The conventional concept of good customer service involves pleasant and effective face-to-face encounters between salespeople and customers. This view is changing due to advances in digital technologies. Today, AI technology is widely applied across most industries, especially in services. The widespread application of digital technologies has brought major changes in customer purchasing behavior (e.g., online and offline shopping, logistics and payment preferences, financing, etc.). The customer’s multichannel purchasing behavior also requires a change in the way the provider’s delivers value and experience to customers.
Customer-centric strategy in the digital age
Corporate strategies have gradually shifted from goods-dominant (G-D) logic to service-dominant (S-D) logic and from a supplier-oriented perspective to a customer-oriented one, thus cementing the central role of service in the economy (Bell 1976; Lee et al. 2007). G-D logic focused on distribution mechanisms for service provision (Vargo and Lusch 2008), while S-D logic emphasizes a unique expression of value for economic exchange between firms and customers (Vargo and Lusch 2004). In addition, S-D logic is one of the most important theories to explain value co-creation through interactions between firms and customers because value is transferred from firms to customers (Vargo and Lusch 2004, 2008).
Recently, an individual’s quality of life is increasingly determined by the availability of services (Xie et al. 2016). A service is described as an economic activity that creates a certain value for a customer or provides benefits to the user (consumer) at a specific place and time through the acts or performance of the provider (Xie et al. 2016; Bordoloi et al. 2018). As S-D logic combines activities between firms and customers as resource integrators (Lusch and Nambisan 2015), a service is a time-perishable intangible experience performed for a customer acting in the role of a co-producer. Thus, service companies seek strategies to identify customers’ needs and enhance performance at service encounters through advanced technologies.
Theory of service encounter was first proposed by Shostack (1985) who classified service contact into three types (face-to-face encounter, indirect encounter, and remote encounter) and defined it as a period of time during which a consumer directly contacts and interacts with a service. Solomon et al. (1985) and Guiry (1992) proposed a service contact structure (customer–technology–provider), which was later generalized by Bitner (1992). Bitner (1990, 1992) defined a service encounter as a personal interaction that influences business performance. In addition, he classified the types of service encounters into two main categories: person–person and person–environment. Froehle and Roth (2004) classified service encounters into five types: technology-free, technology-assisted, technology-facilitated, technology-mediated, and technology-generated. Lee (2018a) classified the technology-based forms of contact during the service encounter (where the service is performed by the customer alone or with the support of machines or AI) into three types. The first is a technology-facilitated service, in which the customer and service provider complete the service together using AI robots or machines. The second is a technology-mediated service, where the customer interacts only with a screen using an AI robot or machine without direct contact with the service provider. The third type is a technology-generated service, in which the customer voluntarily creates and completes the service using AI robots or machines. These studies indicate that technology can be used to gradually reduce the interaction between the customer and the employee.
With the world-leading digital technology diffusion, South Korea has introduced numerous technology-based service types. Since 2018, many service encounters between customers and employees began to shift to untact. An untact service is the one that involves no face-to-face interaction between employees and customers, supported by advanced technologies. This technology-based service represents a new operating model for service encounters (Bordoloi et al. 2018; Kim et al. 2018; Lee 2018a).
Evolution of task transference and “untact” service
Task transference refers to shifting some of the transaction tasks from employees to customers. Evolution of transference has been influenced by economic and technological development during the past 70 years or more. In general, there are three stages of transference evolution.
Post-World War II (WW2) economic development stage
The explosive increase in productivity and an economic boom in the post-WW2 period saw supply of products exceeding demand for the first time (Lee et al. 2007; Ryan et al. 2011). Many new marketing strategies and promotion approaches were developed: massive advertisement campaigns, customer-centric strategies, and analysis of consumer behavior. Thus, customer convenience, customer service quality, and after-sale services became popular. Thus, 24/7 customer service ideas created many vending machines, convenient self-service counters (soda, candy bars, coffee, sandwiches, etc.), and answers to frequently asked questions.
Advanced technology development stage
With the advanced ICT, mass media (TV, radio, and Internet) became the vehicles for engaging customers, build brand loyalty, set up membership clubs, etc. Speedy data processing technologies made it possible to implement market segmentation and market differentiation strategies (Ryan et al. 2011; United Nations Secretariat 2018). Thus, the idea of the S-D logic came as a reality. As customers demand not only the convenience and quality of service, but also the type of service they prefer, speed of service became important. Thus, “Do It Yourself” emerged as an important marketing strategy. Electronic games without an opponent to play against became possible for card games, board games, sports, and mental games (e.g., chess).
Advanced digital economy development stage
In the advent of the Fourth Industrial Revolution (4IR) and the digital age, advanced digital technologies have changed the way people live and organizations function. AI, machine learning, IoT, smart sensors, robots, 3-D printing, and others have made it feasible to turn what is probable into possible (Lee 2018b; Lee and Lim 2018). Thus, convergence of creative ideas and digital technologies has enabled exponential innovation for digital services. Today, customers handle their own banking service, shop and make payments, and check own vital signs for healthcare service.
“Untact,” a creative marketing strategy sprung in the most advanced digital economy of the world, South Korea, is to provide customers with two new services: (1) for customers who prefer not to have any face-to-face contact with service employees, they have a new choice of DIY; (2) for digital savvy customers, intact service does not only fit with their own style of living but it also allows speedy and quality service. For organizations, untact marketing provides many benefits as well. Some of the obvious ones are: (1) expanding the market base as it helps attract new customers who normally would not be attracted to the firm’s products or services; (2) untact marketing saves a great deal of workforce serving customers; (3) untact marketing accelerates the service pace, thus increasing the sales volume per unit of time; (4) untact marketing would increase customer loyalty as it offers an additional choice of service to customers; and (5) untact service most likely would reduce the volume of customer complaints and after-sale service demands.
Online platforms such as social media have altered the culture of communication as well as the way people interact with each other (Horn et al. 2015; Amar et al. 2019). With the activation of online platform-mediated single-person media, the usage of YouTube and Creators is growing rapidly, and collaboration between a firm and personal broadcasting service provider is also increasing. As such, the digital age is changing not only the way firms communicate with consumers but also the culture of sales (Bollard et al. 2017; Kim et al. 2018, 2019). The environment in which products/services purchases are performed is shifting toward untact encounters. In an untact environment, since transactions do not require human interaction, value is created directly by the consumer using digital device or technology (Lee 2018a).
Online connectivity through advanced technologies and platforms such as AI, robots, IoT, and big data creates value without the need for people to directly interact with each other (Bollard et al. 2017). Furthermore, untact service types are gaining prevalence as the number of people who feel uncomfortable or inconvenient with human relationships is increasing (Sweeney et al. 2015; Verleye 2015; Lee 2019). It is becoming increasingly common for companies to use untact technology to sell products and services without face-to-face encounters with customers. With the advent of 4IR, radical technological innovation is enabling change, not only within businesses but also consumers’ concept of quality service.
Kim et al. (2018) drew attention to the rise of unattended service types and untact technology in their Trend Korea 2018 study. The authors suggested that untact services go beyond simple unattended or non-face-to-face technologies because they provide adaptive and personalized services (Kim et al. 2018). Untact services provided through mobile applications offer services that were previously only possible through face-to-face interactions. In Japan, the “silent customer service” trend is also growing and spreading fast. In both countries, new business models are emerging based on the feedback of shoppers (e.g., “I felt nervous when the salesclerk talked to me”) and in the local transportation service “Silence Taxis” have been introduced (Kim et al. 2018). Such new business models create value by shifting human–human relationships to human–technology relationships. Service models applying untact technology have emerged to fit this trend (Verleye 2015; Lee 2018a).
While some untact service types existed in the past (e.g., telephones and call centers), they are different from currently popular service types. To provide rapidly changing untact services, companies need to learn how online systems (their characteristics, information, and design) affect customer behavior. Using this knowledge, they can develop appropriate operational strategies. In this regard, De et al. (2019) proposed that the following questions should be addressed: What drives the effect of search technology on sales? How can economic returns be derived from recommendation systems? Why is it important to separate product facts from product impressions to control returns? How can the digital traces left by consumers be leveraged to generate benefits?
Due to the increasingly active use of social media and the spread of the Internet and mobile technology (Amar et al. 2019), now consumers can easily find what they need without the help of an employee, thus decreasing the need for contact and promoting the spread of untact technology. Consumers have reacted positively to untact technology, and new business models reflect customers’ preference for a “comfortable cut-off” from communication over “uncomfortable communication” (Kim et al. 2018). Many young consumers who are accustomed to digital devices tend to feel uncomfortable around people and prefer “solo shopping” (Kim et al. 2018). According to Kim et al. (2018), cost reduction, immediate satisfaction, abundant information, and interpersonal fatigue are the main drivers for the proliferation of untact technology in the market.
In addition, Kim et al. (2018) suggested the following four major avenues of value creation offered by untact technology: (1) quick service at any time: customers dislike complicated procedures or waiting and want to receive services at any time. An example of this type of value creation is the “smart unattended laundry drop-off box” installed by 7-Eleven that allows users to drop off their laundry 24/7. When the user delivers the laundry and inputs personal information on the touch screen, the laundry service is automatically initiated. After the clothes have been cleaned, the customer is notified via text message for pickup at a convenient time. This approach can create value for both the customer and the business (reducing the cost of labor and management); (2) convenient and in one go: customers dislike having to visit multiple destinations to purchase goods and services. For example, similar to Amazon Go in the USA, Alibaba introduced “Tao Café,” an unattended convenience store that conveniently handles processes from searching for information on products to payment. Users install the Taobao app on their smartphone, create an account, visit Tao Cafe, search for the required product, select the product, and register. Then, the automatic exit opens, the product is scanned, and payment is processed. This is an example of an untact convenience store in which customers can purchase products by only using the Taobao and Alipay applications; (3) without anyone knowing for privacy and secret: many people are reluctant to expose their private lives to the outside world. Personal information, such as video images, location, and biometric information are often shared, thus generating increasing concerns about privacy and security. There is an increasing demand for services that can alleviate these issues. For example, an individual can buy a book online and read it on a Kindle. Then, no one knows what book the person bought or is reading. Protecting one’s privacy is essential in the digital age and untact services make this possible, value created without direct interactions; and (4) just for me: as untact technology is based on big data and AI, customers can receive customized services tailored to their preferences. Thus, customer satisfaction can be improved without direct interaction with the service provider (Kim et al. 2018; Lee 2018a).
Digital kiosks have been available since around year 2000. Today, services based on untact technology are available in various fields, such as cosmetic shops, cafes, restaurants, banks, and delivery. The normalization of untact services is expected to increase consumer comfort with and preference for technology. Thus, consumer purchase activities are expected to gravitate toward online platforms that do not require offline stores. This is in line with the general trend of the increasing online and mobile shopping, the development of AI-based services, and the spread of unattended stores. As consumption trends shift to non-contact service types based on untact technology, these new systems need to reflect generational and social changes.
Untact technology can be regarded as advanced technologies and platforms to create value for customers in line with the trends of the digital age, such as customer-centric management, the S-D logic, and consumers’ desire to avoid hassle and receive timely, quick, and excellent service (Lee 2018a, 2019). In addition, untact technology can accommodate the demands of customers who feel more at ease with the Internet and m-commerce than those who are technologically challenged. Companies that focus on customer-centric management need to find ways to indirectly contact their customers when they prefer not to be contacted by employees. The S-D logic proposed by Vargo and Lusch (2006, 2008, 2016) suggests that if the value generated by the interaction with the customer is more important than the value provided by the product or service itself, such interaction needs to carefully consider the characteristics of the service (e.g., intangibility, simultaneous perishability, and heterogeneity). For instance, customers who are familiar with digital devices tend to prefer solo shopping to shopping based on interactions with staff. Therefore, according to the S-D logic, indirect interaction with customers can be expanded by providing digital device functionalities (apps) that empower customers to generate value for themselves, without interaction with employees.
Untact technology enables services that are provided in a non-face-to-face format without contact with people (employees–customers) as showcased by the Amazon Go convenience stores, Tao Cafe shops, laundry drop-off box service, chatbot-staffed kiosks, and Starbucks Siren Order app in South Korea. Technologies that enable untact service systems are AI, machine learning, IoT, VR/AR, big data analytics, smart sensors, smart robots, and the platform built with these technologies. As technologies that substitute human contact with machine interactions spread, customers are experiencing a digital wave. If customers feel discomfort when interacting with other people during a service encounter, the service model needs to be changed from direct interactions to an intangible service-based model that uses technologies to replace human helpers (Lee 2018a). Therefore, untact technology can be seen as a form of digital transformation where the service paradigm is shifted from the customer interaction focus to intangible interactions based on advanced technologies.