Zendesk’s AI customer service evolution and future trends with Zendesk CEO Tom Eggemeier

I think every customer that I talk to is saying, "What should I be doing with AI?" They're getting a lot of pressure from their board, a lot of pressure for senior management, and a lot of times they don't know what to do and they don't know what the impact is going to be. I am telling customers, I am confident that we don't like the word bots, we like digital agents. I am confident that digital agents can solve a lot of customer opportunities and issues, again in a seamless, personalized, quick way. Welcome to Conversations with Hendesk, where we explore new technology and trends in customer experience. Each episode we speak with industry innovators and experts to hear their thoughts, unpack industry trends, and discuss the most important ideas around CX. I'm your host, Nicole Saunders. Today we have a very special episode as I'm speaking with Zendesk's own CEO and board member, Tom Agamire. Tom has been leading Zendesk for a little over a year and we're excited to share with you his perspective on why it's so important to invest in your customer experience, what's ahead present us in 2024 and to get his take on the future of AI. Before taking the helmet Zendesk, Tom was a partner at the Private Equity firm Primera, where he was the head of the Menlo Park office and focused on investing and value creation in the technology sector. Prior to joining Primera, Tom was the president of Genesis, a Primera Fund portfolio company, and Global Leader in OmniChannel Customer Experience and Contact Center software. He has served on the boards at TKWW, Curriculum Associates, Axiom, G2, seismic, and MIME Cast. His previous Global Experience includes working in Paris, France for almost five years, along with over 20 years of operational experience in the technology sector, leading teams from sales to research and development. Tom holds a BA from the University of Dayton and a JD from the University of Chicago Law School. Stay tuned for this conversation, but first, don't forget that Relate 2024 is returning with a three-day in-person event taking place at Virgin Hotels in Las Vegas on April 16 through 18. We're inviting the best brains and customer experience. That's you to grow your skill set, network, and influence at our in-person flagship conference. Secure your spot at Early Bird Pricing through December 22. Register now at ZendaskRelate.com. All right, onto my conversation with Tom Egamyre. Tom Egamyre, welcome to Conversations with Zendask. How are you doing today? Good, how are you, Nicole? I'm doing quite well. I'm really excited to have this conversation. We've got a lot to cover, so I think we'll dive right on in. Excellent. So, one of the first questions that I want to talk to you about, we talk a lot about the customer experience space. Now, we know that for many small businesses, that their CX is a big differentiator. They really invest in it heavily. That's how they build up their fan bases and keep their customers loyal. But I think something that we have seen somewhat frequently is that as businesses grow, they don't invest in CX as much. Yet, we know that this is a critical thing for businesses. Why do you think some businesses make that mistake? And what are some of the repercussions of not investing in CX? I think some businesses make that mistake because sometimes it's hard to correlate what you're doing in customer experience, investment, and retaining and growing customers. It's hard to show that causation, even though we all know it intuitively. Customer experience matters because every one of us, though, has to deal with it every day. All day long, I'm sure you Nicole I interact with businesses, products, and services. And if those experiences don't go well, it can ruin your day. On the other hand, if they go great, it's kind of the expectation at this point. Interestingly enough, customers are hesitant to walk away from a brand, but they will. 61% of consumers will switch to competitor after a single bad experience. And that jumps. If they give you a second chance, that jumps to 73% are willing to walk away if they feel like they're not getting satisfaction from a customer service interaction. Now, of course, that depends on the stickiness that are product or service that you're delivering. So I know we all know this, but the fact is it's much less expensive to keep an existing customer than acquire a new one. In fact, it costs about five times more to attract a new customer than retain an existing one. And as businesses develop better relationships with their customers and increase loyalty and retention, there's a really big stat that I think is really important. This is according to the Zendesk 2023 CX trends report. 70% of consumers spend more with companies that offer fluid, personalized, and seamless customer experiences. And it kind of harkens me back to a personal anecdote. My grandparents on my mother's side, they ran a cornered grocery store in Covington, Kentucky. And they gave just amazing proactive, personalized customer service to the people that shopped at their store. And I remember being in there, they knew everyone's name, they anticipated what they need. We went through this Brits and Mortars who move an online e-commerce experience over the last 20, 30 years where it became impersonalized, it became not proactive, it became reactive. And it just kind of treats you as anyone else with your customer experience. What's great about technology now is we can get back to that consumer experience that I saw at the Canaisal Food Mark in Covington, Kentucky, where you could with data and technology now, you can give that personalized, fluid, and seamless customer services that you did 50 years ago to a cornered grocery store. And I think that's what's really exciting about customer experience right now. Those are some really amazing statistics that you shared. So is the family grocery store adopted AI yet? The next generation of my mom's family did not want to continue the corner grocery store. We had one of my aunts did, but it's a hard business in a small corner grocery store, Brits and Mortar now with everything going to online. So unfortunately, it no longer exists. That's too bad. Speaking of AI, we know that it is the hot topic right now. And it is really taking over a lot of things in a lot of industries, but that customer experience is really the cutting edge for AI. It's really seeing the most innovation. What are you hearing from Zendesk customers or others across the market about how they're thinking about AI and what they want to be able to do with it? I think every customer that I talk to is saying, what should I be doing with AI? They're getting a lot of pressure from their board, a lot of pressure for senior management. And a lot of times they don't know what to do and they don't know what the impact is going to be. I am telling customers, I am confident that we don't like the word bots. We like digital agents. I am confident that digital agents can solve a lot of customer opportunities and issues again in a seamless, personalized, quick way. I know when I'm a consumer, I actually love to be delighted, but first is just like getting what I want to do with a low effort quickly on time and just without a lot of bureaucracy. So low customer effort. We tell our customers, AI is a marathon. It's not a sprint. You have to be mindful how you're implementing it because if you do it poorly and customers have a bad experience, they're going to think, hey, AI doesn't work with my company. So companies need to strike the right balance between automation or digital agents and human agents because doing so is going to lead to better customer experiences. And again, like we talked about, it's all about being customer centric. So I want to emphasize that I really believe human agents are going to play a critical role in the implementation and the training of AI. We're going to see in the future, maybe it's 80% of interactions you have with a company, maybe it's 90% of interactions are going to be involved with that digital agent or with some other automation or some other rules or machine learning technology. So you're not going to have an human involved, but there's going to be those 10, 20, maybe even 30% where humans are going to be involved. And that's what you need to really concentrate on is that that balance between AI and humans get it right the first time. And if you do that, we're really confident you're going to see massive increase in NPS or customer sat and massive increase in top line revenue. And you're going to have your cost structure decreased. I think you make a really great point about how important it is to get it right the first time. We've talked a lot this past year about trust and safety. And it is a little bit of a leap for a lot of people to use this technology and trust it. And so you want to make sure that you're being really thoughtful about it and that you're engaging with partners that are going to give you good guidance on it. So what are some of the real world CDX challenges where AI can deliver some immediate business impact for folks? So we are seeing a couple places, maybe a couple examples because I like stories, Liberty London. It's a boutique in, of course, London, England. It has embrace and desk. They are using AI to deliver highly personalized services to its luxury buyers at scale. Real quick, they turn it on and they got some great results. 9% increase in customer satisfaction and 11% reduction in average ticket resolution time. Again, real quick, my daughter who's at university is doing a year abroad in Paris and she took the Eurostar of London and she was at Liberty London and she bought some earrings and she had an issue with the earrings. She's Liberty London online had a phenomenal experience. I had to tell her after the fact that that was powered by Zendesk. I even personally, I'm seeing how some of the Zendesk Plus Liberty London use cases are impacting my family's life on a day-to-day basis. Another example of this is Motel Rocks, a vintage clothing brand. They turned on Zendesk AI bots to help customer self-service and they saw a 43% increase in resolution rates using automation and a 50% reduction in volume. Now they can really gauge customer sentiment which has totally changed how the response to inquiries. For example, if they run a report on recent negative tickets and identify a hundred of them are about a late next day delivery order, they know it's now actually a problem with their shipping carrier and they have a much better idea of how to resolve that problem. So it's not just about the human interaction, it's also about loop cause analysis through AI and through insights. You can really have a lot more game changing ideas of what's going on. Looking ahead, we see the emergence of live experiences heavily influenced in the future of online shopping. It's really important to note that 70% of consumers purchase more from companies that offer seamless conversational experiences. That means greater engagement and better customer attention. So I really urge businesses and companies to update data privacy policies, train teams, invest in AI for these engaging online shopping experiences. That's fantastic. I always love that. I know my dad reached out one time he was trying to return a Weber grill cover and they used a Zendesk and he was asking for guidance on how to interact with the ticket so that he could exploit his support experience. So it is always so satisfying to see those. And I just love that story about your daughter and live really London. And I hope she got the earrings that she wanted. You did. You mentioned that you see something to the effective 80% of support interactions just going to AI. Now I know that we are doing a lot in the AI space and powering that. Can you speak a little bit more to Zendesk's role in that? And also what's happening with those other 20% and how does Zendesk play in that space? Great follow up question to call. So first, I think the audience should know that we forecast an absolute explosion in the number of interactions. And a lot of the reason is that as more transactions go online, it spurs more interactions. And so right now, only 15% of the world's commerce is e-commerce approximately. That's going to go up every year, causing more interactions. And so it's funny. One of those things where there's a lot of scenarios where interactions are going to be up 10, 20, 30, 40% a year. And so even though AI is taking more of those interactions, humans, we're going to still need the same number of human agents, potentially even more. It'll be an interesting trend over the next five or 10 years. I think what the great thing about Zendesk is we play on both sides. We play on human agents and digital agents. We play AI and traditional customer service. We can blend that for customers and their customers one way on the digital agent experience. And then another way on the human agent experience, customers demand a seamless experience. Like if I'm talking to a digital agent, a bot, and then all of a sudden, they're not able to answer my question or my query. I want to have all that information transferred over to a human agent, so I'm not starting my conversation from scratch. And I think that is one of the values of Zendesk is that we're able to put all this together between digital agents and human agents. It sounds so exciting and so interesting. One of the things that we've talked about on several episodes of the podcast this year is the impact that AI is going to have on jobs in customer service. And that it's not necessarily the AI is going to replace people so much as that people who know how to use AI are going to replace people. And it sounds like really exciting evolution in a lot of those roles and opportunities for people to expand what they're doing, enrich their work, find ways to be more efficient to your point. It might be my bot interacting with customers, but I'm still back there powering it or working with it. Yeah, I think it's going to be interesting. Maybe I'm always an optimist. I know when I lived in parish France for four years, I was maybe derisively said I'm still very American in that I'm always half-classful and always optimistic. I really do think the nature of work is going to change for people, but I think it's going to be in a good way. There's going to be less wrote experiences, less mundane tasks, for instance, for customer service agents, and they're going to deal with complex, more difficult, more creative tasks, and less mundane and repetitive ones. And so the nature of work is going to change due to AI, the amount of people we have and things like customer service could change, but I think it's going to be more exciting, more satisfying work for those individuals. I agree. I think it's just going to make the human interactions that you do end up having that much more meaningful, because it won't just be the road every day saying when you do get to connect with other people, it will be really purpose-driven. Of course, I'm always thinking about that from the community side of things and what role connecting with other humans will play in a largely AI-driven world. So let's turn our attention now a little bit to Zendesk itself. So you have been with Zendesk just over a year and now, and I know it's been an exciting year. We hope it's been an exciting and fun one for you. One of the things that happened over the course that years we introduced a new tagline for Zendesk, which is that Zendesk is the intelligent heart of customer experience. I'd love if you could tell us a bit about what that means to you. It's really reflective. Our tagline is really reflective of what Zendesk values. It's a combination of IQ and EQ. It's a combination of intelligence and empathy when we enable our customers to deal with their customers. So intelligence is how we resolve issues in an intelligent, quick, personalized way. And the heart of that is doing with the right sentiment, the right empathy, the right personalization for our customers. And Zendesk is uniquely positioned to give that empathetic, data-driven, factual, quick resolution for our customers. And that's why we really love our tagline of the intelligent heart of customer experience. Great. Thank you so much for unpacking that for us. I know we've talked about that a ton in terms of things like personalization and how to make them feel that you really know them and you're connecting with exactly what they need. So what insights can you share about where Zendesk is headed in the next year, inquiring minds want to know? So I think you've heard Latin clear for me that we are going to be driving into customer experience and employee experience in a big way. You're going to see some really exciting things from our employee experience products that's HR and IT use cases. For example, HR onboarding IT help desk in many more. You're also on CX going to see some really interesting advancements on our roadmap and things that we're going to announce, including what we're doing with workforce management and quality assurance of whole workforce optimization, whether that's digital agents or human agents. We're going to be doing a lot with scheduling, quality, making sure that our companies have the right resources on task to meet their customers where they are and really give a lot of training and quality assurance to making sure those digital agents and customer service agents are successful in an interact with their customers. You're going to see us drive way more into our talk, our voice product. We think it's part of that end-to-end customer experience. We're going to continue to be the leader in messaging. We're going to continue to be the leader in analytics and reporting. We're going to continue to be the leader in core ticketing. And you're also going to see us continue to be the trusted provider. We believe in data security and privacy in a big way. And you're going to continue to see us launch a lot. We have two great announcements in 2023 about AI products that we're launching. You're going to see more in 2024. Now, you can see all of this at relate 2024. That's our big customer event in April. And that's what attendees can expect to hear. All these great announcements on how we're helping you, our customers, help you with your customers. And we're really excited about that. I know I am so energized by all of these innovations. And I can't wait for relate listeners. We do have a link in the show notes if you want to get your early bird tickets for that. So if you're free to check that out. All right, Tom. Gosh, this is gone by so fast. It's a great conversation. But I have one more question for you. And this is my favorite question to ask every one of our guests, which is I would love to hear if you've got a good example. Tell me about a time that you had an exceptional customer experience. So I actually wrote a blog about this like probably 10 years ago. When I was living in Paris, France, I had some of the best customer experiences. Honestly, some of the worst, but I like to dwell on the best ones I had. It's about having a relationship with the people that you're interacting with, the companies, the vendors, the professionals. And we got to know my family and I, my wife and two kids. We were in Paris for about four years. And we got to know our local butcher pretty well. And our second Thanksgiving there, of course, they don't celebrate US Thanksgiving in France. Our butcher unsolicited to us. Someway got a hold of a turkey. And about three or four days we were in because you go to the butcher a couple of times a week in Paris. We were in buying some things and he pulled out from the back that he had figured out how to get us a turkey, which was not the norm in France. And I just always remember that it was like it was surprising. It was personalized. It had that intelligent heart that we talk about at Zendesk. And my kids still talk about it. They were young at the time. But it was one of their first memories of having a Thanksgiving US turkey in Paris, France unsolicited that we had established a relationship with our butcher. He was a professional. And because of that relationship, he surprised us in a great way. What a wonderful story. He really got to know you and he found that moment of delight for you. And you still talk about it so many years later. So that's amazing. Well, Tom, thank you so much for this conversation today. I really enjoyed it. And it sounds like we've got a really exciting year ahead of us. Yeah, I really excited. I just want to thank all the Zendesk current customers and potential customers out there. Our customers are our lifeblood. We need to continue to help you deliver exceptional customer service to your customers. And that's my commitment to all of you. I think it is really going to be interesting to see where AI takes us in the coming year. I do hope that you'll join us for Relate in Las Vegas in April. It's always a great time to connect with the broader community of Zendesk users and perhaps some really exciting product announcements and speakers about events. We're going to take a couple weeks off for the holidays, but we will be back in your feed in January with two episodes covering up. our latest research into trends in customer experience. Join us to hear all about those insights with Zendesk's own senior manager of customer insights Joey Edwards LeBair. If you enjoyed today's episode, please share it with a friend or colleague or you could write us a review on Apple podcasts. Thanks so much for listening and for being a part of our community. You can always join the conversation at Zendesk.com/community or connect with other Zendesk users through our user group meetups. Find one for you at usergroups.zendesk.com. Until next time, I'm Nicole Saunders-Presendesque, the Intelligent Heart of customer experience.