By Phil Wainewright

March 14, 2024

Customer Experience (CX) vendor Zendesk has made its third acquisition in less than a year, revealing yesterday that it is buying Ultimate, an AI-powered customer support automation platform. The Berlin-based company provides an AI chatbot and ticket automation to a growing enterprise customer base including Finnair, Taskrabbit, Zalando, Stitch Fix, Lush and Zendesk itself, which implemented the solution for its own support systems in 2021.

Zendesk already has plenty of AI-powered technologies of its own, including generative AI offerings introduced in May last year and extended to add voice transcription and summaries in October. Adding Ultimate will take its AI agent capabilities to a new level, according to Tom Eggemeier, CEO of Zendesk, per Zendesk's press release:

With Ultimate, we will help our customers set a new standard, with AI agents giving customers the support they need quickly and effortlessly. This means human agents can focus on what they do best: building relationships, resolving complex challenges, and applying innovation and creativity to move businesses forward.

Ultimate platform

Ultimate was conceived 8 years ago at a hackathon in Helsinki and now has 150 staff worldwide drawn from 45 nationalities. It raised $20 million in Series A funding in 2020 and claims a 99% customer retention rate. In a blog post on the company's website, Ultimate co-founder and CEO Reetu Kainulainen says:

[The acquisition] means that our mission of building the best AI solution for CX can be scaled even faster ... AI is the future of customer service. And by joining forces with Zendesk, we have the resources, as well as the tech, team and talent to get ahead of this shift and completely revolutionize the industry.

Ultimate's platform uses a combination of AI technologies to parse historical chat data and knowledge resources in order to provide more reliable and precise support responses than traditional chatbots, in multiple languages. Customers can blend different approaches, ranging from a fully automated GPT-powered conversational AI agent to more traditional workflow automation or direct human interaction when appropriate. There is a no-code tool for customizing responses and workflows to complex use cases. Analytics allow for further optimization of automations over time, and the company claims that customers using the full capabilities of the platform can automate up to 80% of support requests. The system provides for API connections to a range of back-end systems, including Zendesk rivals Salesforce, Freshdesk and Intercom, and it is understood these will continue to be supported after the deal closes.

This is Zendesk's second AI acquisition this year. Earlier this year, the company acquired AI-powered quality management platform Klaus, which scores customer interactions to analyse the quality and coverage of both human and digital agent performance, as well as tracking trends over time. Adding the Estonian startup was positioned as a complement to last year's acquisition of Tymeshift, bosltering Zendesk's capabilities in Workforce Engagement Management (WEM). But with increasing automation of customer interactions following the incorporation of the Ultimate platform, effective monitoring of the quality of those interactions seems all the more important. 

My take

Why did Zendesk feel the need to bolster its existing automation capabilities with the acquisition of Ultimate? One answer can be found in the recent launch of Sierra, the AI startup co-founded by former Salesforce co-CEO Bret Taylor, which is working with companies including WeightWatchers, Sonos and SiriusXM to develop "empathetic" AI agents. There's something of an arms race going on in the CX world at the moment, as vendors grapple with the rapid evolution of AI technologies and the implications for automated customer service, as well as marketing and sales.

While Zendesk already has some significant investments in AI, the fact that it was already using Ultimate itself to improve its own agent experience demonstrates that there was a gap it needed to fill. Now it needs to bring those capabilities into its own platform without causing disruption for customers as it blends the two solutions. Meanwhile, Ultimate customers who are not also Zendesk customers will be wondering how well the standalone solution will continue to be supported.

One refreshing aspect of the announcement is that it highlights the ongoing role of human agents. When buy-now-pay-later provider Klarna announced it was using OpenAI to power an AI assistant last month, it focused on the ability to "do the equivalent work of 700 full-time agents" and an anticipated $40 million boost to the bottom line. Too often the dialog about chatbots revolves around how much companies can save, but the more significant benefits come from faster, more accurate resolution of customer issues and better utilization of the human skills and creativity of frontline staff, putting the emphasis where it should be — on improved customer outcomes.