The Impact of Automation on Customer Churn

The Impact of Automation on Customer Churn

Customer experience: everybody is talking about it these days, and, to be honest, investing in it. But many customers are becoming less satisfied with service, not more. We guess that automation is messing things up. Here is how. 

Let us start with two stats:

  1. It is up to 50 times more expensive to acquire a new customer than to keep an existing one.

  2. Most people who leave any service do so because of dissatisfaction with how they are treated, not because of price or product.

In other words: unhappy customers mean - in the end - lower profits. It is as simple as that. That is why everybody is talking about the importance of customer experience these days. Enterprises have invested highly in customer experience and renamed entire departments accordingly. 

But here is the strange thing:

Those same enterprises are still struggling with their Net Promoter Score. Despite high investments, their customers are often not more satisfied. They are less happy.

Something else might be in play, wreaking havoc in customer service: automation.

In 2019, 25% of all customer interactions were automated through AI and machine learning. This number will only increase since 90% of companies plan to deploy AI within a couple of years. 

But where automation is often seen as the holy grail of customer experience, it can be entirely the opposite and hurt customer retention, profits, and, in the end, your company. We see four common mistakes in customer service automation:

1. Automating what never should be automated

Harvard Business Review shares the shocking story of MetLife deploying a robot voice to express sincere (sic!) condolences to customers who lost a beloved one. Really, what was MetLife thinking? Humans are humans, and sometimes they just need human care. As a simple general rule: where strong, negative emotions come into play, be extremely careful with full automation. Your angry or grieving customer may leave you forever. You automated them away. 

Instead: make your company more human with automation
Automation should make your company more human, not less, says HBR in a beautiful paradox. Do you want to automate less sensitive interactions with customers? Go ahead and make sure it creates room for personal conversations with the bereaved. After all, deploying AI may not be a great way to have a sensitive conversation. Still, it can definitely help detect the interaction that a person should handle - and even which person it should handle. 

2. Automating to reduce cost

Companies often automate because they want to cut costs, trying to automate - expensive - work away: a limited scope for automation, states this article by McKinsey. It results only in short-term benefits while creating a whole range of problems elsewhere in the organization.

Instead: focus on growth
Investigate how automation can help you achieve your goals instead of just cutting your company expenses. Focus on humans, not on costs, on growth, not on cutting expenses. 

3. Automation that makes it complicated for your customer

We have all been there: getting lost in a multi-layered phone menu, being redirected to a confusing self-care page, trying to find a customer service number, hidden behind tools that attempt to prevent you from calling. Yes, it’s all automated. And yes, it’s Kafkaesque. When automation makes things complicated and impersonal, your customers will leave. 

Instead: think speed, easiness and personalization
Your customer wants customer service to be fast, easy, and personalized, the big three in customer experience. The big three can efficiently function as checkboxes for any automation tool you consider. 

4. Automation that demoralizes human agents

It’s widely known that employee happiness in customer service is already low. In the US, the average contact center turnover rate is between 30-45%, and motivation is often lacking. Employees sometimes feel like they are doing a job that has not yet been automated away. This is, of course, highly demoralizing. And unhappy employees often mean unhappy customers. 

Instead: improve the agent experience
The paradox that automation should make your company more human, not less, applies to your employees as well. See automation as a tool to improve the work of your employees and to make them happy. Human agents are valuable and irreplaceable in customer service. And yes, a lot of their work can at least be partly automated.

The way forward: human-centered automation

It is excellent for your business if your customers are happy. Use automation to make them happier. Deploy automation to become more human and approachable for your customers and employees. 

But doesn’t this make things incredibly expensive? 

In our experience, it doesn’t.

Firstly, the cost of automation is high, and failure is not uncommon. Maybe you should automate less and better. If you spend all your budget on a state-of-the-art AI chatbot, that machine better delivers. Until then, all your so-called savings are just a spreadsheet with predictions.

Secondly, there are plenty of tools out there that can save you money by automating parts of the customer experience. Remember, full automation solutions are often not necessary

And lastly, back to the beginning: even if human-centered automation is expensive, it may still be worth it. Not just from a moral point of view - but be honest, do you genuinely believe that your customers deserve humane treatment? In the end, what goes around comes around. If you are not willing to invest in them, they will have no reason to be loyal to you. 

Did we already tell you that the cost of losing customers and trying to find new ones may be very high?

Continue reading? Read how automation can make human agents more productive.

Photo by Jon Tyson on Unsplash

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