Two years ago Vodafone UK's customer services operation -- by its own admission -- was a mess. Following the bungled migration of customers on to a new billing platform, the mobile operator's net promoter score (NPS), a keenly watched measure of customer satisfaction, fell in 2015 to -35 on a scale where -100 equals rage and 100 means bliss. Customer complaints rose to about four times the industry average in November that year. "It was not a great place to be," says Neil Blagden, Vodafone UK's customer operations director, during a press briefing in London.

Hired from insurance company Direct Line to clean things up, and relishing a challenge, Blagden has been busy hauling that operation back onto its feet. In each of the last 18 months, Vodafone UK has made about 100 fixes and improvements to its systems. It has closed 12 underperforming contact centers that were supporting the UK business, leaving it with 21 currently, and halved the volume of calls it receives. In April, its NPS was up at 26, having risen more than 60 points since November 2015.

Clearly, Vodafone is still some way from nirvana. The number of complaints it receives still tracks slightly above the industry average, for example. But the turnaround has undeniably been impressive. Having mopped up so successfully, Blagden is now looking to give Vodafone a full digital makeover and transform the company into a customer services leader.

It has started on that digital journey through investments in a messaging platform called Message Us and an artificial intelligence (AI) system branded TOBi. Already "live" with some customers, those technologies are to be rolled out more widely in the next few months. Vodafone is also due to unleash a new voice biometrics system and a voice assistant that will be compatible with Amazon.com Inc. (Nasdaq: AMZN)'s Alexa software and Echo speaker. If they live up to their promise, all four innovations could turn Vodafone into a much sleeker animal more loved by its customers.

Figure 1: Rise of the Machines Neil Blagden (left), Vodafone UK's customer operations director, and Richard Clarke (right), its head of contact transformation, demonstrate a range of new digital technologies at the operator's offices in central London.

Partly because of its obvious implications for employee numbers, TOBi is perhaps the most eye-catching of the four. Based on IBM's Watson technology, it has already been integrated with Vodafone's web chat systems and will respond to queries over a messaging platform much like a human advisor. Vodafone is not trying to hide its real "chatbot" identity from customers, however, and is making human assistance available as needed, including when the AI detects signs of frustration in customer messages (it currently understands what customers need help with about 90% of the time, Vodafone claims).

Even so, the big plan is to ensure, by the end of the year, that TOBi can handle most queries a customer might have. Richard Clarke, Vodafone UK's head of contact transformation, says there are about 150 "intents" in the overall customer service estate, of which TOBi should eventually be able to cope with 112. About 30% of the operator's customers already use TOBi on a more limited basis, but that percentage should also be much higher by the end of 2017. And beyond that date, there are "multiple other channels where TOBi could sit and help," says Blagden, including in Vodafone's interactive voice response (IVR) technologies.

How TOBi gets on in the UK is important from an organizational perspective because Vodafone Group plc (NYSE: VOD) wants to use it in other markets, too. That portends a big shake-up of customer service operations globally. Unsurprisingly, given the growing concern that technology is destroying jobs, Blagden is coy about the impact TOBi could have on staff numbers. But he acknowledges that it raises major questions about investments in staff and staff training. "There is a big human question in terms of the roles of agents and advisors," he says. "There will be implications, but for me it is also about the nature of the advisor role and how that changes. If TOBi can take away the high-volume transactional activity then what is left over is more case-managed and specialist, where there is a need for more investigation."

From Vodafone's perspective, another TOBi attraction is that IBM Corp. (NYSE: IBM) charges for the Watson technology on a software-as-a-service basis, enhancing its economic appeal. "The cost is very cheap compared with human infrastructure and contact centers," says Clarke.

Blagden is not drawing a link between Vodafone's plan to shut down further contact centers and the rollout of TOBi and other digital systems. But if the AI technology takes off in the short term, it could make closing those facilities a lot more straightforward. By March 2019, Vodafone aims to have just ten "core" sites handling the customer service needs of the UK business, including six in the UK and another four spread across Egypt and India.

Next page: Biometric boost

Biometric boost
In the meantime, some of the other technologies in which Vodafone has been investing also promise big efficiency improvements. Using a software platform developed by New York-based LivePerson, the Message Us service works much like Facebook Messenger or WhatsApp, letting subscribers communicate with customer service assistants through a web-messaging interface. Efforts are made to ensure a customer gets the same, familiar representative on repeat visits. And unlike on a phone call, there is no real constraint on the duration of a conversation. A customer could interrupt the exchange if she needed to jump on a train, for example, and resume it later. What's more, while an employee can manage only one phone call at a time, he could feasibly communicate with a number of customers simultaneously through Message Us, says Blagden.

Having gone live with a small number of customers in May, Message Us now has around 1 million users and Vodafone aims to expand its availability fast. Later this summer, a new group messaging feature will allow customer service representatives to join a conversation without displacing a customer's preferred assistant.

Another vendor, Nuance Communications Inc. (Nasdaq: NUAN), with headquarters in the Republic of Ireland, has developed a voice-recognition tool that is now live for pay-monthly and business customers and has already handled about 7 million customer interactions. Instead of answering a plethora of personal questions on contacting customer services, a subscriber need only say "my voice is my password" after specifying his query. Demonstrated in front of reporters, the technology seems to work effectively and has apparently led to a 25% drop in call transfers, whereby customers are passed around several agents before their queries are finally addressed. The biometric system will become available to prepaid customers in the next few weeks and to the entire UK customer base by the end of August, says Vodafone.

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Also set for a rollout in the same timeframe is another voice-based technology that sits on top of Alexa, the digital assistant developed by Amazon. Customers with one of the web giant's Echo speakers will be able to ask about the status of bills, or how much data they have left that month. Feedback on the service is likely to inform Vodafone's development of TOBi as an IVR tool, says Blagden.

How these various technologies work in practice, and how customers respond to them, are big questions. Given the inexorable rise of AI, and with competitors making similar technology investments, the worst-case scenario is that Vodafone is forced to head back into the design room. Sooner or later, though, more customers will be exchanging messages with machines.

— Iain Morris, , News Editor, Light Reading