Brands are increasingly turning to AI-powered chatbots to manage customer service inquiries, a move driven by the need to cut costs amid rising tariffs. This shift is particularly noticeable among small businesses, which are reducing their reliance on human customer service representatives to save money.
Greg Shugar of Beau Ties of Vermont exemplifies this trend. Facing hundreds of thousands in duties due to tariffs on Chinese silk, Shugar has implemented several cost-cutting measures, including laying off one in-house customer service rep and automating more queries through AI. "80% of your customer service tickets ask the same small group of questions," Shugar noted, highlighting the efficiency of chatbots.
Puneet Mehta, CEO of Netomi, confirms that more brands are adopting AI for routine service work, with AI resolving around half of all incoming tickets. This allows companies to reduce outsourced headcount without sacrificing customer satisfaction.
Bots Fill the Gap
Luke Barkley Young of Outlines shared that his company now uses an AI chatbot handling up to 70% of support tickets, saving approximately $5,000 monthly. Young criticized tariffs for costing Americans jobs, as businesses pivot to automation to offset expenses.
Made In, a cookware company, plans to test an AI chatbot within six months, expecting it to handle at least 20% of customer service tickets. President Jake Kalick sees AI as a scalable solution, especially during peak seasons, though he doesn't anticipate it fully replacing humans.
Softening Labor Market
The push towards automation coincides with a softening labor market, with the U.S. economy adding only 73,000 jobs in July. Lisa Popovici of Siena AI notes increased demand for chatbot services as brands seek stability amid economic uncertainty.
Major retailers like Amazon and Williams-Sonoma have acknowledged that AI advancements will lead to fewer jobs, with 41% of employers worldwide planning workforce reductions due to AI, according to a World Economic Forum survey.
However, Brandon Thurgood of Redo points out that AI can also reallocate staff to growth-focused roles, as seen with Absolutely Ridiculous, which repurposed its support team internally, avoiding the need for external hires.
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