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Countless tech platforms are setting out to help call centers automate conversations with their customers. But U.S-Indian startup and Y Combinator alum Observe.ai is bucking that trend by using AI to help coach human call center workers, rather than replace them. Today the company announced it has raised $26 million in a series A round of funding to further this mission.

Founded in 2017, Observe.ai uses natural language processing (NLP) to analyze conversations between human agents and customers. It then automatically transcribes each call and carries out sentiment analysis to determine customer satisfaction while drawing correlations between the words and actions of the support agent and the customer’s happiness level.

Top-performing agents can be used as benchmarks to determine what works, which can help train new or underperforming support staff. Elsewhere, the Observe.ai platform can detect “dead air,” including what caused the silence and how long it lasted, to figure out where the agent may have knowledge gaps. Interestingly, Observe.ai said it can differentiate between silence types, so if an agent puts a customer on hold, for example, it will know the agent isn’t just coming up short on a question.

Above: Observe.ai dashboard

The platform can also prove useful for compliance purposes, as it can automatically find which agents are not using the correct phrases during each call. This is hugely important in certain industries and helps illustrate how Observe.ai goes beyond just improving customer service — it can also help companies meet legal requirements.

“We can automatically surface a list of agents who did not follow the proper compliance protocols, for example, which are critical in health care, and retrain them,” Observe.ai CEO and cofounder Swapnil Jain told VentureBeat. “Or we can identify agents with the most efficient ‘handle time’ or the fewest ‘supervisor escalations’ and learn what they’re doing well and replicate their best practices.”

Above: Observe.ai: Agent feedback, including adherence to compliance phrases

In terms of pricing, Observe.ai operates a software-as-a-service (SaaS) model and charges roughly $75 per month for each agent.

In its two years so far, Observe.ai has raised around $8 million in seed funding and amassed some big-name clients, including Tripadvisor and newly public companies Peloton and Farfetch. To help grow its teams in the U.S. and India and accelerate its product development globally, the company raised a fresh $26 million round of funding led by Scale Venture Partners, with participation from Nexus Venture Partners, Steadview Capital, 01 Advisors, and Emergent Ventures.

“This investment will fuel our mission to elevate agent performance through coaching and voice insights,” Jain said.

The problem

With companies such as Google increasingly investing in automated call center smarts, it would easy to assume that human call center agents are on the road to oblivion — but not according to Jain.

“Our perspective is that customers still want to talk to agents, and there will always be scenarios in which customers prefer calls,” he said. “Agents are increasingly one of the only human connections people have with brands in a digital world, so we want to coach them to improve their performance with AI and augment them on live calls with insights that can be used to personalize the customer experience.”

According to an L.E.K report last year, voice-based customer service alone is a $300 billion-plus market. And although customer service spans multiple channels, with social media or live chat often the first port of call for more straightforward enquiries, call centers tend to be where the most complex queries end up. But ensuring quality at scale is a tall order for larger contact centers, which is why Observe.ai is pushing a different kind of automation.

Moreover, in competitive industries the quality of customer care is often a big differentiator, making it all the more important to optimize agent feedback and coaching by analyzing large pools of data.

“To drive operational efficiencies, agents need to be even better trained, and the organization needs to be able to access insights from conversations and put them to work in an agile way to continue to refine their products and processes,” Jain added. “This is because brands are being forced to push out new products and services faster than ever, and many are only competing on the quality of their customer service.”

Alongside today’s funding news, the San Francisco-headquartered startup also announced that it has entered into a “long-term strategic partnership” with Microsoft that will see Observe.ai’s platform promoted through Microsoft’s Azure marketplace. This is in addition to existing tech partnerships and integrations, such as one with cloud-based contact center software provider Talkdesk, which Observe.ai teamed up with last year.

Since then, Observe.ai has grown its headcount from five to 45 across its U.S. and Indian hubs and is on track to double that figure in 2020. And although it hasn’t revealed its current income or profit figures, the company is projecting a four-fold increase in its annual recurring revenue (ARR) next year.

Lay of the land

A number of other players are operating in this sphere, including the likes of Verint and Nice Technologies, which have legacy systems in place. And various companies offer elements of Observe.ai’s platform, such as speech and sentiment analytics. Cogito, which recently raised $20 million from big-name backers such as Salesforce and Goldman Sachs, is perhaps a good example of how AI is being used to help customer service agents. Cogito, however, focuses more on detecting emotion in phone calls to help agents develop empathy and improve their rapport with customers.

Observe.ai pitches itself as an extensive platform that focuses on improving every facet of the phone call by digging down into specific customer problems and the efficacy of the agent dealing with those issues.

“Legacy speech analytics and talent management systems are simply not meeting the needs of the world’s top brands,” Jain said. “Today’s customer service agents have a unique ability to emotionally connect with customers and are often a brand’s only frontline representatives.”

Other companies worth noting include Gong, which offers something similar to Observe.ai but with a focus on sales calls and which announced a $65 million round of funding led by Sequoia just last week. Chorus.ai is working along similar lines and raised $33 million last year.

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