queries, so customer satisfaction is likely to be linked directly to accurate analysis of the subject of customer enquiries for any given company, which will vary depending on the nature of the business.

To chat or not to chat?

Understandably, some companies still need to decide whether to invest in website chat functionality. Looking at the evidence, you could argue that live chat would be far more helpful than chatbots.

However, for live chat to be effective, a business must have the workforce to support it, and chatbots can be a helpful and less labour-intensive option if most of your customer queries are simple and transactional rather than open-ended or complex.

Automated chat will likely improve as generative AI becomes more intelligent and user-friendly. Still, we may be a way off of that yet. In the interim, marketers and business leaders must support online customer service offerings to ensure users have a high-quality customer experience to improve engagement and brand loyalty.

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