Globally, the cost of living is skyrocketing – in the US, inflation hovers near a 40-year high, topping Americans’ concerns for the country, while Canada’s official inflation rate rose at a 6.8% annual pace this past April, a new 31-year high. Prices for everyday necessities – food, shelter and gas – are on the rise, as the COVID-19 pandemic is driving up the costs of raw materials and impacting global supply chains. Concerns about a recession are mounting, with economists warning that a recession in the US and Europe is ‘increasingly likely’, and Goldman Sachs forecasting a 30% chance of the U.S. economy tipping into recession over the next year, an increase from 15%.
Rising inflation rates place financial pressure on businesses, which need to find a way to bring in more revenue by either increasing their prices or, more optimally, by optimizing the revenue per head made by their employees. This pressure is propelling businesses to identify and act on new ways to drive efficiencies. While adjusting pricing or changing hiring practices may be the first to come to mind, the time to consider other strategies and processes to navigate this uncertain landscape is now, which is where the opportunity for AI and automation come into play.
Harnessing automation in a turbulent environment
For business leaders, leveraging an AI and automation-first strategy should be top of mind for reducing operating costs. For instance, Microsoft employs around 5,000 people on its finance team, a number that has largely remained steady over recent years, even though the company’s operations, profit and market capitalization have grown. Various technologies such as AI, bots, and machine learning have helped to keep a tight lid on the team’s headcount. This is a strategy that all companies, even those experiencing tremendous growth, need to do in this environment.
Turning customer service from a cost center to a profit center
While being conservative about headcount is important across all business areas, customer service is one area that can most benefit from automation. Customer service has long been a cost center for businesses – $400 billion is spent annually on customer experience, yet, this has been plagued by inefficient processes that actually damage customer relationships. In fact, 61% of people have switched brands due to poor customer service, costing businesses $1.6 trillion in lost business. With it costing 5X more to acquire a new customer than to retain an existing one, a time of economic uncertainty makes the need to improve customer service even more important than ever.
Herein lies the opportunity with AI. The amount of knowledge work done by customer service agents that can be easily automated with modern AI systems is significant. Today, it’s not uncommon for agents to have multiple systems open simultaneously, extracting information from various places in order to close one ticket. And in fact, they are usually handling multiple tickets simultaneously. This causes even more issues. For one, resolution time for single tickets surges, as does employee stress and burnout. Customer service has one of the highest attrition rates of any industry, at around 45%.
By bringing AI into the organization, business leaders can improve the efficiency and profitability of customer service teams, leading to:
- Increased loyalty and deepening relationships by meeting customer expectations (the expectation for 24/7 customer support on any channel has only accelerated post-pandemic. Many companies can’t meet these expectations without AI-powered virtual assistants acting as the first line of defense).
- Customer advocacy and proactive care, which reduces the cost per contact by anticipating tickets, and preemptively resolving issues before a customer even knows that one exists.
- Team efficiency by automating repetitive tickets (anywhere from 40-70% of support tasks are highly repeatable knowledge-work that can be effectively automated with AI).
- Savings with onboarding and hiring as agents are more fulfilled with mundane tasks reduced, resulting in lower attrition, at a time when there are fewer agents in the labor pool.
Using automation to shield against over-hiring
When AI is adopted, businesses can have more predictable hiring.
No need for major pricing adjustments to products or services, or the need to add expensive, short-term hires to deal with expected and unexpected spikes in tickets. Then, there is the possibility of having too many staff – this was the case with Walmart, which experienced “weeks of overstaffing” during the first few months of 2022, as extra associates were hired to cover for staff that were on COVID leave, yet when Omnicron case counts declined, employees returned to work sooner than expected. Amazon also faced a similar situation, resulting in lower productivity which added roughly $2 billion in costs for the company. On the other hand, many are hesitant to hire during these turbulent times, and companies including Salesforce and Uber have announced plans to slow or freeze hiring.
Removing some of the guesswork, leveraging AI-powered solutions allows for more elasticity, enabling businesses to strike a balance between too many and not enough staff.
Automation can also play a leading role in other areas of a business when it comes to process automation, including recruiting, sales, and administration activities. This helps businesses streamline various processes that are high volume and common, such as gathering data files, or processing and tracking employee vacation and leave requests.
In today’s often uncertain economy where global events such as inflation are taking their toll, emerging technologies such as AI enable businesses to stay efficient and maintain costs with limited disruption. Today, the trade for businesses may be increasing prices or increasing automation. We place our vote on the latter.