To automate or not to automate

Automation

Finding successful balance in customer interaction automation

By Ryan Dempsey
Senior Analyst, SATOV Consultants

It’s one of today’s most pressing business concerns: how to reduce employee costs by automating customer interaction. But don’t expect the next industrial revolution; customer interaction automation has been evolving for more than 130 years.

In 1880, in London, the first vending machine was introduced to dispense postcards. Self-service gas stations followed in 1905, restaurant buffets in 1946 and ATMs way back in 1967. For the past 15 years, we’ve been living through the digital revolution. Companies have been making tradeoffs between service employees and automation for a long time.

Automation of customer interactions is not a black and white issue

Today there are more options than ever to automate dealings with customers. Technologies like smartphones, the Internet and ubiquitous computing continue to exponentially expand these potential solutions.

As the options for companies increase, so too do customer expectations. Customers have increased awareness of what’s out there and greater variety from which to choose. For instance, only three years ago I would call the one taxi company whose phone number I remembered. Today, I can search online directories to find the best service in my area or use a mobile app, such as Uber.

With these two forces in play, deciding whether to automate gets harder and harder. Do the cost savings outweigh the sales impact? Does automation hinder or improve the customer experience? Given this dichotomy, responses have varied; some companies are rapidly investing into digital solutions, while others are pulling back from automation and reinvesting in human services.

Looking back through history, we found examples of similar automation decisions that had very different outcomes. Through these contrasts, a few overarching themes stood out.

Self-service checkouts don’t (always) fly

Automation wins: Anyone who spent time in airports in the early 2000s can attest to the revelation of digital airport check-in kiosks. Gone are the times of 30 minute check-in lines, or painstaking conversations with agents to change seats.

Kiosks made the process simpler and more efficient and, not surprisingly, also saved airlines money. Processing a customer at a ticket counter costs an average of $3.68 versus 16 cents at a kiosk.

Advantage – humans: Given that success, you’d think grocery stores’ self-service checkouts would deliver similar benefits. Not so. Many grocers are closing them due to low use (just 16% of purchases, the Arlington, Va.-based Food Marketing Institute estimates) and poor customer satisfaction.

The difference? Airline check-in is a simple, consistent process for customers and agents. Grocery checkout tasks like inputting produce codes and unselecting items can confuse customers. In most cases, having a cashier speeds up checkout and lets the shopper relax.

Implication: Changing the customer experience is hard. To pull it off, you must anticipate and prepare for all potential stakeholder impacts on everyone from customers to employees. Ideally, going digital should make the customer experience even simpler than it was in person.

Making the right call on technology

Automation wins: A travel client of ours was worried that moving orders online would hurt cross-sell insurance sales. At first, conversion rates dropped 50%, but the company has since reversed that trend by optimizing its website and using outbound calling.

For this client, the savings outweigh the lost revenue. With a drop of less than 20% in cross-sell conversion, the company has been able to cut costs dramatically and provide a better customer experience.

Advantage – humans: Assurant Solutions invested in technology not to eliminate its call-centre employees but to empower them. In 2004, the U.S. insurer began using IBM’s Real-Time Analytics Matching Platform (RAMP), an algorithm-based system that directs customers to the best agent based on their past call-centre experiences. The system enabled Assurant to make its customer touch points more robust and rewarding by leveraging client information.

RAMP improved first-call resolution, boosting sales revenue by 29% and increased the number of customers retained by 119%.

Implication: Technology can both automate and enhance customer interaction. Developing and evaluating ideas that run the gamut — from eliminating employees to improving their performance with digital tools — will ensure that you find the best outcome for your business.

Bank tellers are people too

Automation wins: ATMs are one of the biggest automation triumphs of the past century. But automated tellers didn’t catch on until the early 1980s, almost two decades after they first appeared. Early ATMs were confusing and unreliable, and had major security flaws. Improvements such as video display units with buttons next to the screen were crucial to their widespread adoption.

Advantage – humans: Despite ATMs and advances in online banking, brick-and-mortar branches remain indispensable for customers who prefer speaking to bank staff in person or are making complex decisions that call for specialized information. In a 2012 survey by London-based market research firm Mintel Group, 50% of respondents said they chose their bank based on proximity of branches.

Implication: Always begin with the target customer experience. And remember, the target customer experience isn’t necessarily the ideal experience for the customer. A back massage would probably make planning your mortgage a more enjoyable experience, but don’t expect to see that at your local branch anytime soon.

The following steps will improve your chances of success when making decisions related to automating the customer experience:

Always start by mapping the customer journey and determine the target outcome for each touch point. Balance customer satisfaction, operating costs, sales potential and branding impact when determining the target experience.

Remember that different customer groups, products or purchase occasions can have different target experiences. Balance the precision of segmentation against the complexity of different approaches.

Benchmark within and outside your industry. Stay up to date with the newest innovations in customer experience across all industries and assess the impact they could have when applied to your target customer experience.

Carefully plan the implementation of new technologies. Scenario planning and pilot programs will ensure that your plan will actually deliver the target experience.