Do Chatbots Actually Improve Either Customer Service Or The Bottom Line?


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Here we go again.

I have a vivid memory my first encounter with an IVR.  It was Bell Canada’s “Emily.”  It was as close as I’ve ever come to actually throwing a phone against a wall.

When Is “Customer Service” NOT Customer Service

It was almost funny back then, listening to the rationalizations of decision makers in the companies who were early adopters of IVR technology.  They would inevitably cite the per-call cost of automation vs. the per-call cost of a human, and then try to convince people that customers actually preferred talking with a robot that very often just made things worse.  “It’s a win-win” they would say to anyone who would listen.  They scrupulously ignored, of course, the increased consumer alienation, and the fact that customers were now calling multiple times about an issue instead of just once.  Nobody bothered to do the math of involving a dramatically increased number of inevitable escalations  – often dealt with by people at a much higher salary range.

This phenomenon is, fortunately, much more rare these days. Most organizations that are genuinely trying to improve their customer experience have gone back to using more, better trained, humans.

Enter The Chatbot – And The Cycle Begins Again

Today, the Big Shiny New Object is the customer service chatbot.  Chatbots, for those who aren’t up on this sort of thing, are artificial intelligence programs designed to mimic live chat.  In theory, they are able to effectively triage common issues, thus reducing manpower and costs.  Unfortunately, it appears to be IVR all over again.

I recently tried to connect with to get some customer service help.  Sure enough, their first line of defense is a chatbot named Anna.  Anna was very polite, trying desperately to solve the wrong problem, and I found myself yelling at my computer screen.  Mercifully, she eventually relented and a small link popped up that allowed me to chat with a human.  The human answered my question in less than 15 seconds.  Problem solved.  But Alibaba certainly doesn’t have a satisfied customer.

I have had a few very similar interactions like this with other companies, and I seriously question the ultimate benefit of using chatbots.  Unless, that is, until there is a profound leap in technology.

It’s A Flawed Customer Service Philosophy

The philosophy of automation seems to be: “Let’s wait until the customer is really annoyed before we actually start trying.”  It’s an attractive proposition, but proponents of automation really need to stop referring to it as a “customer service” strategy.  It is a financial strategy, pure and simple.   The goal of chatbots, as with IVR,  is not to provide outstanding customer service.  The goal is to do the bare minimum service level required before customers will start defecting.

The problem with this balancing act is that, when weighing the costs and benefits, most companies are putting little to no weight on the value of actually connecting with a customer.   That connection; that feeling that a company genuinely cares about us; is very real and very powerful.  It is the root of true loyalty which, sadly, is not captured by today’s popular metrics.

Republished with author's permission from original post.


  1. Thank you for a thoughtful post. Your opening salvo tells the tale. Is the primary rationale of an organization focused on cost savings or on customer care? Every successful organization should keep a watchful eye on cost savings and their bottom line. But, customers have historically rewarded those organizations that place the customer needs and expectations at the center of their decision making process.

    We are in an era of infatuation with technology as the savior of productivity and progress. And, clearly there is a place for the interjection of high tech into a realm that is fundamentally human and relational. The dishwasher surely helped my household better deal with who got what chore! But, when the infatuation causes the organization to get high tech-high touch out of balance, we get sweet Emily with “her” perpetually high morale, low absentee rate, and complete inability to intuitively grasp what matters most to the customer who is paying for her programming!

  2. Thanks Chip! I really like your comment about the importance of balance of high-tech/high-touch.



  3. Hi Shaun: I can empathize with your point about how a company’s customer service philosophy comes across. When new technology has problems in implementation – as it often does – it’s possible to develop negative assumptions about a company’s motivations.

    But I think your characterization of management wanting to “wait until the customer is really annoyed before we actually start trying,” might be unfair. And while I don’t question that some companies decide to use chatbots in a simplistic effort to cut costs, others don’t. How many? I can’t say. Just that it’s hard to generalize.

    You can’t name a single technology implemented in the last 50 years that wasn’t first done badly. To me, that’s more an indictment on project management than on technology itself. Many tend to confuse these two issues. Or, they ignore the culpability of implementation altogether, and just say the technology sucks. After all, it’s way more visible than the team of practitioners working in the backroom.

    In the case of IVR that you mention, there’s little doubt that companies continue to use it the wrong way, and for the wrong reasons. But even in instances where companies have reverted to ‘real humans’ to provide customer support, IVR systems work alongside them, diminishing some of the tedium. In some situations, IVR systems are an essential part of delivering high-quality CX results. At least for now.

    Back to the question you posited in your title: absent context, it’s hard to comment on whether chatbots – by themselves – improve customer experience or profits. Another question would be ‘how can companies deploy them to achieve both?’ I think there is a way, but it involves using chatbots in a larger system, and not considering their merits (or lack) in isolation.

  4. Thanks for the comment Andrew. It would indeed be a good question – how can we employ chatbots and achieve outstanding customer service at the same time. But believe a better question is simply: how can we profitably achieve outstanding customer service? Chatbots are not part of that answer.

    I stand by original assertion that most – if not all – companies that are adopting them have primarily a cost saving motive, not a customer experience motive.

    The more a company distances itself from its customers – whether through technology or layers of bureaucracy, the less able it is to actually connect with customers in a meaningful way. And this has a myriad of negative consequences.

    Elon Musk gets this. Even though he is the poster-boy for innovation, he doesn’t misdirect his technology into round-peg-square-hole applications. When it comes to customer experience, he gets personal – as he did last week with his personal 82-character WOW customer experience


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