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Virtual Agents: What they are, how they work and why you should use them

by Chris Todd, Principal, Marketing Operations, CallTrackingMetrics - April 1, 2024

Virtual agents: What they are, how they work and why you should use them

By Chris Todd, Principal of Marketing Operations at CallTrackingMetrics

It’s no secret that providing outstanding customer service is more crucial than ever in our fast-paced, competitive world. However, between rising customer expectations and limited internal resources, traditional customer service methods just aren’t cutting it anymore for customers or businesses.

Enter: the virtual agent. This game-changer is revolutionizing how businesses interact with their customers, offering 24/7, efficient and even delightful customer experiences. From answering basic queries to providing product recommendations and resolving customer problems, virtual agents are proving their value in the customer service arena. Say goodbye to hold music and endless wait times with traditional customer service methods and greet a new era of customer and employee satisfaction powered by virtual agents.

What’s a virtual agent?

Although several types of virtual agents exist, the foundational goal for each is the same — to answer customers’ questions. At their most basic, virtual agents are software programs designed to assist customers and prospects. Often following predefined scripts and leveraging AI capabilities, they handle routine tasks like answering FAQs, scheduling appointments or qualifying leads that can bog down human agents. If a virtual agent tackles these tedious duties, human agents have more time to focus on more complicated issues. Using virtual agents as the first line of defense for customer questions improves overall efficiency and allows for an advantageous, always-on customer support presence that can fill any gaps in service.

A virtual agent sometimes gets confused for a virtual assistant or a chatbot, but it’s not the same as either. A virtual assistant is a person, not software, who acts as an assistant for someone remotely (aka virtually). A chatbot, on the other hand, is also a tool powered by software to offer instant support to customers, but the support it can provide is limited. The level of support a virtual agent can provide varies as well, depending on the type of virtual agent a company leverages. Let’s take a look at three types of virtual agents.

  1. Basic interactive voice response (IVR) virtual agents are the least “intelligent” type of virtual agents. Through a series of keypad presses, customers can navigate menus. Though not as “smart” as other types of virtual agents, they can still perform the core function of providing basic customer service functions based on a predetermined set of rules. If you call a customer service line and are prompted to “press one for more options,” you’re interacting with an IVR-powered virtual agent.

  2. Voice bots, or virtual voice agents, allow customers to use spoken language instead of keypad presses to navigate menus. AI can understand keywords through voice recognition and often works in tandem with IVRs to deliver seamless customer service. For example, if you call a pharmacy line that uses voice bots, it may ask something like, “Are you a prescriber or a patient?” Your verbal answer will then move you to the next phase of the menu or connect you with a live agent.

  3. Intelligent virtual agents (IVAs) are behind the most human-like virtual agent conversations and can interact with customers via voice, text, chat or email. Powered by AI and hyper-customized rule sets, IVAs are the most advanced virtual agent types and can understand caller intent, enabling them to deliver the right type of service. If you call a mechanic that uses an IVA, it will ask a series of questions to determine the intent of your call and can appropriately respond to details like what time you’d like to schedule an appointment and what type of car you have.

Though any type of virtual agent can help answer customers’ questions, the specific needs of your business will determine which type is best for you.

How do virtual agents work?

Virtual agents started as systems capable of recognizing keywords and moving the conversation along a pre-determined path based on those words. Virtual agents could respond to basic queries as long as they could be answered with pre-programmed, predictable responses. The introduction and further development of machine learning, natural language processing (NLP) and AI took that technology to the next level. This new era of intelligent virtual agents could accomplish more complex tasks, personalize experiences, understand customers’ intent for reaching out and even know when to hand the customer off to a human agent for additional assistance. The most robust services now are built on complex sets of rules and cutting-edge AI.

Why should businesses use virtual agents?

Because of their ability to accomplish many common customer service tasks, virtual agents can increase productivity and efficiency within a business. But the value doesn’t stop there. Here are seven more benefits that virtual agents can bring to your organization.

  1. Identifying customer intent. Problem-solving can begin once teams know what customers want. By understanding what customers want to achieve, teams can tailor their responses to directly address needs and steer toward solutions. A targeted approach like this means the right message is delivered at the right time, fostering conversions and boosting revenue. The personalization of the experience also encourages stronger customer connections. Leveraging automation tools alongside marketing attribution tools can further strengthen those connections and enhance communication.

  2. Omnichannel communication. Many virtual agents can provide customer service on multiple channels including phone, chat, text and email. This accessibility allows customers to reach out whenever and wherever is most convenient for them. Plus, these channels all being manned by virtual agents unify the experience across channels through consistent branded messaging. Some virtual agents can even integrate with other platforms (Slack, Teams, etc.) to further increase reach and connection.

  3. 24/7/365 customer service. Unlike a live agent, a virtual agent doesn’t need to take breaks. This always-on service allows customers to connect no matter the time of day, reducing lost sales opportunities and allowing businesses to stay competitive.

  4. Quick, consistent, compliant responses. Nobody likes long hold times when reaching out to customer service, and virtual agents can do away with that wait almost entirely. A fast response time is crucial for many customers — in fact, according to PwC research, speed is one of the top three factors associated with a positive customer experience. Furthermore, since virtual agents are built to adhere to a set of rules, businesses can rest easy knowing virtual agents will always comply with regulations and deliver consistent, on-brand communications.

  5. Multi-chat management. Human agents can only carry on one conversation at a time. Virtual agents, however, can tackle multiple simultaneous conversations. This means more customers can get their issues resolved faster without the business having to increase employee headcount.

  6. Live agent relief. Customer service jobs can be challenging because of high call volumes, customer frustration, high turnover and agent stress. For example, high turnover means agents are asked to do more with fewer resources, which can quickly lead to burnout, disengagement and poor performance. Virtual agents can dramatically reduce live agents’ workloads and stress, leading to happier, fresher employees who will perform better, ultimately improving the customers’ experiences and the business’s bottom line.

  7. Providing outstanding customer experiences. The previous six benefits of virtual agents all play into what may be the most important benefit of all: better customer experiences. Answering customer questions efficiently and effectively on their preferred channel at the time they choose to reach out facilitates outstanding customer experiences. Virtual agents powered by AI empower teams to do more with less without added stress. 

The benefits reaped from using virtual agents prove their value for customer service and can help with organizational goals as well. From shortened sales cycles to lower labor costs to improved customer conversion and retention rates, virtual agents help drive success for teams regardless of their industry. By benefiting businesses, their employees and their customers, virtual agents are a win for everyone involved.


About the Author

Chris Todd, principal of marketing operations at CallTrackingMetrics, is a professional digital marketer with more than a decade of experience in building and promoting brands. A digital marketing and social media expert, Chris earned his MBA from Univ. of Maryland’s Robert H. Smith School of Business.


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