The Service Leader's Guide to Virtual Customers

July 31, 2019

Contributor: Kelly Blum

Virtual customers will demand new capabilities from customer service and support. Its time for leaders to decide why, when and how to invest.

The technology is still nascent, but service and sales teams are gradually being exposed to the “virtual customer” — an algorithm or an intelligent thing acting on behalf of a human customer. Service leaders need to understand the implications for the enterprise, and what lies ahead before virtual customers are deployed at scale.

Recent advancements in technology suggest that the customer role will be reimagined and redefined in a number of ways as the result. This new type of digital customer is made possible by the growth and development of the Internet of Things (IoT) technology and virtual personal assistants (VPAs) that, when enabled by advanced analytics and artificial intelligence (AI), create smarter, more responsive devices.

“ Now is the time for customer service leaders to develop a thorough understanding of what virtual customers are, how they behave and the impact they could have”

Gartner predicts that by 2020, at least 20 billion things will be connected via the IoT and 5% of all digital commerce transactions will come from a smart device. 

“Virtual customer interaction is still very much in its nascent stages,” says Tiffany Fountain, Vice President and Team Manager, Gartner Customer Service & Support practice. “However, some progressive companies have begun to investigate how, why and when it will make sense to invest in and build capabilities that enable virtual customers to act on behalf of human customers and interact with companies through one or more service channels.” 

Gartner research groups virtual customers into four distinct categories, based on decision-making delegation and process delegation.

Fixed with human fulfillment

Fixed virtual customers with human fulfillment means the decision making is primarily human-driven. The virtual customer provides only limited, rules-bound support, with the human customer responsible for fulfilling all or most of the steps in the process. Amazon’s Alexa is a prime example of a fixed virtual customer with human fulfillment, as the personal digital assistant’s tasks — all prompted by human voice commands — are limited and narrow in scope and require significant amounts of human interaction. 

Fixed with virtual fulfillment 

On the other hand, fixed virtual customers with virtual fulfillment are responsible for fulfilling most process steps. For example, the quickly growing SneakerBot is changing how younger generations get access to new, in-demand sneakers and shoes by allowing customers to pre-enter their selection, shipping and billing information, and letting the virtual assistant to do the rest.  Gartner's virtual customers matrix

Adaptive virtual customers

Adaptable virtual customers means more aspects of the decision-making process are virtually owned. These virtual customers have a greater degree of discretion and autonomy, performing select tasks on behalf of the customer with minimal human intervention. This can be seen in AI-enabled tools like AskTrim, which negotiates cable, internet and phone bills, acting with discretion on a narrow set of tasks authorized by a human customer.

Autonomous virtual customers

An autonomous virtual customer can act independently on behalf of human customers, with a high degree of discretion and owns more of the process steps to complete a transaction. For example, Aidyia is an AI-enabled and automated hedge fund that can operate human customers’ hedge funds with complete autonomy. According to company engineers, this virtual customer reads news articles, analyzes large amounts of economic data, identifies obscure patterns, predicts market trends and then invests according to the information gathered and predictions made. 

“While we are still some years away from more mainstream adoption of virtual customers, now is the time for customer service leaders to develop a thorough understanding of what virtual customers are, how they behave and the impact they could have on the enterprise,” says Fountain.

Before intelligent virtual customers are developed and deployed at scale, five challenges to growth and adoption will need to be addressed by customer service and support leaders: 

1: Technology capacity and capability

Two key domains of knowledge must be mastered for a virtual customer to be truly autonomous and a realistic substitute for a human customer: The depth of a customer’s preferences and the breadth of factors that may influence a customer’s actions. Without each, the virtual customer is unable to navigate required trade-offs. Another challenge is machine-to-machine communication. These system compatibility issues will slow the pace of deployment and acceptance with virtual customers&nbsp

2. Data privacy regulatory environment

Another key challenge to virtual customers is the current regulatory and operating environments. Most organizations face a lack of clarity in legislation and internal policies, not to mention insufficient technology to ensure that privacy rights are upheld. Organizations will need to ensure a virtual customer is authentic, appropriately permissioned to act on behalf of the customer, and can interact with other organizations’ channels and technology. In addition, organizations will need to decide if they are comfortable with devices interacting with their sales and service channels, and whether they are willing to accept personally identifiable information (PII) from third-party virtual customers.

3. Determination of legal liability

Legal liability is a major barrier to adoption for virtual customers. When it comes to failed transactions, organizations will need to establish policies for determining liability and the adjudication and settlement process for a failed transaction. On the other hand, in the case of crimes, organizations and legal institutions must also determine if user data collected by VPAs is protected under constitutional law. 

4. Brand strategy

Gartner predicts that 75 of the top 100 global consumer brands will lose 20% of their brand equity value due to decreasing brand loyalty and the increasing influence of digital gatekeepers that virtual customers are likely to exacerbate. Organizations will need to explore how to keep control of the relationship with the consumer without having direct contact. The key will be how organizations engage virtual customers’ algorithms in place of engaging human customers’ emotions. 

5. Human acceptance

Growing distrust in technology is a major challenge to overcome for the growth of virtual customers. Gartner research shows that an increasing number of consumers would trade convenience for the assurance of data privacy. It will be imperative for organizations looking to deploy virtual customers to consider ways to foster human trust and confidence.

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