Klarna, the buy now, pay later giant, is shifting its customer service strategy back to human agents after an ambitious, but ultimately flawed, foray into AI-powered chatbots. This move comes after the company acknowledged the limitations of AI in providing satisfactory customer experiences, as reported by Bloomberg.
Klarna CEO Sebastian Siemiatkowski recently emphasized the importance of human interaction in customer service, stating that customers should always have the option to speak with a real person. While the specifics of this new human-centric approach are still unfolding, it reportedly involves a remote, “Uber-type setup” leveraging a network of contract workers, including students and individuals in rural areas. This raises questions about potential employment practices, but signifies a clear departure from the company’s previous AI-focused strategy.
This shift represents a dramatic reversal from Klarna’s position just two years prior. In 2023, Siemiatkowski enthusiastically embraced AI, aiming to make Klarna OpenAI’s “favorite guinea pig.” The company implemented a hiring freeze and actively sought to replace human employees with AI alternatives. By 2024, Klarna boasted a nearly 50% reduction in its workforce, shrinking from 3,800 to 2,000 employees, attributing this downsizing to “natural attrition” rather than layoffs.
Initially, Klarna touted the success of its AI chatbots, claiming they handled two-thirds of customer service conversations within the first month and performed the work of 700 agents. However, the quality of these interactions ultimately proved to be subpar. Siemiatkowski admitted that cost considerations had overshadowed quality, leading to a diminished customer experience. He now emphasizes investing in high-quality human support as the company’s future direction.
Klarna’s experience underscores a broader trend: customers generally prefer interacting with human agents. A study conducted last year revealed that over 80% of people would rather wait for a human representative than receive immediate assistance from a chatbot. Similarly, a Gartner survey found that approximately two-thirds of customers prefer companies avoid using AI for customer service. Furthermore, research suggests lower trust and satisfaction levels with AI-driven customer service interactions.
This preference for human interaction was already evident when Klarna initially adopted its AI strategy. The company’s decision to prioritize AI appears to have been driven by a desire to appear innovative and cost-effective, ultimately sacrificing customer experience. Now, it seems, the negative impact of this decision has outweighed the perceived cost savings.
