The Transformative Power of AI in Customer Service

Daniel Newman:
Hey everybody. Welcome back to the The Six Five Summit 2024. It’s day two. We’re in the enterprise apps track and I couldn’t be more excited about this next presentation. I have Jonathan Barouch, CEO, Local Measure. Before I get into this conversation with Jonathan, just want to say Local Measure is a very exciting company. I got to know Jonathan Barouch, CEO, founder of the company over the past few years, in fact, found the company so compelling I not only work with the company but also invested in the company and have been an advisor to the business. I think the world of contact centers, CX, and generative AI are meeting in this really unique intersection and it’s going to change the way companies interact with their customers. And Jonathan is trying to solve that problem each and every day, and I couldn’t be more excited to have him here.

Jonathan, welcome to the summit. Let’s talk about that. So I sort of queued it up. I framed it up. I mean, look, we’re in a world of instant response. We’re in a world where people don’t want to wait. They don’t want to be on phones, they don’t want to be on hold lines, they don’t want to be in queues. I don’t know what y’all call it in Australia, but the bottom line is we want it. We want it now. It’s been on this trajectory for a long time. Generative AI is accelerating. Talk to me about the evolution of customer service, how you see it, Jonathan.

Jonathan Barouch:
Well, thanks for having me. Look first, I’m the CEO of Local Measure, as you said. I am based in Australia and I do speak funny. Daniel has promised to translate today, but we have teams globally, so folks across the US, Europe and APJ. So we’re seeing I think the subtle nuance and evolution of customer experience in each of those regions. I think clearly the US is ahead and you guys are always at the bleeding edge of trying and testing, and I think generative AI is no different. I think the big difference, which sometimes folks in the US forget though is the US is still a very heavy phone market, right? When something goes wrong, the first thing you do is you pick up the phone and you wait in a queue and you kind of press one and you press five and you go round and round and then you get hung up on and then you get frustrated.

What’s slightly different in watching consumer behavior in Asia is they were born digital. Many will have internet connection before they even have access to a telephone. So for them, the way they interact with their friends and the way they interact with businesses is no different. And so they’re digital first, they’re messaging first. And you have these niche platforms like Line, like Kakao in Korea, like WeChat in Asia, and more and more obviously Facebook, Messenger, and WhatsApp. So you already have these asynchronous modes of communication. I think what’s surprising in the US is there is SMS, but it’s just so heavily a voice market, and I think businesses or brands have realized that’s probably not the most efficient way to serve customers. And no one wakes up in the morning hoping to pick up the phone to speak to their telephone provider right? It’s the last thing you want to do.

Daniel Newman:
You’re absolutely right in your assessment about the world does not all work the same way. So part of the opportunity has to be about flexibility in companies though are increasingly global. So despite the fact that the way someone here in the States wants to have customer service being different than how it’s in Australia, being different than how it is in China, doesn’t mean that you as a service provider that’s trying to deliver a global solution can say basically everybody needs to drink the champagne one way, right? You have to build for that. So how are you addressing the fact that people want it differently? But from a platform standpoint, people want a platform. They do not want to say, “Okay, I need to buy a software for Asia, a software for Australia, a software for the US software for Europe.” They say, “I want to work on one platform and I want it to be exactly what each customer in each market wants the experience to feel and look like.”

Jonathan Barouch:
And the regulation and the language and the cost to serve. I think what you’re talking about really comes down to how do you future-proof your CX decision? And if you’re a large multinational, there’s only a handful of choices. I mean, as a company, Local Measure, we’ve doubled down on AWS. We’re very closely partnered with Amazon Connect as the core routing engine, and then we take that last mile orchestration, the personalization, and change it based on the experiences you said, which is nuanced in each market, whether it’s cultural, whether it’s language, whether it’s channel.

So you can have a single orchestration engine, a single platform, local data residency, and suddenly different experiences not only by geo, but actually suddenly differences per customer. Because if you know Daniel’s like a high-flyer and he’s just come back from Vegas, he’s really important. You don’t want to keep him waiting in the queue, you want to bump him to the front and then a guy like me who’s at the bottom of the loyalty, keep that guy waiting, right? But you can only do that if you understand the context of who’s calling, why they’re calling, have really readily available access to the CRM and the other data points to make a decision quickly.

Daniel Newman:
Is that a real thing? Do a lot of companies do that? Do they have like… I mean, I’ve always had a good frequent flyer number, but do a lot of companies actually do queue preferencing now? Is generative AI shifting that? Because I don’t know, let’s say with one airline I have the highest status and with another one I do too, and I still wait like an hour sometimes to get a ticket done. And I mean, I guess there’s that many of the highest status or because in a lot of cases they have a special number like, “Oh, your phone number is different.”

Jonathan Barouch:
It’s a private, and then everyone gets that number and everyone calls. Look, the technology absolutely exists to deliver on that brand promise. I think the challenge you’ve got is a number of the legacy airline carriers, and it’s an industry we know very, very well are stuck with on-premise legacy technology with poor integrations to all the various data sets. The global reservation systems for airlines are kind of a challenge. Many of them are really old and don’t have great extensibility.

Having said all of that, we have a top-ten carrier in the US who absolutely knows who you are as you pick up the call, they query your bookings, they know why you’re calling. They have a voice IVR that can often self-serve you. We’ve seen airlines that can push you to the app and actually, “Hey Daniel, we see that you want to move your business class seat from row 1A to 2A. Open up the app and I’ll guide you through that and I’ll help you,” and actually the button will flash and it’ll guide you through the app. So absolutely you can drive those hyper-personalized experiences. It’s not expensive. That technology’s been democratized. And with gen AI and NLU, you can actually understand the utterances, the intents in any language. You can have some really compelling experiences if you’re willing to trash the 50 to 60-year-old legacy tech that’s written in Cobalt.

Daniel Newman:
So talk to me about that. I know technical debt. I mean, look, as analysts, we talk to companies every day. We talk to the buy side, we talk to the sell side, we’re talking to the vendors and we understand there’s different nuances. And by the way, we’ve been hearing things like data lakes for quite a long time that could potentially solve all your problems. Let me tell you something. When you’re running, let’s not talk about single. I remember listening to Bill McDermott talk at the Knowledge Conference recently where he talked about one company having 200 instances of a single ERP system in the same company. So what I’m saying though is when you go, “Why don’t you just put it all in Snowflake and run it all that way? And why don’t you just-”

Jonathan Barouch:
To solve all your problems.

Daniel Newman:
Because it’s not possible. And when you’re a large company, but there’s also a point where you are absolutely destroying the quality of service. And if you stay on a platform that does not meet the expectation of customers, it does not… or you have to build so much customization, you have to build so much training and then you get even deeper. It’s like a deeper hole you keep digging. You’ve seen this with systems of record. We see this with contact center solutions where you’re literally… I mean, why don’t we just get rotary phones and then run a movie at Blockbuster and then you can send me an email and tap it out on your BlackBerry for me, and then we’ll print the pictures of our time together in Vegas on one of our on film, Kodak, we’ll use Kodak and then we’ll…

Jonathan Barouch:
I’ve seen a few of those companies.

Daniel Newman:
We’ll copy it on Xerox. I mean, why do they not move? Why are they not moving faster? Even if it’s not all to you, it’s gotta be on cloud, native, gen AI powered solutions-

Jonathan Barouch:
Scalable. You should work for me, Daniel, sell contact center solutions. Look, we provide the tooling both for the bot, AI, and the agent and the human agent, so whether it’s a human agent or a bot agent, and there’s a number of strategies, right? Some businesses just can’t move off those legacy systems or their multi-year, extremely expensive migrations. I was with a bank yesterday. Core banking migration is 10 years. It’s just not feasible in some cases to be able to rush that. So we take a slightly different approach. We integrate with APIs and the data where we can, we obfuscate the complexity for the agent. And so we have a telco that’s using our agent experience. We’ve got five CRMs sitting underneath, but the agency is a single view of Daniel. Single loyalty, understands your mobility, understands the data to your home, understands your roaming charges, your kind of the last boxing that you bought on your cable.

It’s all there, even though it’s being sucked in from five separate systems. And then for those that don’t have APIs, because believe it or not, there are legacy systems that you just literally can’t access through an API, we’ll still frame them in or I frame them in and wrap them within an experience so the agent doesn’t have to swivel between different tabs. I mean, one of my team told me they were in Guatemala and the agents showed them 32 different applications that they had to service a single customer, 32 applications. I mean, you need a PhD just to hit the floor, and these guys aren’t the highest paid employee. So I mean, that is really unfair and it’s a huge cognitive load. So drink it at the agent desktop level and then shrink the complexity on the API side and make it simple for the bots, simple for the humans to access the data they need.

Daniel Newman:
Yeah, I mean, you’re speaking the love language of the future, and why do I say that? Look, the economics will win the day in the future. I’ve got a thesis that a lot more of the future of productivity software will actually be driven out of the office of the CFO. We’ve had this sort of exuberant buy from the business units because it will grow sales at any cost. But when you really look at the economics Jonathan, it’s the number of swivels is lost productivity. When you look at the number of applications, it’s lost productivity. And then when you look at the way companies tend to have had software sprawl with very little value at times for that software, it’s lost income. And at some point, someone in the organization that’s less exuberant, more pragmatic, has to look at the situation and say, “No mas, no more. No more software sprawl.” If we can’t attribute value, well guess who does that? Finance. Finance is the one that’ll be able to figure out. I could be wrong, but let’s earmark that.

Jonathan Barouch:
No, I think you’re right.

Daniel Newman:
Let’s bookmark that.

Jonathan Barouch:
I think you’re right. I mean the contact center is the front door to the organization. They’re the salesperson and the first line of defense, and it’s chronically under invested.

Daniel Newman:
Of course it is. The bottom line though is people want to understand what the future looks like. It’s very opaque right now. We’re seeing infrastructure being purchased at a breakneck pace, at a pace that’s never been seen before. It’s either the biggest front loading in history or there is this much demand for AI. And I think it’s actually, yes, I think it’s both. I think there will be this much demand. I think everybody knows it’s an arms race and they’re buying, but then at some point it is the applications that run on top of it that is going to be, so right now I like to say silicon or semiconductors will eat the world, but tomorrow software will once again eat the world and then at some point it will invert to the next chip set and then we’ll keep evolving. What is the contact center, the future? What does this customer service look like in a world powered by AI? What are we not seeing that Local Measure is building for and what should the market expect from their contact center partners?

Jonathan Barouch:
Look, clearly, gen AI is fundamentally transforming our industry. I mean, we view the world shifting more from voice, as I mentioned, into a more asynchronous digital experience. And that could be self-serve experiences, that could be in-app experiences, and they’re all stitched together. So whether you walk into a store, you send a message or you pick up the phone, it’s a single experience where the business knows who you are. Layering gen AI on top of that with a human in the loop for today, for the short term, the six to 12 to 18 months, it’s building a muscle within the organization. It’s understanding who the customer is, what they want. It’s providing recommendations. It’s using the agents to learn about how to serve the customer because those trained datasets exist, but they need to feed the AI model and the LLM. So we’re using the agents to understand the next best action, the response.

We’ve got real-time translation. So we’re serving French and German customers out of Manila with English agents, with the LLM sitting in between doing real-time translation. So when you talk about cost out, that’s a massive cost out for a CFO. So we see voice to digital, digital to self-serve, and then self-serve to full automation. How long is that going to take? I think it’s a matter of years. We’re already seeing some customers automating 50, 60, 70% of their workload. I mean, when Klarna came out to the market and said they had a gen AI solution that handled the equivalent of 500 people’s work, I think it was a very cleverly drafted press release, but others in the industry are actually also doing that, the here and now. I think that was so shocking for people because they’ve been asleep at the wheel for a number of years.

So I think you’re going to see these human augmented experiences, you’re going to see gen AI first experiences, and I’m quite confident they’re all going to be digital experiences. I do think the decline of voice is inevitable. I think you can see the passion that we have with the industry, the desire to disrupt, to use generative AI and our partnership with AWS to kind of transform. We’re working with Fortune 100, 200 companies at scale to actually do this at pace. And when you see the better experience, you see the cost come out and you see the contacts into leaders like smiling, that’s really powerful, and that’s why I get up in the morning.

Daniel Newman:
Well, I tell you what, if you can answer this question, I’ll let you off the hook for the rest of this particular meeting. I’ll give you three questions. We’ll start here. Do you park your car in a parking lot or a car park?

Jonathan Barouch:
Park the car in the car park. That’s my stepmom who’s South African. We’re a car park in Australia. You going to ask me which way the toilet flushes?

Daniel Newman:
Do you eat a sandwich or a toastie? What do you call a ham and cheese?

Jonathan Barouch:
It’s a toastie with a flat white.

Daniel Newman:
Okay. What is a flat white?

Jonathan Barouch:
A flat white is an Australian latte. You’ve promised me you’d come to Sydney to visit. I’m still heartbroken it hasn’t happened.

Daniel Newman:
When the tickets show up in the mail or when the jet comes and picks me up, I’m in. Hey, last question. Is it football football or football? So what is football in Australia? Is it football? Is it football? Or is it football? Is it Australian rules? Is it US NFL, or is it the one that everyone in the world really loves?

Jonathan Barouch:
Look, and none of the above. We don’t have enough time to answer that because it’s different by state. And when you come out, we’ll have to take you-

Daniel Newman:
More than once.

Jonathan Barouch:
Let’s-

Daniel Newman:
Unbelievable. I didn’t know that. I’m kidding.

Jonathan Barouch:
Let’s put that to the side and park it.

Daniel Newman:
Jonathan Barouch, CEO, Local Measure. Thanks so much for joining us here at The Six Five Summit. That was a lot of fun. Everybody check out what they’re doing over there at Local Measure. You’ll see it in the follow-on here from the summit. Congratulations Jonathan on all your success. See you next year. Stay with us for more Six Five Summit. We’re in day two.