Klarna Rehires Human Agents After AI Customer Service Falls Short

Klarna, the popular buy now, pay later service, recently reversed its ambitious AI-only customer service strategy after encountering significant challenges. Initially, the company replaced a large portion of its human workforce with AI-powered chatbots, aiming to reduce costs and position itself as a leader in AI innovation. However, this shift resulted in a decline in service quality and customer satisfaction.

CEO Sebastian Siemiatkowski acknowledged that while AI chatbots handled two-thirds of customer interactions, the quality was comparable to having 700 underperforming agents. The company’s focus on cost-cutting through AI led to a poorer customer experience, prompting Klarna to hire human agents again to ensure customers can always reach a real person when needed.

This move highlights a broader industry insight: despite advances in AI, many customers prefer human interaction for complex or sensitive issues. Studies show that over 80% of consumers would rather wait to speak with a human than receive immediate service from a chatbot. Trust and satisfaction rates tend to be higher with human agents, underscoring the limitations of AI in customer service roles.

Klarna’s new approach involves hiring remote human agents through a flexible, contract-based model, targeting students and rural workers. While this raises concerns about labor conditions, it represents a strategic pivot to improve service quality and customer trust. The company now emphasizes investing in human support as a key part of its future customer service strategy.

Klarna’s experience serves as a cautionary tale for businesses eager to replace human roles with AI. While AI can handle routine tasks efficiently, it cannot fully replicate the empathy, judgment, and trust-building capabilities of human agents. Companies should consider hybrid models that leverage AI for efficiency while preserving human interaction for complex customer needs.

Key Takeaways for Businesses

• AI chatbots can reduce costs but may degrade customer experience if over-relied upon.
• Customers overwhelmingly prefer human interaction for complex or sensitive issues.
• Hybrid customer service models combining AI efficiency with human empathy offer the best outcomes.
• Investing in quality human support is critical for maintaining brand reputation and customer loyalty.

Klarna’s pivot underscores the importance of balancing technological innovation with human-centered service design. For companies deploying AI, understanding customer preferences and maintaining transparent options for human support are essential for long-term success.