Want to Reduce Customer Service Costs? Do these 5 things.

Written by Emily Cummins  on   Jan 27, 2020

Customer service is a $350 billion dollar industry1. But even though companies are funneling all of this money into customer care, it still represents a substantial business risk: poor customer service is losing businesses $62 billion per year2.

Why is this? Companies are struggling to manage the increasing number of tickets on an increasing number of channels. As a result, customers’ expectations for convenient, effortless support are not being met. This leaves customers frustrated enough to stop doing business with a company – which 82% of people report having done in the last 12 months. When you consider, it costs companies 5X more to attract a new customer than to retain customers, the economic impact of underperforming customer service departments is even more significant.

Because customer service now represents a real business risk, companies have to address the shortcomings with urgency. They have two choices: hire many more agents or find a more creative solution.

The opportunity is now for AI to help reduce customer service costs across the landscape 

Increasingly, the creative solution that companies of all sizes are adopting is artificial intelligence (AI). AI is the most cost-effective way to scale high-quality customer service as it allows companies to automate resolutions to repeatable tickets, while simultaneously boosting agent productivity. McKinsey has reported that 29% of customer service agent duties now have the potential to have automated customer service with technology.

Leveraging human and AI agents is the best way to improve customer service operations while not growing the resources devoted to customer service.

Help agents work faster and smarter with a Zoho chatbot.

Five Ways AI Can Reduce Customer Service Costs

1. Reduce Agent Attrition:

Customer service has one of the highest attrition rates of any industry, with turnover rates between 30-40%3. This is because human agents: 

  • Report feeling stressed, and are on the lower end of the compensation spectrum  
  • Are dealing with increasingly frustrated customers who are harder to please 
  • Have to access many complex systems concurrently to resolve tickets
  • Are under increasing pressure to resolve more tickets faster

With agent turnover rates high, companies are drowning in resources related to hiring and training replacement workers. According to the Society for Human Resource Management, “the organizational costs of employee turnover are estimated to range between 100% and 300% of the replaced employee’s salary4.” The cost, though, goes beyond dollars spent towards interviewing, hiring and training. Companies also see customer satisfaction (CSAT) fall when the agents are new, bringing less consistency and increasing resolution times. With reports that it takes up to eight months to get a new hire working at full productivity, the impact on CSAT is measurable4.

Agents and managers alike report seeing employees more fulfilled with AI in the workforce. AI can manage the mundane, repetitive tasks, enabling the agents to focus on high-touch activities that require high-level thinking. As a result of leveraging AI, it’s anticipated that there will be a decrease in agent attrition.

“AI takes tasks away from agents, not jobs” – Gartner

2. No Costs associated with new hires.

Companies that leverage AI and customer service to scale efforts will save on hiring new agents to manage the increased volume and 24/7, omnichannel demands of the modern customer. The average salary for customer service agents is $35,437 in the U.S. (5) The cost of an employee, though, is not solely a salary. You also have to consider: 

  • Employment taxes: Employer-paid Social Security and Medicare taxes for a $35K salary are $2,677 annually, and this doesn’t include State, Federal or Local taxes. If a company hires 1,000 additional agents to manage increased demand, the tax bill could easily exceed $2,677,5006
  • Benefits: Health and other benefits average $2,000 for an individual, and $6,000-7,000 for a family7
  • Office space: Furnishing an 8′ x 8′ cubs runs $2,000 at a minimum7.
  • Equipment: Computers, software seats, phones over $2,0007.

For new hires, there are also costs associated with paid time off, sick days and shrinkage, which quickly increases costs associated with new hires.

3. Proactive customer service gets out in front of issues:

Leveraging predictive analytics, AI can help companies anticipate issues before they happen. By acting on signals from back-end systems like logistics, CRM and order management systems, an AI Agent can preemptively reach out to intervene before a customer opens a ticket, which has an associated cost. Examples of issues which AI can anticipate include issues with a delivery, i.e. it is delayed due to a weather event, rebooking a person on a flight who is stuck in traffic (this requires access to individual contextual signals), or letting a person knows than an item in their order is now out of stock.

Over a 12 month period, proactive customer service can lead to a 20-30% reduction in call center calls — lowering call center operating costs by as much as 25%8.

Offering proactive service also helps keep CSAT high. Customers will think that companies are looking out for them, even if delivering undesirable news like a delayed delivery. Based on the specific circumstance and profile of the customer, companies may also want to offer an incentive or reward in-the-moment to keep the customer happy.

4. Decrease First Reply and Resolution Time:

AI Agents can resolve over 50% of tickets within seconds, without any human intervention. For other issues, AI can recommend responses to human agents or pull data from various systems to help agents make a decision faster. This decreases resolution time significantly, which equals cost savings. McKinsey reports that if companies reduce average handle time by up to 40%, employee costs can be cut by up to $5 million9.

5. Offer Competitive-Edge Service:  

After a bad customer experience, 39% of customers will avoid a company for two years. On the other hand, customers are willing to pay up to a 16% price premium on products and services for good customer service (10). This also leads to increased loyalty and future spending. By simply providing convenient, effortless support on a person’s channel of choice, companies can directly impact bottom-line revenue. When thinking about superior service, companies need to think omnichannel. Leverage a single AI brain across customer support email, chat, messaging and voice (an emerging support channel) to offer anytime, anywhere support.

AI can now successfully perform knowledge-based work. It can help companies reign in excessive customer service costs, while also scaling higher-quality support that incentivizes long-term loyalty and repeat purchasing.

Companies that weren’t born digital are going to take twice as long to implement digital innovation (i.e. AI) into their organization. Whether you’re first looking to implement AI or are further along, Netomi’s AI is easy to implement with very no risk and no retraining.

Special Offer: Can we run a free analysis of your data to see what percentage of customer service tickets we could automate with AI? Get in touch.

For more information on chatbot tools or AI customer service, visit:


Customer Service in America: Where in the U.S. Does Good (and Bad) Customer Care Matter Most?

Written by Dylan Max  on   Jan 21, 2020

An analysis of 2497 consumer reviews. How good and bad customer experiences impact business ratings in seven major cities across the USA.

Customers care more about customer service today than ever before; it’s now a huge driver in determining where people spend their money. In a recent survey, we found that 82% of people have stopped doing business with at least one company based on a single instance of poor customer service.

When it’s easier than ever for consumers to switch to a competitor, it’s never been more important for companies to prioritize support.

While we know customer service is important to every customer, everywhere, we were curious if there is any variation of just how important it is based on where you live. Despite the abundance of research touching on people’s behavioral differences in different regions of the United States, we could not find any original studies that answered the question: How do Americans in different regions feel about customer service?

So we decided to run an experiment ourselves, specifically focusing on the impact of customer service in retail.

Why is customer service important in the retail industry?

Retail businesses have been a cornerstone of American culture. The U.S. was home to the first-ever outdoor mall and, up until the last decade, 30% of the almighty US dollar was made from scraps of Levi’s denim jeans. While a lot has changed in retail, (think chatbots in retail, ecommerce chatbots, or even just the internet itself) the core tenant to provide excellent customer service remains paramount. In fact, studies have shown U.S. consumers tell almost twice as many people about bad service compared to good service.

It’s no secret, the onset of internet adoption has sparked massive transformation. Competition is more intense and customers’ voices are more amplified than ever before. Now retailers have to pivot the way they run business operations – those that cannot are finding it difficult to survive. In fact, if you search “Retail in America” you’ll find Wikipedia’s Retail Apocalypse page as one of the top results.

Now, more than ever, retailers must rely on every advantage they can to stay in business and out of bankruptcy. Increasingly, the most important advantage comes from providing superior customer service. 

Our research yielded three intriguing and statistically significant results. But before we dive into our findings, it’s helpful to understand the research and data collection methodology.

Research and Data Collection Methodology

There were a few predictions thrown around speaking to the stereotypes of “Southern Hospitality” and the emotional coldness of New York. Ultimately, we decided to make our hypothesis as simple as possible, that there would be a measurable difference amongst the regions of the United States.

The first order of business was to figure out how we would divide the country. We found a consensus online that broke the continental United States into seven major regions: West, Northwest, Southwest, Midwest, Southeast, Mid-Atlantic, and Northeast. 

Next, we analyzed ratings of a major clothing retailer in the largest city for each region in the continental U.S.). We looked at five-star and one-star reviews to see how people in different cities were rating the retailer.

Customer Service in the United States of America – Results

We analyzed 2497 reviews from 7 of the largest cities in the United States. Here’s what the data shows:

Customer service was a major factor in more than one third of all “most relevant” and 5-star ratings across the country (39% and 35.2%, respectively). While customer service was mentioned in over 50% of all 1-star reviews (52.8%).

Customer Service Opinions By City


Customer service is most important to consumers in Los Angeles

Customer service experiences carry a lot of weight in Los Angeles. Google’s default ranking algorithm sorts reviews based on how helpful they might be to prospective shoppers. Sorting by relevance, 80% of Los Angeles’ top 10 reviews cite quality of customer service – 54.8% higher compared to other cities.

Bad customer service matters most to consumers in Seattle

Bad customer service experiences had the most influence on 1-star reviews in Seattle. In fact, customer support issues are over twice as prevalent in 1-star ratings compared to other cities. 90% of Seattle consumers’ 1-star reviews cite quality of customer service – 104.5% higher compared to other cities.

Good customer service matters least to consumers in Boston

In Boston, good customer service experiences have the least impact on 5-star ratings. Only 20.8% of 5-star ratings mentioned customer service – 48.9% less prevalent in 5-star ratings compared to other cities.

Click here for the 15 best customer experience tools to elevate CX.

What matters most with customer service?

According to John Formica, The “Ex-Disney Guy” and a customer experience expert, “There is no doubt that customer experience is the next competitive battleground. It is where some businesses will be won or lost. In 2020, the customer experience and the emotional connections it brings will be a strong competitor over price and product. Those businesses that are in a position to demonstrate a positive customer experience to their customers will have the advantage over those who just provide what is now expected customer service.”

In today’s world – friendliness, pleasant and effortless experiences are what people expect. They make buying decisions based on the interactions they have with a company. Consumers are loyal to companies that provide good experiences – and abandon companies based on one single instance of bad customer service.

We found that despite positive comments, a negative customer service experience often drives a person’s rating to the lowest possible number of stars. It’s clear that one instance of a poor experience can completely ruin how a person rates a company. This is so critical for companies to understand.

John Formica continues to say, “ Customers expect a good experience. If not they will go elsewhere and they usually do. Businesses need to put themselves in the shoes of the customer. It makes me cringe when companies don’t look at what their customers see every day in regards to being reliable and responsive. Common sense is not always common practice.” 

In 2020, customer service in- and out-of-store will be the key to growth and customer loyalty. As we see in our analysis of reviews, instances of customer service directly correlate to how a person views a business and indicates future spend.

For more information on chatbot tools or AI customer service, check out:

Why customers prefer email to all other digital channels for customer service [Infographic]

Written by Can Ozdoruk  on   Jan 7, 2020

When an issue or question arises, 47% of people prefer to contact a company for customer service over email than any other channel, according to our new survey. That’s right. Email beat phone (23%), Web chat (23%) and social messaging sites (2%). 

Over the last few years, we’ve seen companies de-priotritize email as channels like Facebook Messenger and WeChat emerged as ways to engage in 1:1 conversations. But while companies funneled more and more resources into these other channels, the change in consumer behavior has not been as swift.  

Today, people expect to be able to get support on their channel of choice and demand convenience. As our study revealed, in order to provide the support that customers expect and can make a positive impact on your business, companies need to reprioritize email. Companies should focus on modernizing the support that they provide customers in their inbox, before looking at other channels. 

Customer support email offers unique benefits that other channels lack: 

  • It’s inherently convenient because the entire interaction is on the customer’s terms; it’s not necessary for a customer to wait on hold or interact with a live agent in real-time (40% of people say this is why they choose email)
  • Email is used in our daily personal and professional lives and is readily available across all of our devices (43% of people say this is why they choose email)
  • There is a record of the conversation that can be referenced at any time (43% of people say this is why they choose email)

How is email customer support performing

As you can see, email needs to be the top priority in 2020, not only because it’s what customers expect but also because it is falling so short today. 

While companies have been focused on other channels, the support they provide on email support has suffered. Surprisingly, 62% of companies do not respond to customer service emails1. Customers expect businesses to respond to their emails within an hour2. The average response time to customer service request is 12 hours and 10 minutes. 

Bringing AI into your workforce can help companies dramatically reduce response time. A virtual agent can recommend responses to human agents to respond quicker or even respond immediately without human intervention. 

Interested in learning how AI for email customer service can scale customer happiness with convenient, effortless support? Get in touch today


  1. Super Office: Customer Service Benchmark Report https://www.superoffice.com/resources/guides/customer-service-benchmark-report/
  2. Toister: Get Ready to Respond to Customer Email Within One Hour https://www.toistersolutions.com/blog/2015/4/13/get-ready-to-respond-to-customer-email-within-one-hour

Freshworks customers now have access to Netomi’s powerful AI platform

Written by Shail Gupta  on   Jan 6, 2020

With the new Netomi Virtual Agent app for Freshdesk, companies can quickly bring AI into their customer experience workforce and provide brilliant customer support 

We’ve launched the Netomi Virtual Agent app for Freshdesk

Our new app integrates seamlessly into Freshdesk enabling Freshworks customers to boost agent productivity and delight customers with immediate resolutions to their issues. When companies use the Netomi Virtual Agent app, human agents work alongside a powerful AI within their existing customer service platform and transform customer support into a business driver. 

The Netomi Virtual Agent can resolve over 50% of a company’s customer service tickets automatically, within seconds, meeting customers’ quick-rising demands for immediate, convenient support. Human agents are freed up to focus exclusively on more complex customer issues. The Netomi Virtual Agent can also be used in “Review Mode,” enabling human agents to review, edit or approve AI-recommended responses, supercharging agent efficiency. 

“Customer service is more important today than it has ever been as it now dictates where people spend their money and assign their loyalty. Customer service is no longer simply a resolution center, but a competitive differentiator. In today’s on-demand society, the expectation is that everything is effortless, convenient and quick, and this is very true with customer support. People demand help on their terms, 24/7, anytime and anywhere,” according to Netomi’s fearless leader Puneet Mehta. “Higher customer expectations combined with an increase in the volume of tickets has left many companies struggling to deliver the customer service that people expect. With our Netomi Virtual Agent app, Freshworks customers will see customer happiness soar with faster resolutions, as well as happier and more fulfilled agents.”  

With the Netomi Virtual Agent for Freshdesk, companies can: 

  • Delegate specific use cases to the Virtual Agent to resolve tickets immediately without any human intervention 
  • Leverage AI-powered recommended replies to help agents work faster  
  • Train from historic email, chat and messaging data or select from our pre-trained AI conversational and industry-specific skills
  • Integrate with core business systems including Order Management Systems, CRM platforms and inventory management systems for meaningful, personalized resolutions 
  • Access real-time analytics and reporting within the Netomi AI Studio dashboard 

The Netomi Virtual Agent dramatically reduces response times on email and chat, boosts agent productivity and provides a brilliant customer experience.  To get started, visit the Netomi app page in the Freshworks App Marketplace here.

For more information on customer service, visit: