What are the advantages and disadvantages of automated customer service in retail?

The retail industry has seen a major shift towards automation in recent years. Many retailers are now using chatbots, interactive voice response (IVR) systems, and other forms of automated customer service.

While automation has some clear benefits, it also comes with some downsides. In this article, we’ll look at the key advantages and disadvantages of automated customer service in retail.

Improved efficiency and cost savings

One of the biggest benefits of automation is improved efficiency and cost savings.

Chatbots and IVR systems can handle a high volume of routine customer enquiries and simple tasks like checking order status, providing shipping updates, etc. This allows human agents to spend their time on more complex issues that require human interaction and empathy.

According to research, automated systems can resolve over 70% of routine customer queries. This leads to significant savings in labour costs as fewer human agents are required. Automation also enables retailers to offer 24/7 customer service without having to employ staff around the clock.

Enhanced customer experience

When implemented properly, automated systems can enhance the customer experience.

Customers appreciate the convenience of getting their simple issues resolved anytime without having to wait on hold for an agent. Surveys show that many customers actually prefer chatbots for simple interactions like checking account balances, ordering status, etc.

Automation also leads to faster resolution times. Bots and IVR systems can pull up customer data instantly and provide answers in seconds. This is much faster than customers waiting on hold for the next available agent. The quick response leaves customers satisfied.

Lack of personal touch

However, automation lacks the human touch and empathy that comes with human-to-human interactions. Automated systems follow rigid scripts and lack the ability to pick up on contextual cues. They cannot perceive emotions or respond accordingly.

Some examples of industries where a lack of personal touch can have negative implications include:

·       Healthcare - Patients want to feel cared for and listened to. Impersonal service can make patients feel like just a number rather than an individual. This could lead to poor patient satisfaction and outcomes.

·       Hospitality - Hotels, restaurants, and other hospitality businesses rely on providing excellent personal service to guests. An impersonal, robotic style of customer service could damage their reputation and drive away repeat business.

·       Financial services - Banks, investment firms, etc. need to make clients feel valued and build trust. Distant, impersonal service could make clients feel overlooked and hesitant to use services.

·       Online casinos - Players look at the customer service options available before choosing to sign up. If there isn’t an option to speak to a customer service advisor, this is viewed as a negative.

Technology limitations

There are still many limitations with automated customer service technology.

Chatbots and IVR systems struggle to understand complex natural language queries. The conversations tend to be rigid and robotic. When the questions go off-script, the bots fail to provide satisfactory answers.

They also lack integration with all the various backend systems. So, automation cannot resolve issues that require lookups or updates in multiple enterprise systems. The technology simply isn't advanced enough to handle the dynamic nature of human conversations.

Security and data privacy concerns

The collection of customer data raises some security and privacy concerns. Hackers could potentially gain access to sensitive information through a breach of automated systems. Customers may also be uncomfortable sharing personal and financial information with a bot.

These concerns can make some customers reluctant to use automated customer service channels. Retailers need robust security measures and transparency around how data is collected and used to build trust.

The human touch still matters

While automation excels at routine tasks, the human touch still matters in customer service. Complex issues require human nuance, discretion, and judgement calls. Customers want to speak to empathetic agents for personalised service recovery or when dealing with sensitive matters.

The most effective solution is to use automation and human agents in conjunction. Have bots and IVR systems handle simple queries and transactions. Then transfer the call to a live agent when automation hits its limits. This hybrid approach delivers cost savings while still providing high-quality personalized service.

The impact on jobs

One major concern with automation is the impact on human jobs. As bots and self-service channels handle more routine enquiries, the need for agents declines. While new jobs are created to manage these technologies, the net effect could be significant job losses, especially in lower skilled roles.

Retailers adopting automation have a responsibility to transition and retrain affected workers. Failing to do so appropriately can damage employee relations as well as public perception of the brand.

The bottom line

Automated customer service offers tangible benefits like improved efficiency, cost savings and faster response times. When applied correctly, it can enhance many routine customer interactions. However, automation lacks human empathy and discretion. For complex issues, customers still appreciate the personal touch of a real service agent.

Retailers should take a hybrid approach - using automation for simple transactions while maintaining sufficient staffing to deliver personalised service.

This balances the advantages of automation with the human touch that bolsters customer satisfaction. The goal should be augmenting service agents with technology, not replacing them entirely.