In 2024, Klarna took a big step forward in combatting the bad apple customer service industry. In the process, the company replaced 700 of its customer service agents with chatbots and artificial intelligence (AI) technologies. This decision is part of an accelerating wave of corporate cutbacks as companies look to AI to boost productivity and save on labor costs. We’ve already made a lot of things easier with AI baked in. Yet, it still depends on a thin layer of human agents to solve hard problems such as identity theft that AI cannot address.
Klarna’s decision is a sign of the times, and it points to a huge change in the customer service industry. Hundreds of thousands of solicitors worldwide answer billions of questions every year. While there are obvious efficiency gains that could be achieved by integrating AI into the development process, the importance of human oversight is essential. Klarna recently rehired hundreds of laid-off customer service employees. They’ve further hired on seven talented, creative internal freelancers who can, as they say, dive into a problem at the moment of truth with the customer.
Second, the call center industry employs about 3 million Americans, many of whom experience some of the highest turnover rates in the U.S. According to McKinsey, nearly half of all customer service agents leave their positions within a year, often due to stress and monotonous tasks. Human infrastructure talent Armen Kirakosian—not pictured—works for TTEC, a company that provides third party customer service in 22 countries. Almost nine years ago, he was put through the wringer himself in this domain.
“A.I. has taken (the) robot out of us,” – Armen Kirakosian
TTEC serves clients across various industries, including automotive and banking, and is at the forefront of developing innovative solutions for customer service interactions. James Bednar, vice president of product and innovation at TTEC, discussed AI’s transformative potential. He thinks it has the power to truly change the industry.
“We’re getting to the point where AI will get you to the right person for your problem without you having to route through those menus,” – James Bednar
Klarna’s chatbot—the appropriately named Erica—now functions in increasingly predictive and analytical ways. Today, though, it understands detailed user queries—no problem. Like, if you say, “I need to book a hotel for a wedding next year, give me options for fashions and presents,” it will understand precisely what you’re looking for. This degree of intelligence allows customers to bypass clunky, classic interactive voice response (IVR) systems. They don’t need to be subjected to vexatious choices such as “press one for sales, press two for support or press five for billing” anymore.
While we embrace the transformative promise AI has to offer, we acknowledge that these rapid advancements bring challenges. Though chatbots are able to efficiently address a majority of basic questions, human agents remain essential for complex, nuanced issues. Identity theft matters require compassion and care. AI is not yet able to deliver this critical assistance. Klarna pairs the conversational capabilities of AI with human expertise to increase customer service efficiency. This smart tactic makes sure that big, complicated problems receive the focus they really deserve.
As Gadi Shamia, head of the AI contact center pioneer, Avaya, recently commented, this hybrid human plus AI approach is the key to success.
“Our vision of an AI-first contact center, where AI agents handle the majority of conversations and fewer, better trained and better paid human agents support only the most complex tasks, is quickly becoming a reality,” – Gadi Shamia
Companies such as Klarna and TTEC are leading the way in customer service innovation. They’re finding great examples of how to best combine the power of technology with a personal approach. The effectiveness of this strategy will likely depend on getting a read on what customers value most, while still focusing on hiring happy employees.
For most agents, the move towards an AI focused world is intimidating. Stress and monotony result in 150% annual turnover at call centers. Now is the time for organizations to act and ensure all employees feel valued and supported, regardless of location. Providing better training and opportunities for advancement may help retain talent in an industry often marked by rapid employee turnover.
