Will Microsoft’s new virtual assistant change your chatbot strategy?

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Neil Davey
Managing editor
MyCustomer.com
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The chatbot marketplace just got even more crowded, with the announcement that Microsoft is to go toe-to-toe with the likes of IBM by launching an AI-powered customer service virtual assistant.

At last week’s Ignite Conference in Orlando, Microsoft revealed it would be bringing artificial intelligence to a host of new business tools, including providing Dynamics 365 customers with a pre-built chatbot that fields customer service queries.

And Microsoft also revealed that its new chatbot functionality is already being applied by the likes of HP and Macy’s.

Given the buzz around chatbots and AI, Microsoft’s move has surprised precisely no-one. As Ian Jacobs, principal analyst at Forrester, notes: “There is more interest from brands in chatbots right now than for any other technology I’ve seen in several years.”

But is the interest justified?  

“Our research has found that 89% of consumers would prefer to engage in conversation with virtual assistants to quickly find information instead of searching through a website or mobile app on their own," says Seb Reeve, director, strategic solutions, EMEA, at Nuance Communications. "This is also true of the phone channel, with the majority of consumers indicating that they’d like to engage with a system that lets them speak naturally when calling a business.

“Given that 87% of consumers report that a positive interaction with a company determines whether they will continue their relationship with the brand, Microsoft is launching its new intelligent virtual assistant will help businesses to innovate and improve their customer services. From Dominos Pizza’s ‘Dom the Pizza Bot’ achieving 200,000 order while in beta, to Kaspersky seeing a 3% increase in completed orders, customer-facing organisations are already seeing massive rewards from the introduction of virtual assistants to improve the customer experience.”

David Rosen, Office of the CTO, strategy, analytics and digital transformation, at TIBCO Software, believes that the biggest reason that there is such interest in chatbots and virtual assistants is that they’re “actually in market and working pretty well”.

He adds: “Primarily driven by the performance and ease of implementation of Facebook’s chatbot, we’ve seen significant penetration.

“This initial leap into marketing-experience automation is demonstrating that customer service can actually be improved over either human chat interface, or even voice-to-voice telephone service. Actual performance shows that they are faster i.e. no need to wait for typing back and forth, genuinely contextually appropriate and accurate, and not “robotic” as there is a feel of humanity.”

Cost savings

But Jacobs believes that suggestions organisations are embracing chatbots to improve the customer experience are only half-right. 

“There are some fig leaves thrown up about chatbots providing a better customer experience, but in the main, companies are looking at customer service chatbots because they believe they will be able to use them to reduce the human contact centre agent population.”

There are some fig leaves thrown up about chatbots providing a better customer experience.

However, he adds: “Some forward-thinking companies are looking at other models. For example, one cable company has deployed a chatbot to handle simple interactions and reduce the volume going to their chat agents.

"But instead of just taking the savings and improving the company’s P&L, it is taking that extra money and using it to fund a program to move those agents from offshore to onshore. So, the chatbot is the mechanism to improve the customer service experience for customers with more complicated issues that require a human being.” 

Microsoft's appeal

But with the likes of Facebook and IBM already providing virtual assistants, and quite successfully so, how can Microsoft be more appealing to buyers?

Ben Rachel, planning director at Soul, notes: “Microsoft have form. Bill Gates is the world's richest man because he understood how to have more people use Microsoft products on a daily basis than any of his tech rivals. He may not be at Microsoft now, but like Apple has Job's DNA so does Microsoft have Gates's.”

Jacobs elaborates: “Yes, Facebook and IBM are also in the market. But in the time it took me to say that, four new chatbot startups were probably founded. Every Ph.D coming out of university with a degree in AI or linguistics seems to be founding a chatbot company.

Microsoft has a strong set of tools for knowledge management for customer service. And knowledge management can be seen as the core of what powers a chatbot’s smarts.

“But this is Microsoft we’re talking about and it has some unique advantages. First of all, Microsoft is already becoming enmeshed in the technology infrastructure of contact centres. It offers tools that allow human agents to chat with customers over the web, talk with them over the phone, and respond to them over social media. This is important because chatbots will get things wrong for a long time to come and those customers facing such a scenario will need support from a human. Microsoft can provide a seamless hand-off between its chatbot self-service solution and its voice or chat agent-assisted solution.

“Also, Microsoft has a strong set of tools for knowledge management for customer service. And knowledge management can be seen as the core of what powers a chatbot’s smarts. Chatbots need to learn what the answers to questions are, and a structure knowledge management solution provides an easy way to begin that training.”

Selecting the right solution

So with an ever-growing number of solution providers in this field, how can buyers ensure they select the most appropriate product for their needs?

“Like any technology, brands need to take a ‘crawl, walk, run’ approach to chatbots,” recommends Jacobs. “Don’t assume that you are going to build a chatbot that can handle the full gamut of customer service queries straight out of the gate - because that simply will not work. Target either the basic frequently asked questions or pick a specific business process, such as resetting a password, and get some experience under your belt before you move on.

Microsoft has much reason to be optimistic about its success in the AI and chatbot fields. But no one person will lead this industry.

“That said, you’ve got to keep the end goal in sight when choosing a vendor to work with. If a chatbot is ever to get close to replacing a human agent it will need to understand what a customer speaks or types, discern their intent, respond in a conversational manner, and act on the customer's behalf. All of this must take place in a secure environment, and the chatbot must seamlessly hand off the interaction to a live agent when required. So, you are looking for a toolset that has all those capabilities, but allows you start small and grow into level of functionality.”

And while the blooming number of chatbot providers can complicate the buying process, it could ultimately benefit businesses and consumers alike, as Michael Olaye, CEO at Dare, notes.

“Microsoft has much reason to be optimistic about its success in the AI and chatbot fields. But no one person will lead this industry. It spans so many different sectors and functions, ranging from aviation to kettles, that no one company can completely trounce the others.

“I believe these tech behemoths like Microsoft and IBM competing against each other to be at the front of AI will continue to accelerate the pace at which AI products and services improve.”

About Neil Davey

About Neil Davey

Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.

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