Transforming Customer Experience Management in the Era of Empowered AI

“I am thrilled to share the next phase of our development: the Webex AI agent. Currently in pilot testing, this innovative solution will be accessible to our clients in the early months of 2025. This AI agent integrates conversational intelligence with generative AI to facilitate seamless, personalized interactions.”

These remarks were made by Anurag Dhingra, SVP and GM of Cisco Collaboration, which is renowned for digital communication and technology within enterprises. Interestingly, this announcement echoed through the industry as Oracle and Zendesk—both significant players in serving enterprise and mid-market customers, respectively—made similar announcements this October, focusing on enhancing customer experience.

There seems to be a palpable trend. While the goal of automating customer interactions (including the tasks of service representatives) appears to be quite ambitious, it raises the question of whether it will soon become a standard requirement if adoption becomes widespread.

But is this ambition feasible? Can customer experience be solely equated with service or support encounters? To explore this, we engaged with Isabelle Zdatny, head of thought leadership at the Qualtrics XM Institute.

Understanding Experience Management

First, it’s important to clarify the role of Qualtrics as a vendor of experience management software and its XM Institute. Notably, the Institute operates independently of specific products. “We function like a think tank within Qualtrics,” Zdatny explained. “Our focus is on enhancing the skills of CX and EX professionals by providing insights, practices, and principles essential for success—supporting both personal development and the establishment of a robust experience management program. Unlike many experts at Qualtrics, our emphasis is less on individual clients and more on defining experience management and equipping people with the knowledge they need to excel.”

The XM Institute was founded in 2018 following Qualtrics’ acquisition of Temkin Group, a niche consultancy led by Bruce Temkin, known as a pioneer in customer experience. Zdatny has been with this organization since 2013.

Zendesk aims to deploy AI agents across all interaction channels, whether independently or working in partnership with humans to address customer inquiries. This strategy aligns with what it refers to as “customer experience management.” While Zendesk asserts that customer experience encompasses all interactions between businesses and their clients, its descriptions often revert to call centers or digital support platforms; similarly, messages from Oracle and Cisco reflect this narrow viewpoint. Isn’t this perspective too limited?

“Absolutely,” Zdatny responded, “because that merely addresses reactive measures. Experience management transcends merely resolving customer complaints. Organizations possess finite resources, and there are countless issues that could be improved. Experience management assists in pinpointing which problems warrant attention and resource allocation. It’s not solely about remediation; it’s about crafting engaging and innovative experiences that differentiate us in a saturated market.”

What is her understanding of customer (and employee) experience? She offered two definitions: the first being a “scholarly” version for internal use, and the second designed for conversations with senior executives. The first definition states: “The practice of driving actions through a continuous flow of insights into the thoughts, feelings, and behaviors of customers and employees. It’s a systematic approach to business, rather than a collection of unconnected tasks.”

The second, more succinct definition is: “Grasping and optimizing the experiences of customers and employees.”

How does Zdatny envision the evolution of experience management within companies? “In early-stage organizations, approaches often lack cohesion,” she noted. “Departments like product and sales operate in silos. An ideal program includes a centralized team capable of unifying and coordinating experiences throughout the organization; whether one contacts a center or visits a store, the experience should be consistent.” For very small enterprises, she mentioned that having one individual oversee experience initiatives can be quite effective.

Gathering feedback is essential for optimizing customer experiences, something Qualtrics has highlighted for some time. However, the process is not straightforward. “Initial CX programs place heavy emphasis on collecting feedback, yet they often neglect to act on this input,” Zdatny explained. “An effective CX team not only collects data and analytics but incorporates supporting elements like experience design and change management. While feedback is crucial, simply passing insights to other teams does not constitute a successful experience program.”

Dig deeper: Zendesk saturates CX with AI and voice

Paths to Complete Automation

One potential solution to centralizing and continually refining CX—be it broadly or within service contexts—could address many of these hurdles, a sentiment echoed by Jeff Wartgow, VP of product management at Oracle CX service. However, he acknowledges that this involves progressing along a continuum.

The initial step involves enhancing service by transitioning from conventional chatbots to conversational AI. The second phase enhances the performance of human service representatives through AI support. The third and fourth stages focus on improving execution through service process automation and transforming operations using automated execution strategies. I sought clarification from Wartgow regarding these distinctions.

The third stage entails: “I know the solution to this—now I’m going to automate the resolution.” The fourth involves: “What if I’m unsure how to resolve this? Can I automate the planning of a resolution?” In essence, this differentiates between utilizing AI to automate known responses and employing AI to determine proper responses to unforeseen service issues.

A significant challenge for businesses in this endeavor is ensuring a robust knowledge base for training AI agents. According to Wartgow, Oracle undertook a comprehensive overhaul of its knowledge base within Oracle Fusion Cloud two years ago. “For example, if there are 15 service requests that we resolve in the same manner, should we create a knowledge article for that? With a single click, generative AI can produce that article and integrate it into the knowledge database.”

Wartgow affirms that keeping the knowledge base up to date is crucial and states that Oracle has a system to ensure this happens. Furthermore, Oracle’s knowledge base can assimilate vast quantities of legacy information, even from large manuals, generating tailored knowledge articles for specific tasks. “We needed to accomplish all of this before we could even initiate discussions about these agents,” he noted. Oracle intends to promote the use of their knowledge base as the primary source of truth for Oracle service agents, rather than relying on internal alternatives.

Dig deeper: Oracle aims to automate the complete customer service lifecycle

The Comprehensive Experience

When asked, Oracle, much like Zendesk, acknowledges that the customer experience encompasses more than just service interactions. “As the service lead at Oracle,” Wartgow remarked, “I often emphasize service. Yet, around 70% of the interactions customers experience, whether in B2C or B2B settings, involve the service team. However, I don’t perceive this interaction as merely engaging with a service department; it feels more like communicating with the brand itself. Transitions between sales, service, and marketing conversations should be as seamless as possible.”

Oracle and Zendesk both advocate for a nearly fully automated future for the service component of customer experience. How does this align with a broader, more holistic view of customer experience? “One consumer concern that notably increased over the past year was the desire for a human connection, which over 50% reported,” Zdatny noted, referencing research from the XM Institute (registration required).

She points out that there are regulations in Europe mandating organizations to provide easy access to human representatives. “From a corporate perspective, I understand the efficiency of diverting calls away from expensive call centers. Yet, current consumer sentiment indicates that they prefer not to have this experience.”

However, Zdatny also acknowledges the uncertainty regarding consumer preferences (or those of B2B clients) three years down the line, particularly if AI agents significantly enhance their capabilities. “In the long term, that is the trajectory we’re heading towards. Yet, in the short term, many companies may be pushing themselves beyond their means,” she concluded.