As the CEO of CommBox , Dvir has over two decades of experience in technology innovation and product strategy.
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2023 will be remembered for a lot of things, but for many, it will be the year when budget reductions, cost-cutting and layoffs were front of mind. In the tech sector alone, more than 240,000 jobs were cut, representing a 50% increase from the previous year.
This has been felt across different domains, but there have been notable cuts in service functions. Klarna, for example, outsourced its customer services team in Germany and Sweden. Meta has done something similar, reportedly cutting wide swathes of its customer service operation.
A Short History Of Cost-Cutting
If you know anything about the customer service industry, the news that a sizeable percentage of cuts can be found in service provisioning will come as no shock. The “customer service as a cost center” narrative has been in circulation for years, which stems from the mindset that servicing customers is a numbers game—customer handling and closing tickets should be a transaction completed as quickly, and therefore cost-effectively, as possible.
But what makes these cuts so surprising is that they arrive at a time when customer expectations of brands are higher than ever, and customer loyalty and receptiveness to good service are at their highest, but seemingly so are the frustrations with poor service.
Of course, customer service isn’t the only area where budgets are being reduced. Still, given the increasingly understood connection between service delivery, loyalty, retention and bottom-line impact, it prompts us to ask: What’s driving these cuts? Is it purely an effect of economic struggles, or are there other forces at play that we should be mindful of?
Many of the recent budget reductions are, of course, wrapped up in broader action surrounding the global economic downturn. But I believe another, more subtle but arguably more powerful driver is beginning to have a greater say in shaping budget considerations and allocations: technology, specifically artificial intelligence (AI).
The Impact Of Technology On CX
Technology has always been seen as a way to enable brands to cost-effectively scale engagement with customers while balancing the level of service customers are hoping for. Whether it’s IVRs, knowledge centers, chatbots or messaging, some of these technologies have been truly transformative in getting closer to the equilibrium between costs, scale and service delivery.
Chatbots, for example, have been transformative in enabling brands to handle high-volume, repetitive tasks, which in turn can reduce the number of required agents, with those remaining agents focusing efforts on high-value interactions.
But the development of these technologies and their shortcomings are some of the reasons why brands still struggle to strike that coveted balance between scaled customer engagement and costs while also delivering on consumer expectations. For example, while bots have enhanced automation, experiences vary and many consumers are often left frustrated as their queries remain unanswered.
Further, technology adoption is still varied, with many yet to undertake basic forms of digital transformation. This means, for example, when customer volumes surge, some brands still typically respond by increasing their human resources, which is a high-cost way of operating.
However, with the recent buzz around generative AI (GenAI), there is a growing sense of opportunity to finally strike a balance between keeping costs to a minimum and delivering the service that consumers expect at scale. In turn, GenAI is slowly becoming one of the largest contributors to how leaders view the service function, its composition and how it might help reduce costs while ensuring consumer expectations are met at scale.
How To Avoid Further Imbalance
But it’s important to recognize that generative AI is not the catch-all answer to the volume-cost equation and that everything becomes immediately balanced once implemented. In fact, it could have the opposite effect, as, in some circumstances, companies have laid off 90% of support staff due to implementing an AI-powered chatbot that can handle all customer interactions.
While undertaking such drastic action for one brand may work and reducing costs by around 85% is a huge gain, it is creating an incorrect perception that AI can replace all human agents and that every customer engagement can just be automated.
The injection of GenAI into our industry will mean more and better automation. With its ability to learn from historical data and understand the context, language and prompts, GenAI can enhance existing automation capabilities and offer new ways to personalize customer experiences. For example, there are already innovations that offer advanced sentiment analysis, enabling brands to reroute calls when necessary and identify intent to provide end users with a conversational-like experience.
But becoming more AI-driven does not mean automation only. Becoming AI-driven and establishing an AI-supported service means encompassing and reimagining all touchpoints, including the digital self-service channels that we’ve become so accustomed to and the agent-supported channels where AI can assist employees in delivering high-quality outcomes on some of the more complex, non-repetitive issues they are faced with.
GenAI can help cut costs, and some brands will inevitably use it to reduce the number of agents that are required. But brands mustn’t overstep as they begin to adopt the technology. Striking a balance in cost-volume means doing exactly that—finding the equilibrium.
Not every customer engagement can (or should) be driven through an AI-powered service channel now that some more intelligent models sit behind it. It’s about building a service model that encompasses multiple AI-powered touchpoints, where repetitive queries can be dealt with swiftly where consumers need them to be, while agent-supported channels are empowered with the technology to deal with complex, high-value interactions.
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