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Image of woman working on laptop with text ‘The Neglected Metric: Calculating the True Cost of Automated Conversations’

As conversational bots continue their rapid evolution toward being an efficient means to deliver self-serve customer support, it begs the question: how much are we paying for each automated conversation? 

In the contact center industry, the cost per call is a routine KPI. Contact center leaders rely on it as an indicator of the performance and efficiency of the call center. Most call center managers can quickly tell you the cost per call. It’s pretty easy to calculate too. It’s determined by calculating the total loaded cost / total number of calls, taking into account resources and average handle time. In a similar vein, the cost per live chat is commonly understood, and easy to calculate.

Regarding industry benchmarks, for high-touch contact centers in sectors such as telecommunications and retail, it is customary to anticipate a cost range of $10 to $14 per live agent call and $6 to $8 for a live chat interaction.

But what about the cost per automated conversation? 

With so much emphasis being placed by the platform developers on the cost savings and ROI of automating customer service, there is little emphasis on calculating the cost per automated conversation.

At a basic level, it might seem that the cost per automated conversation is as simple as dividing the bot platform and license fees by the number of conversations. However, the reality is more nuanced. This simplistic calculation overlooks key factors, such as whether the engagement genuinely fulfilled the customer’s requirements or if it prompted them to switch to a more costly channel – live chat or live agent – thereby inflating the overall cost.

To gain a better understanding of the actual cost, we need a different perspective.

Calculating the cost per automated conversation takes into account three main factors:

  1. Platform fees – including licensing and implementation;
  2. Conversation volume;
  3. Automation. Beyond mere containment, automation takes into account whether the bot was able to genuinely satisfy the customer’s query without repetition, excessive transitions, or escalations – and without added frustration.

When you first invest in a conversational bot, it’s normal for costs to be on the higher side, largely due to implementation and startup expenses. However, over time, a reasonable cost target for each conversation typically falls within the range of $1 to $2. While there’s limited opportunity to reduce platform and license fees, simple adjustments in bot automation can go a long way. Whether that’s upgrading NLU training, bot responses, introducing or adjusting intents, making sure the customer gets the answers they came for, quickly, and without escalation is the surefire way to increase chatbot performance and reduce overall cost.

Many bot program managers are surprised to learn their actual cost per conversation and need a plan to regularly evaluate and adjust bot responsiveness in the right ways, with the highest impact, in order to reduce the cost. Having the right tools, and the right process is key to successfully knowing how much you’re paying today, being able to set targets, and monitoring progress toward your goal. 

It’s not uncommon for many bot program managers to be taken aback when they discover the actual cost per conversation. And the need to adopt a regular, and systematic approach to evaluate and adjust bot responsiveness in the right ways, with the highest impact, is key. Equipping yourself with the right tools and processes is pivotal in effectively assessing your current expenses, setting attainable targets, and monitoring your progress toward your cost-reduction objectives.

Why is the cost per automated conversation useful?

It is one of the primary key performance indicators (KPIs) that allows you to measure the quality and performance of your conversational bot. Cost per automated conversation provides an insight into the amount of money you spend on each call. It serves as an indicator of how much you will want to invest in a conversational bot program in order to achieve your business goals. 

What is the average cost per automated conversation?

The industry standard for the cost per automated conversation falls within the range of $1.00 per conversation for high-volume transactions up to $2.00 per conversation. However, it will depend on the type of business you have, the use cases, channels, and complexity of your customer experiences.

How to calculate the cost per automated conversation 

There are two basic formulas you can use. The most robust calculation takes into account additional metrics such as resource costs and automation rate. So, the cost per automated conversation =  (Automation score * Volume of automated Conversations) / A very rudimentary calculation is Cost per call = Volume of automated conversations / (Cost of bot platform fees (implementation + licensing). 

How to reduce the cost per automated conversation 

The best way to do this is to identify your target cost per call and establish a measurement framework that takes into account automation, resolution, and experience. It’s also important to know what is impacting gaps in performance, to be able to address those and reduce the total cost per conversation.

Don’t let the cost per automated conversation remain a neglected metric

Understanding the cost of automated conversations is crucial to enhance your bot’s efficiency. It involves more than just platform fees and chat volume; it’s about meeting customer needs cost-effectively. Regular evaluations and adjustments can significantly lower costs.

Take control of your chatbot optimization and book a demo of the Operations Center bot analytics software today.

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