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Dan Loney: Well, has has been mentioned in
the past, almost every aspect of business is being examined to
see what impact artificial
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intelligence can have to improve
operations. Today, we take a look at it from the customer service
perspective. Pleasure to be
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joined by Christian Terwiesch,
who's a Professor of Operations, Information, and Decisions here
at the Wharton School. Christian,
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great to talk to you again. How are you, sir?
Christian Terwiesch: Hey, always glad
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to be on your show. - Thank you,
sir. This is obviously an interesting topic, especially
when you think about the fact
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that customer service has been
one of these elements of business that, in many cases,
has been ridiculed by the
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public, but now we're talking
about it as a way that maybe we can improve it. So when you
think about the connection
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between AI and customer service,
what first comes to mind? - I think the big challenge is
that, I mean, everybody on
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the consumer base is familiar
with it, that we have many disappointments in the customer
service experiences that we
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have. Think about interacting
with your airline, your insurance, your bank. Most of us
have horror stories of bad
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customer support. And let's
acknowledge it, it's pretty damn hard because it's a very
tedious, a very labor intense
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piece of work that the service
provider has to provide on demand, on the time, and
in synchronization with the
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needs of the customer. So it's
nothing that you can do like on an assembly line. So it's really
hard work. And I think many
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companies have turned to AI and
have arguably somewhat naively believed that this problem is
going to go away because of AI.
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And I think we've seen some
things work, but many things that do not. - So for companies, is the
expectation then the customer
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service, or is it the cost
savings they may have, or is it a combination of both? - This goes
to the heart
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of the problem, right? So you
think, in general, in strategy and operations, we like to think
about the cost trade off, a cost
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quality trade off, right? So in
one dimension, you can imagine the efficiencies of productivity
as measured in dollars per
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episode. And on the other
dimension, you think about some version of customer delight,
willingness to pay, customer
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utility. And there's a trade
off, right? I mean, I can give you an amazing service if money
doesn't matter. I can give you a
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glass of champagne, I can give
you a back massage, and I make you the happiest customer, but
it's going to be bloody
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expensive. Or I see like, hell,
you're going to wait an hour long on the on the call center,
on the call line, I'm going to
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give you a crappy service with
someone who barely speaks English. So there's this trade
off. And the hope is that we can
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push this trade off curve
outwards and give you better service at lower cost. The
empirical pattern that I've seen
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most companies do is when
they've shifted that frontier, they hope the AI will give them
lower cost. So they're solving
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for lower cost, as opposed to
better customer service. - But don't companies still want
to have a human component
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involved in customer service
somewhere along the line? They just can't, you know, go 100 percent AI.
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- Well, so that is a challenge,
and I think, for two reasons. So one is, what do you want as a
company? There's a certain
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argument that you say, like
there's a human touch. I mean, again, think about maybe a real
estate agent. Maybe think about
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a cardiologist. You kind of want
to talk to a human being just to be safe, because the stakes are
really high. The second piece is,
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independent of what do we want
as a company, what do we have to do? And I think we're waking up
to the reality that ChatGPT
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and other tools are really good
of getting us 80 percent of the way, but not to 100 percent. And so most
people then kind of wave their
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hands at some point and say,
like, "We're going to -- we need a human in the loop." And that is
when it gets expensive, right?
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That human in the loop is
costing a lot of money, and the workflow is even more
complicated than before.
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- But the expectation of the
consumer, in many cases these days, and it's been talked about
a lot by retailers, is that they
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need to make sure that the
experience for their consumer is as good as possible, even if
they have the AI, so that that
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customer will continue to come
back time and time again. They don't want to lose them because
of a bad experience.
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- Absolutely, right. I think the
customer expectations are high enough, they're only getting
higher. And at the same time,
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many customer support centers
are struggling with the high cost and the high customer's
expectations. And again, because
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you, in most settings, need some
form -- you need to keep some form of a human in the loop,
we're not at zero marginal
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cost. And so I see a lot of
companies struggling with, how do we educate the customers that
they can do self service without
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the human in the loop? That's
when we make the big money. But again, that requires training or
educating our customer beyond
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just kind of having them call up
ChatGPT. - One of the things I saw written
about when you talk about the
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connection between AI and
customer service is the potential to improve the
language barrier for consumers,
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with AI being able to speak to
consumers in the language of -- in their own language, and not have
to have that misconnection
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because somebody can't speak
Spanish or German or French or whatever it might be. - Well, you shouldn't
ask the person who speaks with a
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German accent here, right?
I think there's language barrier. And indeed, I think
that is a good point. I think
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that the more important point I
want to double click on is eloquency, the persuasiveness of
ChatGPT. We've seen in study
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after study, it is better
arguing, it's better -- it's more empathetic. It's more
lovely to talk with an AI person
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than with a human being. And
that's scary, and tells us a lot about human beings. But again,
it comes out in study after
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study that AI is really sweet
and persuasive, and I think that makes even more difference than
the language capability.
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- So then I'll leave you on this.
What do you think, then, is the longer term impact of
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AI in customer service? - I think for the near future, we're
going to have some form of a
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hybrid workflow, where we have a
human who is augmented through some ChatGPT type of
technology. It's a hybrid where,
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again, I might be able to get a
little bit more productivity out of the agent by helping the
agent through text prompts in
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the screen and the
interview by automating some follow up chat messages. But
hopefully, we can get to a point
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where, in five or ten years, a lot
of the tasks that still require a human in the room will be
fully automated. But I don't
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think we're there yet. - Christian,
great to talk to you, and thank you again for your insight, sir.
- Always a pleasure. - Thank you.
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Christian Terwiesch, Professor of Operations, Information, and Decisions here at the Wharton School.