The Next Big Trend in Conversational AI Is Total Experience Automation

1. Total Experience Automation The next trend in Conversational AI WHITE PAPER

2. Preface Globally, organizations are investing more in their customer experience (CX) strategies for savings, growth and competitive differentiation. However, as we enter the post-pandemic era, there is also a sharp focus on employee experience (EX) strategies to compete for scarce talent and engage employees with delightful experiences. Typically, CX and EX strategies are often siloed and developed in a vacuum. At Yellow.ai, we have studied the market and our customers to bring this research to enterprises like yours, to give you a sneak peek into how CX, EX and Digital Transformation Leaders are benefiting from Conversational AI Platforms and Dynamic AI-Assistants built atop the platform. I hope this validates your organisation’s outlook towards Total Experience Automation for the year 2022. Regards, Raghu Ravinutala, CEO @ Yellow.ai 01 www.yellow.ai

3. Table of Contents 1. COVID-19 and digital transformation 03 2. Commerce trends through communication channels 05 2.1Voice channel and IVR automation 05 2.2Messaging for customer support 06 2.3Conversational commerce 07 08 2.4EX automation 3. CX and EX automation trends from 2021 09 3.1Industries adopting CX automation 09 3.2Do you need EX automation 11 3.3Introduction to total experience 13 4. Trends in conversational AI for 2022 15 4.1The rise in voice as a channel 15 4.1.1Voice usage by geography 15 4.1.2Voice usage by industry 16 4.2Evolution of TX as a benchmark 17 4.3Blended model of HUMAN + AI AGENTS 17 4.4BOT-Initiated conversations 18 4.5Shift to Self-Serve 18 5. Engagement strategy in 2022 and the future 19 About yellow.ai...........................................………………… 21 02 www.yellow.ai

4. 1.COVID-19 and digital transformation COVID-19 ushered in a new normal for businesses and employees across the globe. Employees had to adapt to a work-from-home model almost overnight. Businesses accelerated into digital transformation. Adoption of Conversational AI technologies for continuing customer support and employee communications grew manifolds. In effect, the pandemic boosted the chatbot business to the forefront and cemented it as one of the technologies here to stay. COVID-19 and the resurrection of Chatbots Predicted Chatbot market by 2026 Companies already use Ai for with chatbots regularly on Ecommerce sites & will continue (2019-2024) 100 90% 75 50 25 20% Mid Low Figure 1.1: Disruptive effect of COVID-19 over the chatbot business. 03 www.yellow.ai

5. From the data on our platform, we saw an interesting correlation between the rise in the number of dynamic AI agents and the COVID-19 numbers across the world (see Figure 1.2). There was a rise in both CX and EX automation, clearly showing organizational-level changes. How COVID-19 accelerated Digital Transformation India APAC EMEA Figure 1.2: How COVID-19 accelerated the digital transformation across the world. All geographies saw growth in the number of bots as the pandemic raged on. The two major leaps in bot adoption were during or right after the first and second COVID-19 waves. More businesses engaged chatbots for faster and parallel query resolution to their customers. Bots minimized wait times to ensure successful journey completions and customer satisfaction. Businesses started adding more channels to their repertoire. This was a leap that would land them at the fingertips of their customers. 04 www.yellow.ai

6. 2.Commerce trends through communication channels New channels and technologies are finding a place in the market share. The need of the hour for any company is to be able to communicate and connect with customers. The communication strategy has moved from multichannel to omnichannel. A conversation that started on Instagram can continue over WhatsApp and end up as a live-agent call. The most natural ways in which people communicate are by Voice or by Text. Writing includes many options like text messaging, social media chats, SMS, email and so on. Verbal communication is typically through calls or voicemail. In the Conversational AI space, a lot of effort is being taken to render natural experiences using automation. To this end, our chatbots and voice bots run on world-class Natural Language Processing to mimic human interactions and provide delightful customer experiences. In this chapter, we explore the different avenues of growth in automation. 2.1.Voice channel and IVR automation According to PS Market research, the global voice assistant market is growing at a CAGR of 29.7%. The report predicts it to reach $26,872.6 million by 2030 from $1,723.6 million in 2019. The continuing demand for contact centers delivering quality customer experience is driving the growth of the market across the globe (see Figure 2.1) and the Asia-Pacific region is likely to record the fastest growth in the market. $4.6 Billion Global Voice Assistant transaction Values in 2021 27% OF THE GLOBAL ONLINE POPULATION CURRENTLY USES VOICE SEARCH BY 2022, IT’S EXPECTED 55% OF HOUSEHOLDS WILL OWN A SMART SPEAKER 320% Growth of Global Voice Assistant Transaction Values 2021-2023 52% USE VOICE ASSISTANTS TO SEARCH FOR PRODUCTS/SERVICES 58% OF CONSUMERS USE VOICE SEARCH TO FIND LOCAL BUSINESSES 50% Growth of Global Smart Speaker Source: Yellow.ai, C-Zentrix.com Figure 2.1: Growth Potential of the Voice AI business over 2022-23. 05 www.yellow.ai

7. 2.2.Messaging for customer support Texting through WhatsApp has become extremely common in the past few years. A WhatsApp text is non-intrusive, gets the message across, has a 95% open rate and is the most preferred mode of communication for youngsters. With the pandemic, this natural behavior extended to businesses as well (see Figure 2.2). These days, customers prefer to chat with nearby businesses. Whether it is for deliveries, finding out business hours, checking the availability of products or any other query, messaging has overtaken calls. Research shows that 89% of the consumers prefer to be messaged, rather than called. With only 49% of the businesses equipped to do the same, there is a huge opportunity. On our platform, we have witnessed massive volumes of messaging for Customer Support across all industries all around the world. Messaging trends for customer service in 2021 No. of messaging of consumers avoid Service due to the Sends 3 messages every hour uses 3 apps to chat per week prefer messaging messages by a business over any Figure 2.2: Infographic showing the Messaging trends observed in 2021 for Customer Service. 06 www.yellow.ai

8. 2.3. Conversational commerce Over a hundred billion messages are sent on WhatsApp in a day. The potential for Conversational Commerce over social media channels is enormous. With texting far overtaking calls (see Figure 2.3), businesses have to be present on every channel to engage with their customers over social media, websites, apps and other digital channels. Conversational commerce landscape 2021 Millions of Users 40% 32% of respondents said they would spend lesser times in shops 25-35 Yos Working Professionals are the demographic most likely to buy through CC 50M Businesses are present online of respondents said they would shop online more after the pandemic 60 50 40 30 20 30% 22% 10 14% 13% 13% 8% 0 Source: aichat, yellow.ai, digitalinforma- tionworld Figure 2.3: Growth of Conversational Commerce over the pandemic. The pandemic has definitely played a large role in many businesses moving online. The convenience offered by no-contact orders and deliveries has seen a surge in Conversational Commerce over the past two years. This trend is expected to grow even after the pandemic ends. 07 www.yellow.ai

9. 2.4. EX automation Digital transformation as a repercussion of COVID-19 didn’t filter down to having an impact on the business segmentation within the organizations into silos. Organizational-level changes in EX have to happen in tandem with CX to help rid these silos. Employees across the world are moving into a hybrid work model as we learn to live with the pandemic. A recent HBS research roundtable affirmed that ensuring great EX is the cornerstone to delivering world-class CX. From integrating data to customer service, understanding the entire customer journey to delivering a seamless experience across platforms and channels, EX and CX are entwined in each step of the way. In EX automation, Human Resources (HR) and IT Services Management (ITSM) automation is the norm. In Figure 2.4, we have illustrated the extent of automation possible by deploying an AI agent. Such a function will likely save a company hundreds of thousands of dollars in freeing up time for the HR personnel. We detail the ROI from deploying an HR bot in Chapter 3. Voicebot Email Website Senior Level Improvement Level Benchmarking Lower Level Figure 2.4: Typical functions of an HR bot. 08 www.yellow.ai

10. 3.CX and EX automation trends from 2021 We reviewed our platform data to identify the industries that have adopted CX and EX automation. On the EX front, we identify the companies that can benefit most from deploying an HR bot and postulate the ROI from it. We also introduce Total Experience (TX) and how it translates to a holistic experience that is now setting a benchmark for companies to measure their success. 3.1.Industries adopting CX automation We have seen enormous bot use volume on our platform. In the last 6 months alone, the number of notifications on our platform has gone up by more than 1000x. The number of conversations has risen by approximately 400x. BFSI, Retail & Ecommerce, Telecom, Education and Technology emerged as the top-performing industry verticals across all the geographies based on bot usage. In granular detail, we were also able to observe which channels were outperforming others in terms of dealing with the largest volumes of messages on our dynamic AI assistants. WhatsApp emerged as the victor among social media channels. Other popular channels were Google Business Messages, Instagram and Facebook Messenger. Each of these channels has seen increasing traction over the past quarter (See Figure 3.1). We further analyzed the peak engagement hours by industry. This was to identify engagement times for customers on the platform over the AI assistants (see Figure 3.2). This is a useful asset for companies when deciding when to send campaigns, push notifications, abandoned cart or back-in- stock notifications on various channels to engage customers to learn their online behavioral patterns to target their attention at the right time slots. 09 www.yellow.ai

11. Travel & hospitality BFSI Total New Users India Manufacturing Healthcare Total New Sessions IT APAC Retail & Ecommerce Web bot EMEA WhatsApp N.America Telecom Other Channels Media Utilities Source: Yellow.ai Figure 3.1: Flow diagram showing normalized platform usage data from all Geos. How to read this chart? Each node splits into different branches, the thickness of which indicates its volume of share in the split to the next node. For eg., BFSI forms the largest chunk of Indian accounts, of which most messages are exchanged on our bot on their website. 10 www.yellow.ai

12. Lunch Hour: Noon 2 pm Source: Yellow.ai Breakfast Slot: 7-10 am Morning work Hours: 10am - noon Afternoon Work Hours: 2 pm-4 pm Healthcare Lunch Hour: Noon 2 pm BFSI, Education Hospitality Education BFSI Nightcap: 10 pm onwards Evening Commute: 5-8 pm Dinner: 8-10 pm Education, Healthcare Retail & Ecommerce, Telecom Healthcare, Hospitality Figure 3.2: Which industry’s bots saw traffic at what times. Insights from the data from our platform. 3.2.Do you need EX automation? Global 10K Multiple Figure 3.3: Determining if EX automation is right for your company. By deploying EX automation, we can measure tangible ROI for any company based on the number of hours saved for HR personnel. In Figure 3.4, we postulate potential savings of up to 65% for a company with a top-line of $8 Billion by deploying an HR automation bot for a period of 3 years. These are huge and will translate to a large component of saved revenue. There is also a host of intangible ROIs in 11 www.yellow.ai

13. saving support costs and improving employee experiences (see Figure 3.5). 12 www.yellow.ai

14. Reduced no. of un-productive man hours: Employee Relations Building feedback surveys for Reduced no. of un-productive man hours: Recruitment: Filtering leads Schedule interviews Surveys/ Questionnaire to map the right candidates Reduced no. of un-productive man hours: Compensation, Learning & Development Compensation Benchmarking - Roll out offers, benchmark to Reduced no of unproductive man hours: HR Business Ops - Potential to payroll, statuatory remittences, Employee cells POSH training Policy roll out and changes Creating a repository, rolling out monitoring, employee leaves etc Exit process- F&F, exit surveys, ER- Exit and L&D TA - Query Handling Feedback Recruitment WS - Policy ++ Indirect Benchmarks Figure 3.4: Example of ROI calculation for HR EX automation Sample Client with normalized revenue of USD 8 Billion and 10K employees possible 66.5% reduction in HR payroll cost savings over 3 years Long wait times for HR & IT queries motivation levels Reduced time to proficiency Increased new hire NPS Reduced productivity 30% query reduction to Identity areas Figure 3.5: Example of intangible ROIs from HR EX automation 12 www.yellow.ai

15. 3.3.Introduction to total experience Total Experience (TX) is a modern view of assessing shared experiences by cross-linking the user experience (UX), customer experience (CX), multi-experience (MX), and employee experiences (EX). As discussed above, it is possible to automate EX and CX. Correlating great EX, CX and TX Large enterprises ensure high quality CX through their contact centers and IT departments. Improving Agent Performance and Employee Experience (EX) are vital. The key challenges are: low productivity, declining CSAT, high training agent costs, and high employee turnover. These are of major concern from an operational standpoint. EX automation is beneficial to a company, both by delivering a tangible ROI thereby reducing unproductive man hours and by improving the quality of employee experience. TX correlates the company experience, from the representative to the customer and the user, hence proving to be a vital part of the company at large at all levels - Customer, Employee, Financials and Organizational (See Figure 3.6). Organizational Improvement Financial Returns Better Better Product decision Making Higher Revenue Quick Increased Market Share Better Total Lesser Complaints Talent Business Model Lead Loyalty Generation Customer/Employee Experience Transforming TX enhances experiences at the junction of multiple components to achieve transformational business outcomes. 13 www.yellow.ai

16. 4.Trends in conversational AI for 2022 In 2021, we witnessed a surge in Voice as a channel. This stems from the millennials and Gen-Zs who prefer to “dictate” text or do voice searches as opposed to typing. Hence, Voice as a conversational AI channel will see a significant rise in adoption in the next two to five years, as we move forward. While brands have traditionally focused on customer-centric marketing and business strategies, the trend now is to enhance the holistic Total Experience. Other than this, we can expect to see a blended Human + AI model being adopted by most brands to keep the customer satisfied throughout their interactions. There is also a shift to self-service in bot-building. We discuss these trends in detail below. 4.1.The rise of voice as a channel With Alexa, Siri, Google Assistant, etc. becoming household names, the awareness of Voice technology and its capabilities is seeing rapid adoption. Voice assistants can engage in over 100 languages. Voice is the future and it will continue to drive and shift consumer behavior as more adoption happens across the globe. 4.1.1.Voice usage by geography Globally, the smart speaker market has continued to grow exponentially (see Figure 4.1). Alexa skills are the fastest- growing voice-driven tech. Companies need to prepare and adapt accordingly. Currently, the North American market is leading in sales and usage of these technologies for everyday needs. APAC is fast growing. With the return to native speech usage, companies must be prepared for channel expansion into Voice. 2022 RoW North America Europe Figure 4.1: Global Smart Speaker Market, 15 www.yellow.ai

17. 4.1.2.Voice usage by industry In the last 5 months alone, we have seen an astronomical jump of over 300% in the number of voice bots on our platform (See Figures 4.2. (a) and (b)). BFSI has been an initial adopter of Voice technology. Voice bots automate a host of internal processes, including applying for a loan, getting policy details, renewals, etc. Telecom, Technology and Retail are testing the waters with Voice to expand their services. We have deployed Voice bots in some of India’s largest private banks, insurance companies and even a government electricity company. Voice bots have the capability to scale and contribute handsomely to cost savings while being highly efficient. With Natural Language Processing that is the backbone of the technology, Voice bots are designed to deliver a delightful natural conversational experience that reduces that “bot” feel that customers typically dislike. Initial call duration trends suggest that customers are finding interacting with Voice bots an engaging manner for query resolution. Growth of Voice Bots Aug 21 Sep 21 Oct 21 Nov 21 Dec 21 Figure 4.2(a): Rise of Voice bots in recent times and 4.2(b) Distribution of bots by industry. 16 www.yellow.ai

18. 4.2.Evolution of total experience as a benchmark We have waxed eloquent about CX over the last few years and finally, it has been taken seriously in business strategy. The spotlight is now on Total Experience (TX) Automation. As enterprises have grown more remote around the globe, virtual and distributed, a strategic TX plan is necessary. Total can help organizations capitalize on interruptions such as remote work and distributed customers. It helps connect customers and employees by interlinking their interaction and experiences. TX thus incorporates a complete business experience, from the user to the customer and the employee. TX also helps in brand building. It is responsible for the quality of its end services or product. According to a Gartner report, companies having a planned TX management will have more success than others. It helps the companies, brands, and businesses to enjoy engagement with their customers and vice versa. At yellow.ai, we offer CX, EX (ITSM, HR, etc.) to better your TX. Know more 4.3.Blended model of human + AI agents Gartner identified that the human touch was the strongest element of AI. Forrester reported that blending AI with human agents allows enterprises to achieve the strengths of both. Enterprises that have blended AI with human agents report that their customer service efforts are more effective at improving both customer satisfaction (61%), agent satisfaction (69%) and agent productivity (66%). Improving these metrics ultimately helps drive increased customer retention and lifetime value by 59%. AI offloads simple, repetitive, monotonous tasks from customer service agents —letting them concentrate on complex questions or allowing them to better connect with the customer. This means that bringing in AI does not displace or dispirit existing customer service agents. 17 www.yellow.ai

19. 4.4.Bot-initiated conversations With the success of the hybrid Agent + AI model, the next natural progression is towards bot-initiated conversations. The scope of these messages includes promotions, campaigns, back-in-stock notifications, abandoned cart reminders, etc., to proactively reach customers. With WhatsApp having over 90% open rates and 40% conversion rates, there’s a great chance that your notifications get to read and actionable responses occur. In fact, research has shown that through proactive messaging, nearly 8-12% of the 68% of abandoned carts can be recovered. On a similar note, back-in-stock notifi- cations have shown the potential to recover up to 22.5% of the shoppers - a huge number by any mea- sure! 4.5.Shift to self-serve Chatbots were once considered difficult to build. With the advent of DIY no-coding bots, it is rapidly becoming an option for small startups and individuals to try their hand at building bots with basic functionalities. This is a rising trend that shows a proclivity to self-serve and is self-sufficient while dabbling at automation. Figure 4.3 shows the rise in self-serve bots on the yellow.ai platform since we introduced it in late June 2021. As seen, there is a lot of interest in trying one’s hands at building bots, but the completion rates remain slightly low, probably exposing a gap in understanding that we are working at bridging with our unparalleled documentation and demos. Want to build a bot? Try now 18 www.yellow.ai

20. Bot creation using No-code Build your Own Bot Options Dec 21 Nov-21 Oct 21 Sep 21 Aug 21 Figure 4.3: Rise of self-serve bots on yellow.ai platform 5.Engagement strategy in 2022 and the future The acceleration of digital initiatives in response to pandemic disruptions is a key trend affecting the next year’s focus areas for CIOs and transformation leaders. The Conversational Artificial Intelligence platform market is at a pivot point as customers look to scale their pilots. This indicates a market trend of end users seeking specific technology capabilities that are often beyond the capabilities of current AI tools. As per the Gartner Hype Cycle for 2021, the AI market continues to evolve, with a high percentage of AI innovations appearing on the horizon. We are witnessing a surge in not just new logo wins, but also an expansion in signed scopes as companies want to explore this technology more. With customers and employees frequenting four screens at a time, the enterprise’s engagement strategy cannot be singularly focussed. Prioritization of customer experience is driving innovation in the contact-center-as-a-service market where enterprises are looking beyond one channel of automation to an omnichannel automation strategy across text, IVR, and voice platforms such as Google Assistant and Alexa. 19 www.yellow.ai

21. While Customer Experience has been at the forefront of most digitisation efforts, the pandemic leading to a WFH culture and shortage of workforce, gas led to: Organizations investing more in their customer experience (CX) strategies for growth. More focus on employee experience (EX) strategies to compete for scarce talent. CX and EX strategies, however, are often siloed and developed in a vacuum and the need for Total Experience is emerging as a need in large enterprises. Developing TX strategies to identify the digital and nondigital needs of both employees and customers is crucial to the continued success of businesses. TX simultaneously addresses their respective journeys —especially the parts that intersect. This creates a superior shared experience for everyone. EX and CX initiatives should reuse the underlying technologies and compose the UX into a set of mutually beneficial multi-experience (MX) apps across devices, touchpoints and interaction modalities. Through analysis of our data and understanding the current market situation, we have drawn projections for 2022. We have realised that far from the coronavirus being Pandora’s box event for chatbots alone, it is clear that Artificial Intelligence’s role in the “call center intervention” has shown fruition in the past 18 months beyond anyone’s expectations. Brands that were underprepared for digital traffic were caught off guard and were challenged by broken systems with these spikes. Having a digital strategy in place with opportunities to grow and even the possibility of a self-serve is what saved many businesses from running into the ground. And here is where chatbot automation plays a huge role. The revenue from chatbots and vice versa play hand-in-hand with one another leading to an exponential growth phase that will probably peak ~2025. Brands should actively arrive at their own TX strategies to complete their digital transformations and ride this wave of success into 2022 and beyond. 20 www.yellow.ai

22. About Yellow.ai Yellow.ai is the world’s leading Total Experience Automation platform powered by Dynamic AI agents, that enable enterprises to have enriching, delightful and personalized interactions with their customers and employees across their preferred choice of channel, language and time. Dynamic AI agents are advanced virtual assistants that automate digital (text), conversational (voice) and unstructured (documents) workflows to deliver a connected experience across all human interactions in real-time, across channels and at scale. The platform is trusted across 70+ countries by 1000+ enterprises, including Domino’s, Sephora, Hyundai, MG Motors, Bajaj Finserv, Food Panda, Bharat Petroleum, Waste Connections US and Tata. Weaving in the best of AI and human intelligence to automate customer and employee experience, the company aims to democratize AI through its no-code/low-code bot builders, omnichannel virtual assistants, and ticketing automation suite. Yellow.ai has raised more than $102M from blue-chip investors and has offices across six countries. Visit www.yellow.ai for more information. Visit www.yellow.ai for more information. Contact us at contact@yellow.ai 21 www.yellow.ai