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ISSP Reflections: Chatbots and Cost Reduction

Nov 4, 2019 9:28:52 AM / by Mark McNasby

I just finished giving a panel presentation at the ISSP Conference in Miami. The panel discussion, "Enabling your Super Heroes," was moderated by Jesse Boeding, an industry veteran and doctoral student at the University of Pennsylvania. The other panelists were Chrissy Kintner, Assistant Vice Provost at the University of Missouri and Kimberly Laney, Director of Enrollment Management at UNC Charlotte. (Full disclosure: both Mizzou and UNCC are clients of Ivy.ai). 

During the presentation, we covered a lot of ground! The topics meandered from what is (and isn't) a chatbot - to - deployment strategies for chatbots on campus. 

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Everything was going well ... until ... During Q&A, one of the attendees asked Kimberly Laney:

"Do you currently use a call center? Kimberly, a successful business leader, recruited by UNCC for her ability to create amazing customer experiences, answered "Yes." 

The attendee followed up: 

"Well, has the chatbot saved you money on your operating expenses?"

Kimberly replied "No."

My heart sank. Then, Kimberly continued. "Our Director of Marketing, Lisa Meckley, bought Ivy.ai 18 months ago to improve student communications with the Financial Aid Office." She continued, "Ivy.ai has had over 30,000 conversations with students and we recently expanded our use of Ivy.ai to Niner Central, the one stop website for UNCC." 

So, even though UNCC has expanded the use of their bot from Financial Aid alone to now include Student Accounts and Registration, the cost reduction question made me think: "Is Ivy.ai doing something wrong? Do we need to fix something?" After stewing on it for a while, I realized that the question ("Did the chatbot save you money on your operating expenses?") is actually the wrong question to ask. 

Let me explain.  

Do chatbots reduce costs? They do, but only in situations where bots are deployed for that purpose. Frankly, it all depends on you! Let's look at it this way: if you buy something that reduces call volume, and you don’t adjust your existing cost structure then your overall costs will not be reduced! This is obvious, of course, but it's also a "Catch-22" because specific sectors including higher ed are infamous for creating barriers to avoid staff reductions. In these cases, the best you can hope for is to reduce the opportunity cost of not having the chatbot. In other words, has your staff been freed up to do other things because they are spending less time on tier 1 requests? Have those new activities translated into value accretion for the school? Have the 30,000 conversations with the students of UNCC helped the school retain students who would otherwise have dropped out if it was not for that information? Measurement of the opportunity cost is certainly difficult and perhaps unnecessary, but at the same time, chatbots should not be expected to reduce costs with everything else being equal. Chatbots are not, in a vacuum going to solve all the world's problems. They are one part of an overall strategic framework for schools.  

With that said, if cost reduction is the core goal of the chatbot for the school, it's also critical to consider the deployment strategy. 

Imagine, if you physically positioned the chatbot next to the school's phone number, in whatever digital format, how many calls would it reduce? Simple tactics, like this, can make a huge difference and would make a tangible financial impact on the school.

Furthermore, words matter! Are schools analyzing the transcripts of the call center conversations? Training the bot on publicly available information is only half the battle. The larger question is: why is the student calling in the first place? Is it because they need personalized answers? Is it because the information on the website is insufficient to answer these questions? If so, the bot and all digital interactions should "speak" to the student in such a way that there is no need to call! 

As I mentioned in the panel discussion, there are two aspects of the chatbot: Does the chatbot understand the question? and if the chatbot understands the question, is there an associated answer? To maximize the student centricity through bot effectiveness requires the ability for the bot to gain additional knowledge by populating the bot's brain with answers. As some smart person said, "The only way out is through." 

Contact us for more information! 

Mark McNasby

Written by Mark McNasby

Mark McNasby is CEO of Ivy.ai.

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