instituteofcustomerservice.com The Heart of Artificial Intelligence Enabling the future of customer experience

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1 instituteofcustomerservice.com The Heart of Artificial Intelligence Enabling the future of customer experience

2 Foreword Joanna Causon Chief Executive It has been impossible to ignore the current, extensive debate about artificial intelligence and its impact on jobs, skills, personal security and privacy. The Institute has undertaken this research because we felt there was a gap in current thinking. Much of the work undertaken to date examines the impact of artificial intelligence from an organisational or technology perspective. Our approach also looks at the perspectives of senior managers in organisations. We have in addition conducted research with customers and employees, for a richer, practical, threedimensional perspective on the challenges of deploying artificial intelligence in a customer experience context. We show that the opportunities and challenges are as much about trust and relationships as they are about technology, processes and skills. I believe this research is a crucial and timely contribution to the public and business debate on artificial intelligence. It is not a given that artificial intelligence will eradicate millions of jobs and leave thousands without work per se, but it will mean that the roles of the future will demand greater flexibility and both new and enhanced skills. We have seen that many of the most effective applications of artificial intelligence involve technology working alongside, or empowering employees to give better customer experiences. As routine enquiries become automated, there will be a need for higher order customer service skills combining high levels of empathy, relationship-building, brilliant communication and investigation skills and problem solving. We will need individuals who are curious, able to see the whole picture, make connections and add unique personal value to customer experiences. Organisations will need to develop specialist expertise in the technology applications and data that underpin artificial intelligence. We identify the emergence of a new role, customer experience and technology broker, whose purpose is to combine technical expertise and a deep understanding of customer experience and needs. Many employees are excited by the use of artificial intelligence in customer experience but uncertain about its future consequences for them. Communicating and engaging with employees is both an opportunity and risk for successful deployment of artificial intelligence. Organisations should not take it for granted that customers will accept new technologies being "imposed" on them. Customers are divided in their views about artificial intelligence. Most customers would rather speak to a person than an intelligent robot; they welcome technologies that make it easier to deal with organisations; but many have concerns about security, and potential use of artificial intelligence to influence lifeaffecting decisions. As artificial intelligence moves from the back office to more visible applications, it will be increasingly important to build customers confidence and trust through transparency and engagement. We have seen the importance of trust and reputation come to the fore and it will, in my opinion, grow in importance. Artificial intelligence highlights the ethical and moral dimensions of leadership. Of course, leaders will need to develop their knowledge of artificial intelligence and the capabilities and structures required in their organisation. But in a context of uncertainty about future implications of artificial intelligence, leaders need to make decisions, and engage, to protect long-term reputation with customers, employees, regulators and other stakeholders. In this research, we set out ten key enablers of effective artificial intelligence deployment. I believe that putting customer experience at the heart of strategy will guide leaders in making decisions that build capabilities, prioritise opportunities and earn the trust of customers and employees. The Heart of Artificial Intelligence 1

3 Executive Summary A guide to the report

4 This research has four key objectives Investigate how organisations are deploying artificial intelligence in a customer experience context Assess customers current use of artificial intelligence and attitudes towards its wider implementation Examine employees experience of artificial intelligence and perceptions about how it affects the customer experience and their job role Determine what organisations need to do for successful deployment of artificial intelligence that strengthens customer satisfaction, now and in the future Organisations current deployment of artificial intelligence is test and learn across a relatively narrow span of applications Our research with 1,045 employees suggests that almost a third of UK organisations are making widespread or some use of artificial intelligence 22.9% No plans to deploy 14.4% Not yet deployed but plans in place 11.2% Currently testing/ piloting 19.6% Using some elements of AI 10.0% Widespread use of AI We identified five key motivators for organisations to introduce artificial intelligence Productivity and efficiency Cost savings Better customer service Enable better business decision-making Prepare for the future The Heart of Artificial Intelligence 3

5 There are five themes that characterise current deployment of artificial intelligence Process automation Analytics to enable business decision making Analytics to empower employees Direct customer interactions New ways of experiencing products and services Organisations have seen early gains from deploying artificial intelligence in back office processes and analytics which are largely invisible to customers. Around a third of organisations surveyed have selectively introduced chatbots in direct customer interactions. They have taken a cautious approach, monitoring accuracy, the number of hand-offs to employees and customer feedback. 4 The Heart of Artificial Intelligence

6 Many of the most effective current applications harness artificial intelligence to complement and empower, rather than replace employees Applications that enable reduced input from employees Applications to complement and empower employees Contexts requiring high employee input Automation Order processing, correction and closure Form filling Collation of billing data Detecting and dealing with billing exceptions Direct customer interactions Routine, high volume, low risk queries that do not require judgement or discretion Automated information updates Secure cash payments Identity verifications Managing customer interactions Analysis of reason to contact to steer to the appropriate employee Hand-offs from chatbots Knowledge and analytics to empower employees Next best activity Consolidated access to customer data Real-time compliance feedback Knowledge hub Customer experiences requiring judgment, discretion or empathy Complaints High value sales Complex queries and issues Sensitive issues such as bereavement Emergency or safety- related situations Vulnerable customers Tasks requiring technical expertise and judgement Technical support Strategy and change management The Heart of Artificial Intelligence 5

7 Organisations will need to develop enhanced skills and capabilities in three key areas Higher order customer service skills As more routine issues are dealt with through automation the role of customer service advisers will require a broader mix of skills Empathy Proactive advice Problem-solving Investigation Customer experience and process design Commercial judgement Precision of language Technology and data Requirement for broad and specialist expertise Artificial intelligence is predicated on the ability to integrate datasets Integration of structured and unstructured datasets, analysis, interpretation and presentation Artificial Intelligence application development Programming and coding Customer experience and technology broker To ensure that deployment is shaped by a deep understanding of customer experience and needs Customer experience Proposition design Insight Technology and customer experience integration Innovation Evolving skills needs have significant implications for how people are taught and developed, both in the education and training system and in organisations Evolving skills needs Advanced specialist skills in data science and technology applications Ethical and societal awareness of the impact of artificial intelligence Precision of language Teamwork, collaboration, personal effectiveness skills Implications for learning and development Enable students to access a wider range of specialisms, especially in data and technology, whilst continuing study of arts and humanities Enhance frameworks for collaboration between organisations, schools and colleges and universities Organisations will need to become more proactive in defining skills needs as they evolve, and developing them 6 The Heart of Artificial Intelligence

8 Customers' awareness, use of and attitudes to artificial intelligence is variable and depends on situation and context Customers current awareness and use of artificial intelligence is variable 65% of customers were able to name some kind of artificial intelligence applications they have experienced; 35% could not. 28.8% of customers have used at least one of the most common virtual assistants. Only 7.7% of customers always use a virtual assistant for Internet searches. Most customers would prefer to speak to a person rather than an intelligent robot 82% of customers believe that organisations should make it transparent when an interaction is not with a person. 13.1% of customers would stop using an organisation if they had to speak to an intelligent robot first, rather than a person. 34.9% would prefer to use an alternative supplier. However, 22.4% of customers say that having to interact with a chatbot first, rather than a person would not make any difference to their relationship with the organisation. 18% of customers always want to speak to a person, especially in sensitive situations The Heart of Artificial Intelligence 7

9 Customers are divided in their views about broader use of artificial intelligence Most customers are open to use of artificial intelligence There is a mix of views about use of artificial intelligence Many customers have concerns about use of artificial intelligence Recommendations about products and services Controlling domestic heating, comparing prices or playing music Risk-monitoring situations such as alerts about a potential fraud or phoning the emergency services Better planning and forecasting by public authorities Personal financial management Personalised recommendations based on analysis of a customer s individual profile, especially for insurance quotes that are informed by medical and lifestyle history Interpreting thoughts and feelings Driverless cars Issues requiring moral or ethical judgment As artificial intelligence moves from the back office and analytics to more visible applications, customer confidence and trust will become increasingly important Organisations need to be transparent about how they are addressing customers concerns about data, security and privacy. Customers need to feel that artificial intelligence will improve customer service, not just reduce organisations' costs. Organisations should engage proactively with their customers in the design and testing of new technologies and seek feedback about its use. Only 17.1% of customers feel highly confident about wider use of AI in everyday life 8 The Heart of Artificial Intelligence

10 Employees experience of artificial intelligence is a mix of fear and excitement 47.2% of employees in organisations that are using artificial intelligence have experience of working alongside it Employee engagement is a key risk and opportunity Automation of internal processes, support customer facing employees, image recognition and analysis of speech or voice data are the applications most commonly experienced by employees. Employees are much more likely to say that artificial intelligence has made their job and the customer experience better, rather than worse. But over half of employees believe artificial intelligence has made little difference, either to the customer experience or their jobs. Employees like the speed, ease and accuracy of artificial intelligence. They have concerns about system errors, getting used to the technology and the risk of job losses. Senior managers and employees identified employee engagement as a critical risk and challenge in the deployment of artificial intelligence Employees working in organisations where artificial intelligence has been implemented are much more positive about how their organisation engages with customers and employees, than those in organisations that have not introduced it. Employees in organisations that have deployed artificial intelligence are the most likely to feel excited that they work in an innovative organisation with opportunities for learning and development. Employees believe artificial intelligence is both an opportunity and a threat to future jobs but many are uncertain about the future 27.9% of employees believe artificial intelligence technologies have created new job opportunities. A similar proportion, 25.6%, say it has led to job losses. Over 40% of employees are unsure about the future consequences, either in terms of potential job opportunities or losses. The Heart of Artificial Intelligence 9

11 How do you feel about using new technology at work? I feel excited and I like that I work somewhere innovative 9.6% 39.2% I like learning new things and developing 47.8% 63.8% I worry whether I'll be able to use new systems 16.2 % Organisations that have deployed AI 46.5% Organisations with no plans to deploy AI Our research suggests three key reasons why it is vital to engage and communicate with employees about artificial intelligence Transparency Where organisations are active in communicating their plans to integrate artificial intelligence and customer experience, it can positively influence employee engagement Lack of transparency risks undermining broader employee engagement. Collaborative engagement Employees have a vital role to play in piloting and testing artificial intelligence in a customer experience context Deployment will require hybrid, cross-functional teams There is a positive message to communicate about the benefits of artificial intelligence in reducing time spent on routine processes, enabling employees to give better, more personalised experiences. The need for enhanced skills and receptiveness to change Organisations will require higher levels of skills in customer service, technology, data, and integration of customer experience, systems and technologies Employees will need to be flexible, receptive to change and willing to take on new roles. 10 The Heart of Artificial Intelligence

12 Building skills and capabilities, engagement with customers and employees, and ethical leadership are the key challenges and enablers As organisations grow their capacity to deploy artificial intelligence, it is likely to become a bigger differentiator in customer service and business performance. There are three fundamental challenges organisations must address: building skills and capabilities; engagement with employees and customers; and ethical leadership that gives weight not just to immediate legal and regulatory issues, but to the human, moral and ethical issues which concern customers, employees and wider society. Putting customer experience at the heart of artificial intelligence strategy provides a context for making decisions that prioritise opportunities, build capabilities, and earn the trust of employees and customers. 10 key enablers for successful deployment of artificial intelligence in a customer experience context Develop board-level knowledge of artificial intelligence in order to assess the commercial, customer experience, ethical and reputational implications Define and scope business opportunities in terms of customer needs, processes, required datasets and emerging technologies Build key datasets to underpin effective artificial intelligence deployment Develop capabilities in three key areas: higher order customer service; skills; data and technology applications; integration of technology and customer experience Pilot, test and learn from implementation Ensure transparency of compliance and governance in order to protect trust and reputation Proactively engage and involve employees in design and testing of artificial intelligence Build customers trust and confidence through transparency, proactive communication and engagement Develop flexible organisational structures that enable hybrid, cross-functional teams to accelerate deployment Assess emerging opportunities and applications Key actions underpinning each of these enablers is covered section 4; Key enablers of artificial intelligence in a customer experience context (p.80) The Heart of Artificial Intelligence 11

13 Our sponsors O2 is the commercial brand of Telefónica UK Limited and is the mobile network operator with the highest customer satisfaction in the UK according to the UK Customer Satisfaction Index. O2 was also awarded Best Network Coverage in 2018 by uswitch. With over 32 million connections to the network, O2 runs 2G, 3G and 4G services across the UK, as well as operating its nationwide O2 Wi-Fi service. O2 has over 450 retail stores and sponsors The O2, O2 Academy venues and England Rugby. Read more about O2 at Centrica is an international energy and services company. Everything we do is focused on satisfying the changing needs of our customers. We supply energy and services to around 27 million customer accounts mainly in the UK, Ireland and North America. We are also developing new and innovative products, offers and solutions for customers globally, underpinned by investment in technology. UK Power Networks owns and maintains electricity cables and lines across London, the South East and East of England, making sure the lights stay on. It distributes more than a quarter of the UK's electricity through our network of electricity substations, underground electricity cables and overhead lines, regardless of who customers pay their energy bills to.. Capita is a leading provider of technology enabled business services, operating across five key markets: Customer Management; People Solutions; Software; IT Services and Government Services. Working across the UK, Europe, India and South Africa, we use our expertise, talent and technology to partner with our clients to transform services and add value for all their stakeholders. Further information on Capita can be found at: Capita is quoted on the London Stock Exchange (CPI.L) 12 The Heart of Artificial Intelligence

14 About The Institute of Customer Service The Institute of Customer Service is the UK s independent, professional body for customer service. Our purpose is to enable organisations to achieve tangible business benefits through excellent customer service aligned to their business goals and to help individuals maximise their career potential and employability by developing their customer service skills. We provide tools and services to support continuous customer service improvement and a framework for our members to share and learn from each other. We are independent setting standards so that our customers can improve their customers experiences and their business performance. The Institute is the secretariat for the All Party Parliamentary Group on Customer Service. Key Activities Research and reports on the latest customer service trends and thinking Publication of the UK Customer Satisfaction Index (UKCSI) twice a year Benchmarking customer experience to identify areas for improvement, drawing on the views of both customers and employees Bespoke customer insight and research Training and accreditation programmes for customer service professionals Professional qualifications for individuals at all stages of their career Public policy development. For further information please visit T: E: enquiries@icsmail.co.uk July 2018 instituteofcustomerservice.com ISBN The Heart of Artificial Intelligence 13