Zendesk is one of the world’s leading customer service platforms, currently wielded by major UK retailers including Tesco, Next and Lush.
With labour costs increasing and generative AI features improving, much has been made of the potential for AI to help retailers increase automation, improve customer experiences and ultimately bolster their margins.
At its London showcase last week, Zendesk looked at what the future of customer service could entail, including generative AI-powered chatbots for customers and digital assistants helping reps easily navigate customer service guides.
There are promises of “agentic AI” capabilities, with increasingly flexible chatbots lowering the number of customer queries where a human needs to be involved.
Chief executive Tom Eggemeier and chief technology officer Adrian McDermott sat down with Retail Week to talk about innovation in UK retail, cyber-attacks, and why automation does not necessarily lead to cutting staff.
Responses have been edited for brevity
RW: How do you view the UK retail sector?
Eggemeier: “As someone who travels a lot globally, I think the UK retail sector may be a lot more dynamic and competitive than people perceive that are living in the UK.”
McDermott: “Many of our best public customer references in ecommerce and retail are in the UK.
“This is in some ways a hotbed of extraordinary innovation and ecommerce.”
RW: Does that bring any challenges with it? Having a more mature digital consumer here than other markets in Europe?
McDermott: “What I like here is that we find, you know, people like Raz (Razaq, head of customer contact experience technology at Next) who are bold.
“They’re in a competitive market so they need to differentiate and innovate and that’s where the magic happens.”
Eggemeier: “They challenge us and think of innovative use cases and, quite frankly, gaps in our technology. Sometimes it is great to be challenged like that.”
“The internet is a tough and hostile place, and I really feel for those people”
Adrian McDermott, chief technology officer, Zendesk
RW: Three major UK retailers have recently been hit by cyber-attacks, with suppliers now reporting problems too. Speaking as a service provider to retailers, how do you navigate that?
McDermott: “There are pockets or outbreaks of issues globally all the time.
“I spend a lot of time with our chief information security and privacy officer, because it’s just so core to what we do.”
“We help people speak to their customers, capture a lot of personally identifiable information and bridge the bond of trust. Nothing is more important to us in some ways—it’s feature zero on the list.
“The internet is a tough and hostile place, and I really feel for those people.
Eggemeier: “Even if companies are doing everything possible that they can, there’s no guarantees of security.
“I really do have empathy for the companies, their customers, because they’re pouring resources into security, and they have been for years.”
RW: I’ve been watching the presentations today. It seems like the priority for you is using AI to move towards more flexible responses to customer queries. What are the challenges in making that happen for retail? And are there any sectors where it is particularly tough?
McDermott: “The time to the first response for an AI agent is effectively zero, if you remove that (human effort) component, you then have to have a debate with yourself about what kind of service retailer am I?
“Am I the Japanese capsule hotel where someone walks up, scans their credit card and key pops out? Or am I the Aman Tokyo where you’re paying handsomely for a level of a superior service that is quite wonderful? In retail, you decide who you are and what you want to be.
“I think we’re giving our customers, in some ways, agency to do that by removing or changing the basis of the cost equation.
Eggemeier: “One of the retail customers I met with today was really big on wanting to reinvest all savings they’re getting from AI into customer service.
“Their vision is not just to be reactive, but to be proactive on service and really flip the paradigm.”
“They’re willing to fail, but they’re willing to fail fast and have the mentality that it’s okay to make some mistakes while you’re experimenting”
Tom Eggemeier, chief executive, Zendesk
RW: I’ve heard your prediction, Tom, about 80% of customer service interactions being automated within five years. What do retailers need to do to get to that point?
Eggemeier: “The best retailers, most advanced retailers, are close to that right now. We even have some companies that are doing 90%-plus automation of interactions with a very high customer satisfaction score.”
RW: Those 90% automation companies that you mentioned. Are there any commonalities to them?
Eggemeier: “They’re risk preferring. They’re willing to fail, but they’re willing to fail fast and have the mentality that it’s okay to make some mistakes while you’re experimenting.”
RW: The UK public can have quite mixed views on chatbots, as demonstrated on a recent You and Yours episode about a Retail Week feature. You have all this new tech and generative AI. How do you bridge that gap and get consumers engaging with the new solutions?
McDermott: As the things get better, from a utility point of view, and they work better, people trust them. Many of the experiences that I heard on that programme were bad service manifested through a good bot, and I think that is a real problem.
Eggemeier: “Being transparent is really important.
“The worst thing you can do is have someone think that’s a human on the other side.
“We’ve seen some customers do some interesting experimentation, such as one company that says “Do you want to talk to an AI agent right now? Or do you want to hold for five minutes for a human agent?
“The little nudges like that are going to continue to move acceptance up.”
RW: What role do you think that voice plays in the current CX landscape? And how do you see that evolving?
McDermott: “Myself, and all of us at Zendesk are very bullish on the potential for voice automation.
“We’re building voice and voice-to-voice implementations using very modern libraries from the frontier labs (leading AI researchers) and it’s extraordinarily good.
“What I have found in my personal life with my ChatGPT license is I use voice for that more and more. Why? Because it works. It’s just really convenient.”
RW: How should companies prioritise between technology investment and upskilling CX staff?
Eggemeier: “They’re hand in hand. The more that you’re investing in automation, it is going bend the cost curve a little bit on human beings.
“You’re still going to invest in human beings, and that frees you up some money to go invest in their skills and capabilities, because they’re going to be doing the more complex work.”
McDermott: “I have two college-age kids, and those kids are the last generation of children that will face the tyranny of the blank page to write a report.
“I think customer service agents are going through a similar transition. They’re not necessarily going to be primary researchers and responders.”
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