Excitement around conversational AI for customer service has grown significantly in recent years. The advent of generative AI and increased investment in intelligent technology among CCaaS vendors is revolutionizing the industry.
Now, Gartner believes conversational AI could be the key to accelerating worldwide contact center technology growth. According to a recent report by the industry analyst, Worldwide contact center and conversational AI spending is expected to reach $18.6 billion by the end of this year. That represents a boost of around 16.2% from 2022.
Gartner believes an uncertain economy may hamper near-term growth in the industry. However, increased interest in generative AI and the conversational AI landscape will likely lead to significant long-term growth. According to the report, contact center and CX leaders invest heavily in efficiency and customer satisfaction.
The conversational AI and generative AI space are set to accelerate contact center growth by as much as 24% by 2024. Here’s what we know about the evolving market.
What is Conversational AI for Customer Service?
Conversational AI is a broad concept referring to the AI algorithms which allow machines and humans to communicate in a “natural” format. It can encompass everything from speech-enabled IVR systems to chatbots and messaging solutions.
Conversational AI can complement a company’s broader approach to CX initiatives, working with self-service solutions like FAQs and help centers. Conversational AI for customer service can also support a wide range of use cases, such as:
- Improving accessibility: Conversational AI can make customer support accessible to individuals with disabilities and special needs. It can translate voice into text for hearing-impaired customers or text-to-voice for visually impaired individuals. Some solutions can also offer real-time translation for multi-lingual contact centers.
- Contact center efficiency: Voice assistants and IVRs use conversational AI to detect intent, customer sentiment, and more before routing clients to the correct department. NLU and NLP solutions can even gather essential details from a customer before a conversation begins.
- Automating processes: Conversational AI can automate various tasks, such as arranging bookings and reservations or authenticating customers for security purposes. Some solutions can even use biometric technology to streamline the authentication process.
- Self-service: Voice assistants, chatbots, and other conversational AI solutions can either fully or partially handle the troubleshooting process and directly answer questions. They can respond naturally to questions based on user input and assist with various account and order management tasks.
- Data insights: Conversational AI solutions can collect valuable information about a customer’s sentiment, background, and other data. This can help companies make more intelligent growth decisions and personalize the customer experience.
How Customers Feel about Conversational AI in Customer Service
AI in customer service hasn’t always had the best reputation. Some early versions of AI tools, like chatbots and IVR, were considered clunky and unreliable. However, evolutions in AI algorithms, natural language processing, and conversational AI are beginning to change the market.
In one report from 2020, researchers found most consumers are now comfortable interacting with AI systems during customer service interactions. However, younger generations generally embrace technology the most. Older customers may feel less comfortable with bots. This is particularly true if they haven’t been informed they’re dealing with AI in advance.
Around 59% of customers rate their interactions with AI today at about 8 of 10 in terms of quality. However, conversational AI in customer service is generally seen as a solution for answering easier questions. For more complex interactions, there’s still a demand for live agents.
Gartner’s report further highlights this idea. It found that while customer service interactions with AI are growing, most engagements are “augmented.” In other words, customers prefer using AI alongside human support rather than dealing with a completely anonymous agent. Gartner predicts around 14% of interactions will be handled entirely by AI in 2027.
The Growth of Conversational AI in Customer Service
Gartner’s report highlights the global conversational AI and virtual assistant market as the fastest-growing segment in the current contact center forecast. According to the report, conversational AI abilities are gaining more significant investment in the quest for efficiency.
AI innovations are set to significantly reduce the reliance of contact centers on human agents for handling repetitive queries. Additionally, the analyst firm said AI in computers and mobile devices will address many aspects of the buying cycle going forward.
As generative AI continues to evolve, assistants can support customers with paying bills, accessing product information, and more. Plus, they can help streamline the path to human assistance by directing queries effectively to agents.
While the rise of AI has led to some concerns among human agents, many workers see AI as a valuable tool for their roles. One Salesforce study found 82% of business leaders believe generative AI will lower costs, and 80% say it will increase revenue. Around 54% of employees also said they look at generative and conversational AI as resources for developing new skills.
65% of employees also said generative AI would help them focus on more strategic work, saving up to 5 hours a week in productivity. Unfortunately, 70% of business leaders also said they don’t believe their teams are sufficiently trained in generative AI.