May 2019 Omer Minkara Vice President & Principal Analyst Contact Center & Customer Experience Management

THE ROI OF INTELLIGENT VIRTUAL ASSISTANTS IN CUSTOMER EXPERIENCE PROGRAMS

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This document highlights how use of intelligent virtual assistants (IVAs) influences performance across the contact center and enhances customer experience programs. It also examines the financial impact of IVA adoption.

IVA Users Enjoy Superior Results Across Three Key Categories

Between March and April of 2019, Aberdeen surveyed 445 businesses regarding their customer experience (CX) programs and best practices. Participants represented companies of all sizes across varying industries worldwide. The findings revealed that 18% of companies currently use an IVA to support their customer experience management activities. Another 23% indicated that they plan to incorporate this technology within their activities throughout 2019 and early 2020. Together, these statistics indicate that companies plan to more than double their adoption of IVA by early 2020. What’s behind the increase in IVA adoption?

Companies invest in this technology because organizations using IVAs observe significant performance improvements; these firms want to replicate the results. Improvements span three key areas:

1. Financial Benefits

A successful CX program is one that helps companies create happy customers without compromising the key financial goals of cost reduction and revenue growth. Figure 1 shows that firms using an IVA accomplish far greater year-over-year improvement across both categories.

Figure 1: IVA Users Enjoy Superior Financial Results

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45 Companies Using an IVAAll Others

Source: Aberdeen, April 2019

Definition: Intelligent Virtual Assistants

For the purposes of this research, Aberdeen defines an intelligent virtual assistant (IVA) as a digital employee with which current and potential customers can interact using voice and text through multiple devices (e.g., smart phones, tablets, laptops, IoT devices) to address their needs.

An IVA is defined as “intelligent” because of its ability to adapt, over time, and learn to address changing customer expectations. This process occurs through use of machine learning, natural language understanding, prescriptive guidance, and automation capabilities.

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The average cost per customer contact is calculated in various ways. In general, companies calculate this metric by using the direct costs that can be attributed to customer service activities. These include telephony costs, technology costs, and contact center agent labor costs. Figure 1 shows that IVA Users observe 2.3% annual improvement (decrease) in average cost per customer contact, compared to 1.0% worsening by Non-users. While this 3.3% difference may appear small, it has a significant impact on financial results. Let’s assume the subject is a contact center with $5 million in annual customer service costs. The 3.3% divergence would translate into a difference of $150,000 in cost savings if the company adopts an IVA ($5,000,000 million times 3.3%). The cumulative savings over the course of five years for this firm would be $750,000.

Using an IVA helps firms cut costs as IVAs can handle a greater volume of customer interactions and address them through AI-enabled self-service capabilities. This means companies can address a greater portion of customer traffic through IVAs without corresponding cost increases in agent labor costs and overtime. That’s true because using an IVA for intelligent self-service enables firms to use agents for more complex tasks, helping better manage labor and overtime costs. In turn, IVA users experience a decrease in labor and telephony costs, which results in an overall reduction in service costs.

Figure 1 shows that IVA Users also grow their overall revenue more successfully than Non-users, enjoying 98% greater annual increase in customer lifetime value (11.5% vs. 5.8%). Improvement in customer lifetime value is influenced by companies retaining clientele while growing client spend. Considering the organization’s success in improving this metric, we can infer that IVA Users achieve enhanced performance in retaining customers and growing client spend, which our analysis later in this document will provide quantifiable evidence to validate.

This growth in customer spend is facilitated through various activities, such as IVA-assisted optimization of cross-sell / up-sell activities. This is done using machine learning and business intelligence capabilities which analyze historical customer interactions to determine the factors that represent the greatest likelihood to drive cross-sell / up-sell — utilizing the resulting insights to pursue further opportunities when appropriate. For example, a telecommunication services provider using an IVA can detect when customers are most likely to buy a device protection plan and present clients with one at the right time in the buyer journey.

In addition to helping firms grow cross-sell / up-sell revenue, data shows that IVAs also help companies improve website conversion rates. They do so by making it easier for potential customers to have questions addressed when searching for a product or related information on the company website. For instance, if a consumer has a question regarding the material a handbag is made of, an IVA can answer the question. This makes the consumer buying

Companies plan to more than double their adoption of IVA by early 2020.

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experience more seamless and increases the likelihood of the buyer purchasing the handbag instead of abandoning it in the shopping cart. These activities help IVA users observe a 64% greater year-over-year increase in annual company revenue (9.5% vs. 5.8%) while increasing customer profit margins by 64% (7.2% vs. 4.4%) as well.

2. Contact Center Operational Efficiency

Achieving operational efficiency while creating happy customers are the two top objectives driving contact center executives’ agenda across almost all companies surveyed. Figure 2 shows that contact centers using an IVA have an advantage in achieving these goals. Specifically, they report 2.2x greater annual improvement in first contact resolution rates (12.1% vs. 7.4%) and 2.4x greater annual increase in number of quality service-level agreements (SLAs) met (9.2% vs. 3.9%).

Figure 2: Contact Centers with IVAs Drive Greater Efficiency

Because using AI capabilities such as natural language understanding enables companies to more accurately detect the context of the customer issue, adopting an IVA helps contact centers with improved first contact resolution rates. Once an IVA accurately determines the context of the customer issue, it can then automatically execute related workflows such as looking up customer account balance. As such, customers are less likely to contact the business again to seek help because their issues are more likely to have already been accurately addressed.

Companies may have various SLAs they are trying to attain. These might include responding to client requests for support in a certain timeframe or using a proper customer greeting in at least 70% of interactions. Because IVAs are supported with automation capabilities, companies can repeatedly execute activities designed to ensure delivering on these SLAs. As a result, IVA users are able to achieve greater annual improvement in these metrics.

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Companies Using an IVAAll Others

Source: Aberdeen, April 2019

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Figure 2 also shows that IVA users enjoy 64% greater annual increase in agent productivity (12.1% vs. 7.4%). As noted earlier, the AI capabilities built within an IVA solution enable this technology to more accurately determine the context of customer issues. If it is determined that the issue would be better handled by a human contact center agent due to higher complexity or sensitivity, the interaction can be routed to a live agent after the context is determined. However, the contextual insights captured by the IVA are also provided to the agent, which helps them understand the client issue and improves their productivity.

This empowerment of agents with relevant insights helps IVA users achieve 4.2x greater annual improvement (decrease) in the number of transfers and 27x greater annual improvement (decrease) in the time spent by supervisors assisting contact center agents (12.1% vs. 7.4%). IVA users enjoy drastically better results because the contextual insights captured by an IVA provide agents with vital knowledge they need to more effectively handle each interaction. As such, we can say that using an IVA amplifies the results of agent-assisted customer interactions.

3. Maximizing Customer Experience Results

The most important result all CX executives aim to accomplish is to create loyal, satisfied customers. Data shows that in addition to achieving greater financial results and driving operational efficiency in the contact center, firms with an IVA also excel in delighting their customers. Figure 3 shows that IVA users achieve 2.5x greater annual increase in customer satisfaction rates (13.5% vs. 5.5%) and increase retention rates by 88% more than All Others (10.7% vs. 5.7%).

Figure 3: Incorporating IVA within CX Programs Maximizes Results

When organizations make it easier for customers to address their needs, customers cite increased satisfaction and reward these firms with their loyalty.

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Source: Aberdeen, April 2019

The contextual insights captured by an IVA provide agents with vital knowledge they need to more effectively handle each interaction.

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For example, if a customer struggles getting timely and accurate answers when seeking help with an insurance claim, they will likely be frustrated and less likely to consider renewing their policy. IVAs help companies improve customer satisfaction and retention results by making it easier for customers to address their needs through self-service. This finding is validated by the improvement IVA users observe in reducing customer complaints and effort scores.

This is further indicated in Figure 3, which shows that IVA users achieve 74% greater annual improvement (decrease) in customer effort score. Companies measure customer effort in various ways, including a numbered scale (e.g., 1-10) or counting the number of repeat contacts customers must make with the business to resolve their issue. Focusing on year-over-year change in customer effort enables CX leaders to determine how using an IVA influences the overall improvement in customer effort — regardless of how companies measure it.

When companies deliver effortless experiences, consumers are less likely to be frustrated by inefficiencies. This helps decrease the number of customer complaints — a metric where IVA users enjoy 7.4x greater annual improvement (decrease) as compared to their counterparts that do not use this technology (8.1% vs. 1.1%).

Key Takeaways

CX leaders never had more tools at their disposal to achieve their goals than they do now. One of the greatest challenges companies face today is using the right set of existing and new technologies to create happy customers while controlling costs and achieving efficiency. It’s telling that companies plan to increase their adoption of IVAs to more than twice the current number by early-to-mid 2020.

Such a significant increase in planned adoption of IVAs means companies want to use this technology because it aligns with their goal of creating iconic customer experiences while achieving operational excellence. Use of AI capabilities incorporating greater intelligence into IVAs also helps optimize self-service experiences, which provides companies with opportunities to differentiate themselves through intelligent self-service programs.

Firms also prefer using technologies that deliver the desired ROI. Observing performance differences between IVA users and non-users across the three areas we discussed in this document shows that CX leaders recognize the performance gains their peers enjoy through IVA use and want to replicate the results in their own businesses.

If you’re not currently using an IVA, we recommend you consider how this technology can support your self-service programs by creating more effortless

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customer experiences while enriching efficiency and improving financial results. Make sure your IVA is tightly aligned with omnichannel activities to ensure consistent customer interactions across all channels. Also, optimize your routing activities to send complex interactions to human contact center agents while providing them with the insights gleaned through the IVA. Taking these steps will maximize the likelihood of generating the greatest return possible from this technology.

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About Aberdeen Group Since 1988, Aberdeen Group has published research that helps businesses worldwide to improve their performance. Our analysts derive fact-based, vendor-neutral insights from a proprietary analytical framework, which identifies Best-in-Class organizations from primary research conducted with industry practitioners. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision-making and improve business strategies. Aberdeen Group is headquartered in Waltham, Massachusetts, USA.

This document is the result of primary research performed by Aberdeen Group and represents the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group.

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