February 6, 2024

AI Is Not FREE: The Costs of AI Customer Service

In the rapidly evolving landscape of e-commerce technology, AI customer service is often viewed as a silver bullet that’s free (and maybe even easy to implement). But that’s NOT the case. 

By
Jon Tucker
CEO HelpFlow
AI Is Not FREE: The Costs of AI Customer Service

In the rapidly evolving landscape of e-commerce technology, AI customer service is often viewed as a silver bullet that’s free (and maybe even easy to implement). But that’s NOT the case. 

Implementing AI isn't just a simple matter of replacing humans and cutting costs. Yes, you should use AI. And yes, you will save money. But the path to success and the economics of how it works is nuanced. 

In this blog post, we'll share the costs involved in implementing AI in customer service along with specifically how to gauge ROI.  At HelpFlow, we have helped over 100 brands harness the power of AI effectively in their customer service operations. You can use this post to better understand how to do the same in your business. 

Let’s get into it!

The Hidden Costs of AI Customer Service Software

First, let’s dive into the costs associated with bringing AI into your customer service infrastructure. Software is not free, and neither is AI software. You will learn that quickly when implementing AI, but here’s the basics: 

  • AI SaaS Subscription: Like any SaaS, AI customer service tools come with subscription costs. The marketplace is constantly changing, but common platforms typically cost ~ $300-$500/mo for subscription fees. These subscriptions usually include a certain amount of tickets to be processed by AI. The right tool to choose varies widely depending on your unique customer service processes, but these fees are typical. 
  • AI Data Processing Costs: Separate from the SaaS subscription fee, there is typically an added cost for the AI actually automating or assisting on individual tickets. While this will definitely be cheaper than pure human processing, AI processing costs add up over time. Here’s a little insider info too… Most AI customer service tools are built on top of OpenAI’s API, which can be expensive (especially if you haven’t optimized API usage). This means you’re not only paying the SaaS subscription fee, but you’re also paying the OpenAI API processing fees AND a markup on top of that.

This model of building on top of OpenAI and marking up the API costs can sometimes start to feel like old-school outsourcing agencies that hire junior agents and then charge a huge markup on top of that to staff them on your account - it’s not a great model for everyone (except maybe the outsourcing agency for the short time you are paying them).

At HelpFlow, we think the market will eventually consolidate into the HelpDesk having AI capabilities, the AI software providers being the AI engine that runs it, and the brand ultimately paying OpenAI directly via a “bring your own API key” model. But the world isn’t there yet - for now, just make sure you know how to follow the money so you aren’t paying more than you should be.  

The HUMAN Cost of Automating Customer Service with AI

Apart from the SaaS software costs and API processing costs, there are human costs to implementing AI effectively. Brands that are new to the AI game think that AI software can replace a big chunk of their Agent team, but that’s not the case. 

The model that works is to use AI customer service software that integrates deeply with your HelpDesk, and then have a methodical process to initial training and ongoing tuning of the AI. This training and tuning process is driven by a mix of AI and humans. 

Here’s how it works:

  • Initial Training of the AI: Similar to training a customer service agent, someone on the team will need to train the AI with your company info and FAQ data. The more robust, the better. In addition to compiling this training information, there needs to be a ramp-up time where you are using the AI as a copilot to gauge how it operates and constantly refine the training data. Think of this like training side by side with a human agent. 
  • Ongoing Improvement / Tuning: Once the onboarding phase is done, it’s important to have an ongoing monitoring and improvement process in place. This includes AI-assisted human monitoring to automatically escalate certain tickets, flag tickets for review, and spot-check random tickets to spot issues and constantly refine the knowledge base. This is exactly what happens in a robust customer service operation with Agents and QA specialists but now needs to be applied to the AI as the “Agent”. 

The AI customer service SaaS companies in the market today ALL have the same problem. Someone needs to train and manage the AI but the brands coming to them don’t realize that. This leads to the SaaS company needing to have a services arm, or the brand needing to manage their own QA process. Both of these are abnormal for each of these business models. 

At HelpFlow, we work with brands and AI software providers to implement AI effectively. We essentially become the technical and human expertise that brings all of this together to produce a highly efficient CX operation for brands. 

The ROI of AI / Human Customer Service Operations

Once you have implemented AI effectively and have a strong AI and human-assisted management process, you will see extremely strong ROI results. 

  • 2-3X Agent Productivity: The number of tickets per Agent in your organization should increase 2-3X since the AI will handle a lot of tickets, and assist agents on all of the others. To be clear, measure this just like you would before the AI was in place - # of total tickets processed divided by a number of agents in the business. 
  • Faster Response and Resolution Times: With AI handling many tickets and assisting with the rest, response times will skyrocket and resolution times will improve significantly. 
  • Increased CSAT: The fast response and resolution times will make customers happier, resulting in higher CSAT. 
  • LTV, Retention, and Enterprise Value: Happy customers lead to repeat orders, which ultimately drives enterprise value - the ultimate metric the executive and ownership team cares about, even if they ask about ticket handling time. 

Do you see what just happened there? By laying in AI, even at a higher cost than you anticipated, you can massive increase metrics of performance in customer service AND increase the enterprise value of the business. This is how the AI game is played at the highest levels. 

What’s Next?

At HelpFlow, we've been the driving force behind integrating AI into the customer service processes of over 100 e-commerce brands. Hopefully, this post shows you a bit of that experience, and how we can guide you through the process in this brave new world of AI. 

Are you focused on implementing AI in your customer service operation? Let us help. Book a Free Audit Call with us. 

We'll review your current customer service setup and provide a comprehensive roadmap for AI integration. Whether or not you choose to partner with us, this audit will offer invaluable insights into how AI can revolutionize your customer service.

Schedule Your Free Audit Now

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