With artificial intelligence (AI), dominating every industry in recent years, we’ve seen businesses adapt rapidly to augment and optimize operations and communications—bridging the gap between them and their customers, especially in the customer service industry.
You’ve probably already heard of AI, such as ChatGPT. Some people might think AI is some kind of massive robotic structure like the Transformers, but the reality is AI is everywhere—even in places we didn’t think we’d see them. AI’s takeover in today’s world has become so natural that we often don’t even realize that what we’re using and talking to is powered by artificial intelligence.
In this situation, where does that put actual human workers on the map if businesses continue incorporating AI into their operations? Is there a way to find the right balance between AI vs. human agents, especially in the customer service industry, where efficiency and human touch are equally important?
Read on to find out.
The rise of AI
Where and when did AI actually start, and when did it start dominating people’s lives daily?
The concept of AI isn’t new. In fact, dating back to the 1950s, a young British polymath named Alan Turing was the first to initially draw the concept of machines thinking and making decisions like humans in his paper Computing Machinery and Intelligence.
From the 1950s to the 1970s, AI flourished in machine learning and problem-solving, and in the 1980s, the concept of ‘deep learning’ was integrated into computers so that they could learn using experience.
By 1997, AI was on a winning streak—literally—when IBM’s Deep Blue (a chess-playing program) defeated world chess champion Gary Kasparov.
In 2006, AI was slowly being integrated into how humans live and how we do business with social media sites like Facebook, Twitter (now known as X), and Netflix started using AI to curate content based on consumer behavior as a marketing and UX experience. In 2011, Apple created the first widely popular virtual assistant, which we now know as Siri.
By 2016, more and more companies had developed AI to mimic human interactions and behavior. Hanson Robotics created the first ‘robot citizen’ with realistic human features and the ability to replicate emotions and communication, whom they called Sophia. The year 2018 saw Chinese tech group Alibaba’s language processing AI beat humans on a Stanford reading and comprehension test.
From 2020 until today, the world has fully accepted and adapted AI with the introduction of GPT-3 and various Generative AI programs, as well as deep learning models that can generate any kind of content similar, better, or indistinguishable from human creation. Businesses have also greatly benefited from AI in recent years because of the efficiency brought by AI-chatbots or virtual customer reps in the customer service industry.
What does the customer service industry look like today?
Until just recently, businesses had no alternative to human agents for offering services, resolving complaints, processing orders, and providing necessary information about their products and services.
While many businesses assume those human agents are a cost center, quality customer service can often generate revenue. A study by SalesForce supports this statement, wherein 91% of respondents say that a positive customer service experience will incline them to make another purchase.
A company with good customer service can:
- Improve customer retention and loyalty
- Increase sales
- Strengthen brand and identity
- Attract new customers
Customer service plays a crucial role in being the face of the business. According to Fortune Business Insights, the customer experience management market size is valued at $14.95 billion in 2022 and is projected to increase to $52.54 billion by 2030. This projection was made based on the value of incorporating AI and Augmented Reality to enhance customer experience solutions.
The role of AI and chatbots in customer service
According to the U.S. Bureau of Labor Statistics, the U.S. had approximately 2,982,200 customer service representatives in 2022, which is projected to decline by 5% in the next 10 years.
Customer service is the world’s 5th most stressful job, leading to high levels of turnover and burnout. That, combined with the automation of AI customer service tasks, contributes to the continuous decline in human agents worldwide.
In the past, customers’ only option was to call human agents by phone for every minor and major inconvenience or information and patiently wait for a resolution—or end the call with no resolution at all. Aside from phone calls, customers can also email companies, which would take days, if not weeks, to receive a response.
Now with the rise of chatbots, businesses can provide better and more efficient customer service, especially regarding repetitive tasks and questions.
Chatbots serve as the initial interaction between a customer and the business, eliminating wasted time and enhancing customer satisfaction with instant support. As a replacement for human agents, chatbots are meant to communicate with customers at any time of the day.
Some of the types of chatbots include:
- Button-based chatbots. Chatbots you can communicate with by pressing a predetermined set of buttons from a scripted menu that best fits your queries. This type simply operates like a decision tree and is most helpful for repetitive questions.
- Rule-based chatbots. Chatbots operate based on a certain set of rules or keywords typed by the customer, much like a predefined Q&A.
- AI-powered chatbots. AI-powered chatbots are a much more advanced version of rule-based chatbots. It is powered by NLP or natural language processing, machine learning, and deep learning to derive ideas from contextual information from the customer. AI chatbots have more flowy and human-like conversations than rule-based chatbots.
“There’s no one-size-fits-all solution for businesses to use chatbot services. The type of chatbot a business needs depends on its scale, capacity, and the extent of customer support it wants to extend to its consumers,” says Jim Pendergast, Senior Vice President at altLINE Sobanco.
Will AI completely replace human agents?
According to a BBC report by investment bank Goldman Sachs, AI could replace 300 million full-time jobs, and the customer service industry is no exception. However, does this really spell the end for human agents?
The straightforward answer: No.
Despite all the automation and efficiency features of AI, an industry like customer service that thrives on effective and humanistic communication with its customers can never rule out real human agents.
Technology is still technology and is limited to whatever information its users, humans, feed it. What AI cannot do is build rapport or empathize with customers on a deeper level, which is a necessity in this industry.
“Businesses can leverage both AI and human agents to create a more efficient yet still human-centered approach to customer service, targeting business pain points with a specific function for each,” says Jesse Hanson, Content Manager at Online Solitaire & World of Card Games.
AI vs. human agents: A comparison
Now that we know that AI cannot completely replace human agents, it’s time we introduce how AI in customer service and human agents differ based on certain factors and situations:
| AI-chatbot | Human agents | |
| Response time | Responsive 24/7 because AI chatbots are preprogrammed to provide results immediately for simple queries and concerns | Unless businesses spend on manpower costs for human agents with shifting schedules, customer queries outside of work hours are usually addressed the next working day. |
| Cost | Chatbots are generally less costly for businesses in the long run, even with the costs of chatbot plans. Depending on the complexity of chatbot functions, chatbot plans usually range around $1,000 and can go as high as $10,000 monthly for complex and massive enterprises. | According to the U.S. Bureau of Labor Statistics, the average median pay for one human agent is $37,780 per year, not including all the benefits and statutory government dues you must pay each employee. Costs also increase when you factor in the training and turnover process and the cost of hiring new employees. |
| Scalability | Chatbots are very scalable depending on the needs of your business. Some chatbots that cost less perform simple functions like rule and menu-based chatbots. Custom in-house chatbots that are more expensive, like AI chatbots, are generally more scalable and customizable. | Scalability for human agents comes in the form of training and seminars. You won’t have to spend as much time teaching and improving the skills of human agents, whereas chatbots need to be fed a series of tests and programs by experts to be able to perform basic human functions. |
| Customer approach | Chatbots’ only goal is to answer customer queries straightforwardly. Even with the ‘human interaction’ that AI chatbots aim to be, AI won’t be able to empathize with a customer’s concerns through the screen—and your customers will feel it no matter how human you make your AI to be. | The edge of human agents is its humanistic and empathetic approach to customer service, as well as human agents’ ability to understand context and be relatable—something AI can never replicate. |
| Efficiency | As robots, chatbots can work around the clock, ensuring continuous customer support even at night or on the weekends—no matter how a customer approaches it. | Many human agents experience burnout, especially with an abusive shift schedule and rude customers, which can significantly affect a human agent’s mental health and work efficiency |
“Both AI and human agents play a crucial role in how customer service works because there are things that AI cannot do that only humans can—for example, dealing with aged customers who are less inclined to technology and may need the assistance of an actual human,” says Stephan Baldwin, Founder of Assisted Living.
Striking a balance between AI vs. human agents
“It is important to acknowledge that in the customer service representative industry, where human agents are often stressed and overworked, AI is not a replacement for human agents but rather an augmentation for better employee productivity and efficient business operations,” says Brooke Webber, Head of Marketing at Ninja Patches.
IBM research, in particular, focuses on a discipline called Human-Centered AI (HCAI), emphasizing how AI should ‘amplify and augment’ rather than displace human agents. Rather than being replacements, there is a need for equitable collaboration between humans and AI to keep up with the modern world while also acknowledging the indispensability of human touch.
In this context, AI in the customer industry can augment business operations by:
- Focusing on repetitive tasks like simple data pulling while leaving complex problem-solving tasks to human agents
- Creating trend reports based on massive historical data, while human agents offer effective solutions based on data
- Screening calls, emails, and queries and sending them to the best human agent for the concern
- Helping in training human agents by simulating various customer scenarios
- Accomplishing repetitive tasks that are the most stressful for human agents, to allow human agents to focus on core responsibilities and problem-solving tasks
Simply put, AI will be in charge of mundane tasks, sorting through massive amounts of information to draw results, graphs, and relevant data, and offer quick and easy solutions. On the other hand, human agents are tasked with complex decision-making involving nuanced understanding and emotional intelligence.
The synergy between AI and human agents can be compared to sociotechnical systems theory, wherein people and technology, infrastructure, goals, processes, and culture work together seamlessly for businesses to succeed.
The future of customer service
It is safe to say that the future of a good customer service team lies in the effective synergy between AI and human agents or the synergy between automation and human touch.
In particular, here are the possible futures of augmenting AI with human agents in the customer service industry:
Generative AI
We know of generative AI as ChatGPT, or image, sound, video, and content-producing platforms using AI.
With generative AI, businesses can incorporate conversational tools like ChatGPT into their customer service platforms. At the same time, generative AI can also generate personalized recommendations based on customer data and previous interactions to tailor to each customer’s concern.
Financial services
The role of AI and chatbots in the financial services industry is critical as they involve a lot of sensitive customer data.
“One should not undermine how important privacy protection is when it comes to online transactions,” says Volodymyr Shchegel, VP of Engineering at MacKeeper. “Efficiency is necessary, but businesses and AI implementers need to see to it that no important information is compromised in the process.”
Today, the financial sector is working towards better AI and chatbot customer service when it comes to:
- Checking of account balances
- Opening of new accounts
- Examining transaction history
- Bill reminders
- Make financial advice based on historical data
- Instant loan approvals
- Handle insurance claims
- Tax assistance
- Identifying fraudulent activities
Most chatbots’ and human agents’ role in the customer service industry today mainly revolves around handling transaction queries.
“With several exceptions, most financing sectors are still reluctant to allow financial transactions through online conversations because of the rampant cases of online fraud and security breaches—-making it a challenge for the technology industry to work seamlessly with the finance sector on how to address such matters in the future.”, says Anthony Martin, Founder and CEO of Choice Mutual.
Conclusion
Businesses need to recognize the major role of effective customer support in keeping customers engaged and loyal and attracting potential new markets. An effective customer service strategy should serve the best interests of its market, prevent potential bad PR, and strengthen its brand image while integrating modern technology and employee satisfaction.
In the same breath, we encourage businesses not to treat customer service as an ‘either-or’ matter between AI and human agents, as the role of each plays a crucial role in effective customer service strategy. Finding the right balance between technology and human touch is just as important as finding the balance between profit and expenses—both contributing to the overall performance of an organization.
