Innovate Your Business Model With Conversational AI: Part 3

Ivo van Barneveld

Part 3 in the 3-part “Driving Innovation with Conversational AI” series

In the first two blogs in this series, we looked at the impact of injecting conversational AI into the value proposition as digital value drivers. Now, let’s explore how conversational AI can change the way you interact with your customers.

Unlike humans, chatbots operate 24/7, so your customers can engage with you any time they want. What’s more, as chatbots can pull information from many different sources and systems much faster than humans can, their answers and recommendations are more accurate and personalized. Many customers dislike calling a customer service agent: choosing the right option from a menu, waiting for the next available agent, explaining the problem or question, waiting for the agent to come back with an answer – that’s no longer acceptable in 2018! Instead, customers prefer to interact with brands as they do with friends: through conversations, getting a personalized experience, being able to continue on a previous thread. Chatbots offer just that.

Covering both high- and low-touch interactions

So let’s have a look again at the business model canvas, and this time inject conversational AI into customer relationships. The relationship could be very personal and “high-touch,” for example, when dedicated account managers build close relationships with their customers. Or it could be automated and “low-touch,” for example, through self-service tools with no personal interaction whatsoever. The paradox of conversational AI is that it covers both sides of this scale! It offers a personalized, contextual, 24/7 interaction, while being fully automated at the same time.

Chatbots can be used throughout the customer journey:

  • Evaluation: answering general questions about the product or service
  • Purchase: proposing the right product or service, suggesting related products or services (upsell), handling the transaction
  • Delivery: providing information about order status
  • After sales: providing tips and tricks, handling customer incidents

Thousands of brands already use chatbots in one or more of these phases. The Wall Street Journal offers a chatbot to deliver the latest breaking news, live stock market data, and other financial information. Expedia offers a bot for travelers to quickly see hotel options and move forward with a booking. And Tommy Hilfiger has a bot helping fashionistas choose clothes that match their style.

The conversational nature of chatbots make them very suitable for communication channels customers love to use: Facebook Messenger, WhatsApp, WeChat and Slack, and so on. Rather than trying to pull customers to your Web site or mobile application, with a chatbot, you can follow customers where they spend most of their time when engaging with others: messaging applications – and lower the barrier for engaging them with your brand. KLM President & CEO Pieter Elbers couldn’t have said it better when announcing KLM’s business account on WhatsApp: “We want to be where our customers are and, given the 1 billion users, you have to be on WhatsApp. With an account verified by WhatsApp, we offer our customers worldwide a reliable way to receive their flight information and ask questions 24/7.”

Expanding the exposure of your brand

The popularity of messaging applications is huge: combined, they have more than 3 billion users globally. That’s a reach you can’t get anywhere else! Offering your chatbot in these channels will give your brand exposure to new potential customers. In turn, new customers will lead to incremental revenues. An increase in customer satisfaction is another positive effect.

So we see how introducing conversational AI in the customer relationship propagates to the customer channel, customer segment, and revenue components in the business model canvas. But there is another effect: chatbots are often associated with reducing operating costs. Benchmark figures for call center pricing show that the average cost per minute for inbound customer calls ranges between $0.35 and $0.90. The cost of an API call to conversational cloud services such as Language Understand (LUIS) on Microsoft’s Azure platform, or Conversation on IBM Watson, is less than $0.01. Or, as stated in an SAP solution brief, the cost of resolving a ticket is $0.10 per ticket using chatbots versus $2.50 per ticket using a human agent. This means that you can service the same number of customers with fewer personnel.

Freeing up people for developing customer intimacy

And while this is great if your focus is on the bottom line, you could also use the freed-up resources for innovation. For example, you could create a new value proposition by focusing on customer intimacy. While chatbots perform high-volume but low-value tasks like providing order status, resetting passwords and so on, your customer service personnel will have more time to focus on high-value activities. These might include building personal relationships with customers (think private banking), handling complex issues and brand advocacy (writing blogs and how-to’s). These activities will positively change your value proposition, and with that, you can unearth new customer segments in the market!

Don’t wait, start now

There are of course many other examples of how conversational AI can impact your business model, including those focused on internal (employee) use cases:

    • improve employee productivity by achieving faster task completion
    • reduce time spent on administrative tasks
    • eliminate the need for end-user training for enterprise applications
    • access self-service tools
    • support decision-making
    • write meeting minutes
    • book travel
    • order products

These are ideal areas for gaining experience with conversational AI. All major software suppliers for systems of record offer a digital assistant to improve the user experience of your employees. SAP CoPilot is already available for SAP S/4HANA Cloud, and with planned support for natural language interaction for SAP S/4HANA on-premise systems in early 2018.

AI has reached a stage where chatbots can have a meaningful, engaging, and gratifying conversation with end users. The technology is available, the chatbot ecosystem is fairly robust, and users embrace it. So don’t wait, and start creating your first chatbot!


Ivo van Barneveld

About Ivo van Barneveld

Ivo van Barneveld is a passionate evangelist of innovations in user experience, mobile, and Internet of Things. His work focuses on the intersection of technology and business. He is currently a member of the UX Customer Office team in SAP Global Design, with the remit to drive adoption of SAP’s award-winning user experience, SAP Fiori. Previously, he worked at SAP as a lead consultant, supporting customers with planning and executing digital transformation strategies. Prior to joining SAP in 2012, he held several business development, account manager, and partner manager roles at Nokia and Layar, among others. Ivo holds a Master’s degree in Applied Physics from the Delft University of Technology, and is based in the Netherlands.