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Apr 9, 2020 12:07:02 PM

Live chat vs chatbot: Which one delivers a better service experience?


In our daily work, we talk a lot to customer service managers. Our discussions often revolve around strategic topics, such as how to improve the service experience and what kind of tools are available.

These days, chatbots in particular get a lot of attention on the customer service floor. And when the discussion turns to chatbots, live chat almost always comes up as well.


When service managers start investigating chatbot solutions, they are usually experiencing one of the following scenarios:




  • They’re looking to get rid of their existing live chat solution and want to replace it with a chatbot—a decision usually driven by the high costs and low ROI of live chat


  • They’re looking to get rid of their existing chatbot solution and want to replace it with live chat—often because of a buggy NLP chatbot, low resolution rates and plummeting CSAT scores


  • They’re looking to add live chat to their service mix—but someone from C-level has brought up chatbots as an alternative for a higher ROI


  • They’re looking to add a chatbot to their service mix—but an important stakeholder has had bad experiences with chatbots and is worried about customer satisfaction


Basically, these strategic scenarios are about getting one or the other—“they’re both chats, anyway”. On the surface, it might make sense to look at it this way, but in reality, this “either/or” approach is flawed.


Why? Because the best solution for most companies is a two-pronged approach:


  • Add both a chatbot and live chat to the service mix for optimal ROI, better agent resource allocation, improved CSAT scores, a reduced number of tickets and an improved service experience


Those other strategies are flawed, because they fail to recognise the main differentiator between the two chats: only one of them is a self-service channel. If you fail to account for this factor when crafting a service strategy, you might not be able to accurately evaluate their unique benefits.


This is an easy mistake to make, because we’re so used to looking at customer service strategies in terms of the individual channel categories, such as social media, email, phone and chat. Instead, we should be looking at completely different aspects, including the type of request, how urgent it is, its impact on CSAT/retention/CLV, the level of engagement, the type of interaction, as well as how all these elements fit into the given channel mix.


It may seem logical to compare live chat and chatbots: they’re both conversational service channels, they both have conversational interfaces and they tend to occupy the same “real estate” (often in the form of a beacon in the corner of a website or app). Based on these factors, the two seem very much alike.


However, in reality, they’re suited to answering very different types of questions, with different levels of complexity and urgency. There is even a clear, one-direction escalation between the two in the customer service funnel, as the interaction moves from “zero-contact resolution” to “first-contact resolution”.


So let’s look at the characteristics of both channels, their place in the customer service funnel, and how they fit together in a coherent service strategy that improves the overall service experience.






The benefits of using chatbots


Chatbots are one of the newest additions to the customer service toolbox. More and more companies are using chatbots to relieve their customer service woes.


Chatbots have several very clear benefits in the customer service funnel. Many of those benefits also apply to other self-service channels, such as FAQ pages and Help Centres, while others are very chatbot-specific.


When it comes to speed of resolution, chatbots simply cannot be beat. With chatbots, things happen fast—most of the repetitive requests can be solved in less than 20 seconds. While FAQ pages are also available around the clock and some companies offer 24/7 service hotlines, the combination of speed and availability makes chatbots a very attractive choice compared to other self-service channels.


All self-service solutions reduce the number of repetitive requests, but chatbots also actively guide the user towards the right answer, so the customer is more likely to find a solution and won’t need to pick up the phone. Bots can also serve an endless number of customers at the same time without any human intervention.


It’s particularly worth mentioning that if chatbots are powered by artificial intelligence, their performance will actually improve over time. The more customers use them, the more effective they will be for new customers down the line—and for slashing those ticket volumes.


Using chatbots is also a matter of optimising quality and cost efficiency. Bots should only do what bots do best (handle repetitive and easy requests), so that customer service agents can do what they do best (be empathetic and build relationships with customers).



The benefits of using live chat


Live chat is the next step down from automation and self-service in the customer service funnel. It’s a channel with the lowest threshold for direct communication with a person, a.k.a “first-contact resolution”. Live chat provides a fully personalised service with a human touch—something customers with more complex problems will appreciate—while still offering some of the benefits of chatbots.


Compared to other service channels involving a human, like email and phone, live chats enable agents to serve multiple customers at the same time. This means that live chats can bring significant efficiency to the “first-contact resolution”.


Live chats also tend to have a similar level of immediacy as phone calls (at least compared to email, which is very asynchronous). Users don’t need to wait for a reply that may take several days. In addition, most users are very familiar with conversational interfaces these days, thanks to the ubiquity of messaging apps such as WhatsApp and Facebook Messenger. The interface and the immediacy are two key reasons why live chat is a popular choice among customers.





A match made in heaven


Both channels are strategically relevant to the overarching goal of improving the customer service experience. When implemented correctly through an API integration, the two contact channels complement each other by serving different stages of the customer interaction.


In fact, given that the two channels are so similar in terms of their user interface and “flow” (both are chats), we believe that live chat is the natural second step down the funnel. After first interacting with a chatbot, users with unresolved issues can then get in touch with the service team via live chat.


In our experience, this is an ideal setup for improving the service experience. The transition from the chatbot to live chat is incredibly smooth, because everything happens in the same interaction, through a similar interface, within the same chat window. If a customer is funnelled through to live chat, the service agent will receive the chatbot transcript from the interaction, which gives them an excellent overview of the customer’s request.


In contrast, consider the following scenario. A customer has been browsing the FAQ section for 15 minutes, going through article after article, but they cannot find an answer to their question. To transition to another channel—such as the phone—the customer has to go through a variety of disrupting actions. They have to find the phone number on the website, get their phone, navigate through the menu options, wait in the queue and then re-explain their problem to the service agent.


Strategically placing the chatbot as the “concierge”—the first contact point to your brand—enables the customer to smoothly progress down the customer service funnel in accordance with the nature and urgency of their request.



When you cannot have both


Now, sometimes there are limitations. You might have a very good reason for basing your service strategy on either chatbots or live chat—not both. If you absolutely need to choose one over the other, our recommendation is to start with a chatbot and build the strategy with a “self-service first” approach.


While implementing both channels will do wonders for your service experience, live chat alone won’t achieve that much. Sure, live chat is better than email and phone in many ways, but its inherent limitations mean that, in isolation, it won’t have a major impact on the service experience. The efficiency and speed of your customer service department will still depend on your ability to scale up the headcount of your service team. In addition, it is incredibly easy for customers to contact your company via conversational interfaces (social media, messaging apps), so the number of incoming requests will most likely even increase.


While these issues are not a problem for chatbots, they can add to service agents’ already hefty workload, especially during peak seasons. When used on its own, live chat is the same as all the other service channels that involve interacting with people: there’s little opportunity to scale up and respond to fluctuations in demand.


You can really only reap the rewards of live chat if you have introduced an automated service layer before it and are actively applying a “chatbot first” customer service strategy.



A great chat strategy will give your company the edge


If it’s not feasible to implement a strategy involving both channels, we say go for the chatbot. Bots are generally better suited to meeting the immediate needs of your customer service department and almost always deliver a better ROI.


That said, the magic is in the mix. Chatbots and live chat are ideal successive stages in a winning customer service strategy. Together, they’ll enable you to give your customers the right help at the right time. That will boost customer satisfaction and it’s also great news for your company’s overall success. After all, excellent customer service departments are increasingly seen as a valuable competitive advantage, so a cutting-edge strategy for your service experience can really pay off.


Sara is a former Solvemate. She’s really into chatbots, and improving customer experience. When she’s not writing about customer service automation, she’s an Italo-disco singer and a devoted housekeeping nerd. Hailing originally from snowy Finland, the Berlin winters leave her cold (pardon the pun).