Skip to main content

How Zendesk builds the future of AI-powered service

The News

On April 15 to April 18, 2024, Zendesk held its annual Relate event, including a half day analyst track on April 15. The event was attended by around 1,600 customers, partners and analysts.

It was about Zendesk’s strategy, which revolves around - no surprise here - AI to deliver better customer experiences. As part of this strategy, Zendesk also made clear how the past twelve month’s acquisitions of Klaus, Ultimate, and tymeshift get integrated into Zendesk’s customer service offerings, enriching and rounding them off. The company is betting big on AI, working on the assumption that interaction volumes between customers and companies are continuing to increase very fast. As a conclusion of this, service needs to become AI driven to accommodate this scale. Secondly, Zendesk sees AI as the technology underlying the necessary high degree of personalization. Together, this is estimated to increase the market size available to CX solutions that automate CX labor tremendously.

At the event, Zendesk had three key announcements. They were

  • AI agents to improve self service solutions,

  • a copilot that helps agents solve incoming tickets faster and provides insight to further optimize the service and

  • a workforce engagement solution that helps improve the productivity of digital and human agents as well as the quality of conversations.

Behind all this lies the recognition that customer service is very much conversational.

Customers and partners that I talked with had a keen interest in learning more about AI use cases. Many of them had started to use AI but estimated themselves still in early stages. 

The bigger picture

The customer service software market has become very crowded with players ranging from service specialists to suite players, with classic call-center companies making inroads, too. Additionally, there is a raft of niche companies that are offering specialized add-ons to improve customer service solutions, from connecting them to workforce management or -engagement solutions, to QA solutions and many more. It is quite easy to see a kind of a consolidation going on here.

A good number of these solutions use advanced statistics or machine learning based technologies to increase the overall efficiency of  customer service and/or to achieve a higher degree of automation. If not outright embedded into each other, solutions are regularly integrated using APIs, with customers often choosing to work with a small number of vendors in a kind of an ecosystem approach. With service centers being regularly trimmed to efficiency, companies usually follow one of two base strategies: they either look for efficiency, aka cutting cost, or for offering better service without adding cost. The latter is often combined with setting up the service center as a profit center, as opposed to a cost center.

The latter strategy was exemplified by a Zendesk Relate customer that built a continuous improvement strategy around its ticketing system. Three of the main KPIs that are measured and shall be maximized are customer satisfaction, employee satisfaction, and the ratio of automated responses. The company is achieving its goals using generative AI to solve issues, another AI to predict a customer satisfaction score. Human agents are involved if the AI cannot generate a response or if the predicted customer satisfaction for this response is not high enough. In this case, human agents are tasked with improving it. Quite the same happens with agent responses: The agents’ responses are evaluated for predicted customer satisfaction and sent back to the agents for improvement if the predicted customer satisfaction score is not high enough. This is combined with an automated coaching system that agents are encouraged to use to continuously improve their own productivity. The results of implementing this strategy - which admittedly is a bit more complex in terms of systems, metrics, and culture - are quite amazing.

My point of view and analysis

Let’s cover two topics here, the event itself and the content.

Starting with the event

Looking at it through a customer lens, it was chock-full of information and, more importantly, the ability to talk to experts about the roadmap and to see working software in the exhibition hall. The customer presentations were very interesting.

Keynotes are always an interesting thing. Robert Richman very relevantly and excitingly talked about customer service requiring a service culture. Having Michelle Obama on the first day was certainly interesting. On the other hand, no one I talked to found much relation to Zendesk in her story. This is the eternal challenge that I have also seen at other events. While it is important to work with “luminaries”, it is sometimes difficult for the audience to relate their stories to the story that the vendor tells.

From an analyst perspective, I would have wished to have more access to company executives to dig deeper into information. Still, the ability to speak to customers and partners was valuable. 

Big kudos to the organizing team that mastered the challenge of creating an event that was interesting for customers, partners, and analysts.

Coming to the content

As said in the beginning, these days every CX strategy involves AI, if it doesn’t outright revolve around it. This includes Zendesk. From a capability as well as a vision capability, Zendesk seems to be positioned better than many of its competitors in the customer service arena. And there are certainly a good number of competitors. Zendesk’s position is a result of a good product mix, the early creation of “ready-to-use” AI models to improve service efficiency as well as of interesting acquisitions. Of course, it is important to deliver this vision fast. These days, most advantages tend to be of temporary nature.

The good number of competitors is not only because the customer service market is crowded. It is als partly attributable to the fact that Zendesk claims to offer a “complete CX solution for the AI era”. This broadens the competitive field significantly, also into areas that Zendesk does not cover or does not cover with a strong product. CX is not limited to customer service.

On the other hand, Zendesk’s mission is to “power exceptional service for every person on the planet”. This focus on service processes somewhat reduces the ambiguity of the terms “CX” and “CX department”. As one of the execs said “we are great when it comes to tickets” - which is true. In short, the company maintains a focus on customer (and employee) service. It is important for customers to keep this in mind.

Having said that, Zendesk also offers a sales solution, Zendesk for sales. It was notably absent throughout the event, yet is important for the complete CX story. The same is true for the Sunshine platform, although in this case there still was a lot of talk about the platform, without naming it. This makes a lot of sense, both in terms of the need and also a need to make the fresh acquisitions part of this platform. 

Talking about these acquisitions, they are important add-ons to the core service functionality. This is especially true for the QA capabilities that come with Klaus and the AI engine that is delivered by Ultimate. Tymeshift as a WFM solution plays out its strengths increasingly with bigger growing service centers.

Service processes will be automated more and more to achieve and maintain high levels of customer and employee satisfaction. This needs a solution that has the necessary intelligence. Zendesk is on a good way to get this job done. It already now solves parts of this problem and has many of the remaining parts of this solution at hand - and is working on combining them to a whole.



Last Year's Top 5 Popular Posts

SAP CRM and SAP Jam - News from CRM evolution

During CRM Evolution 2017 I had the chance of talking with Volker Hildebrand and Anthony Leaper from SAP. Volker is SAP’s Global Vice President SAP Hybris and Anthony is Senior Vice President and Sales GM - Enterprise Social Software at SAP. Topics that we covered were things CRM and collaboration, how and where SAP’s solutions are moving and, of course, the impact that the recent reshuffling in the executive board has. Starting with the latter, there is common agreement, that if at all it is positive as likely to streamline reporting lines and hence decision processes. First things first – after all I am a CRM guy. Having the distinct impression that the SAP Hybris set of solutions is going a good way I was most interested in learning from Volker about how there is going to be a CRM for S4/HANA. SAP’s new generation ERP system is growing at a good clip, and according to the Q1/2017 earnings call, now has 5,800 customers with 400 new customers in the last quarter alone. Many

SugarCRM explains how the third wave of CRM adds value

The news On October 4 and 5, 2023, SugarCRM held its Connected event followed by an analyst summit in London. The first day – Connected – was targeted mostly at customers while the second day focused on analysts.  The event started off with an intense speech by Katherine Grainger, DBE , a British rowing champion. Her core messages were about team bonding, the importance of communication, continuous improvement, and perseverance (well, at least that’s my take). This was followed by information about what is new in the software and, more importantly, a customer panel.  The main sponsor, Mobileforce , placed some words about the partnership. In addition, the analysts had 1:1s with customers, partners, and Sugar executives. The second day was filled with information targeted at analysts. CEO Craig Charlton and his executive team shared about financial status, strategy and more in-depth product news. Sugar being a privately held, VC backed company, the financials are of course under NDA, s

How to play the long game Zoho style

The news On February 7 and 8 2024, Zoho held its annual ZohoDay conference, along with a pre-conference get together and an optional visit to SpacX’s not-too-far-away Starbase. Our guide, who went by Chief, and is probably best described as a SpaceX-paparazzi was full of facts and anecdotes, which made the visit very interesting although we couldn’t enter Starbase itself. The event was jam-packed with 125 analysts, 17 customer speakers, and of course Zoho staff for us analysts to talk to. This was a chance we took up eagerly. This time, the event took place in MacAllen, TX, instead of Austin, TX. The reason behind this is once more Zoho’s ruralization strategy, transnational localism.  Which gives also one of the main themes of the event. It was more about understanding Zoho than about individual products, although Zoho disclosed some roadmaps. More about understanding Zoho in a second.  The second main theme was customer success and testimonials. Instead of bombarding us with presenta

Relevance, reliability, responsibility are key for AI – the SAP way

The News A lot is going on in the SAPverse during October and the early days of November 2023. First, SAP conducted its CXLive event with CX-related announcements, then the company reported good Q3/2023 figures, a new version of its CX software that includes new generative AI capabilities got released and lastly, it executed its SAP TechEd event with a good number of AI-, BTP-, and ERP related announcements. As this is quite a lot, I covered the CX world in a previous post and will cover the TechEd related news in this post.  So, what is new at SAP TechEd ? For one, it is enough to fill a 17-page pre-event news guide that SAP sent out. SAP certainly is able to stack up the news for major events. I took the liberty to ask ChatGPT for a summary of the document, which I slightly edited afterwards. Here we are: AI and Development Environments: ·       SAP introduces SAP Build Code with generative AI, improving application development and testing, while new AI capabilities are integrate

The Generative AI Game of Thrones - Is OpenAI toast?

The News This has been an exciting weekend for the generative AI industry. On Friday November 17, OpenAI announced that the company fired its figurehead CEO Sam Altmann and appointed Chief Technology Officer Mira Murati as interims CEO in a surprise move. The press release states that Altmann “ was not consistently candid in his communications with the board .” Surprised was apparently not only Sam Altmann, but also the till then chairman of the board Greg Brockman who first stepped down from this position and subsequently quit OpenAI. Investors, notably Microsoft, found themselves blindsided, too – or flat footed depending on the individual point of view. Satya Nadella was compelled to state that Microsoft stays committed to the partnership with OpenAI in a blog post that got updated on November 19, 11:55 pm. All hell broke loose. Microsoft shares took a significant hit. A number of additional senior OpenAI personnel quit. Both, Altman and Brockman, voiced the idea of founding anoth