The Cost of not Embracing AI

The Cost of not Embracing AI

The following numbers are based upon two different imaginary companies. Both companies starts out at the same place, with €1,000,000 in annual revenue. Both have 10% annual profit, and both have support costs of €150,000 each year and marketing costs of €100,000 each year.

One of these companies makes a strategic decision of embracing AI, both for customer support and marketing. This company is able to save 80% on support and marketing. This company saves in total €200,000 per year, which it puts back into marketing with an ROI of 3:1, implying every marketing dollar the company spends, becomes 3 dollars in additional revenue.

The numbers

The following table shows how this affects the revenue of this company over the next 5 years. The numbers are as follows. The company using AI will save €200,000 the first year, which it drives back into marketing, making an additional €600,000 in revenue due to its 3 to 1 ROI key on its marketing initiatives. The effects are cumulative, and the companies yearly revenue can be found below.

YearNo AIEmbraces AI
Initial year€1,000,000€1,000,000
1st year€1,100,000€1,700,000
2nd year€1,210,000€2,470,000
3rd year€1,331,000€3,317,000
4th year€1,464,100€4,248,700
5th year€1,610,510€5,273,570
Total growth€610,510€4,273,570

5 years after embracing AI the company that utilised AI in its support and marketing initiatives is 3.3 times as large as the company that did not. Basically, one of the companies in the above example got 3.6 million EUROs more than the other. This dramatic difference is because the effects are accumulating, since it allows the AI company to use its savings to further its growth. Below is a graph to better visualize the differences.

The winnings from AI

Below are two pie charts for both companies illustrating costs and savings in case you want to run through our numbers for yourself.

Costs of company not using AI

Costs of company not using AI

Costs of company using AI

Costs of company using AI

A simple saving like €200,000 per year leveraging AI in your business, can accumulate over time resulting in dramatic effects.

Fairy tales?

Well, obviously the above numbers are an over-simplification - However, savings of 80% on customer support is something we've got a lot of research related to allowing us to back up with facts. And, being able to lubricate your marketing initiatives using AI 5x is also arguably a "no brainer". So no, these aren't fairy tales.

As you gather additional customers, obviously your costs will increase simultaneously as your revenue grows. This is accommodated for by the 10% profit though, so the figures are fairly solid - Even though they're a simplistic view of the world. If we can get to study your budgets, costs and processes, I am 100% certain of that we can identify extreme cost savings for your company too, allowing you to at the very least come close to figures such as those above. All research into the subject basically concludes with the following ...

Not embracing AI is madness!

AI Research

Several years ago IBM conducted a study together with CNBC, Cognizant, VentureBeat, Forbes and AccentureDigital. Their findings at the time was that an AI chatbot could reduce costs of customer support by 30%. Since then we've seen a quality explosion in generative pre-trained transformers, such as ChatGPT. These improvements are today probably dwarfing the figures from IBM's original study, increasing cost savings by orders of magnitudes due to quality improvements.

80% cost savings on customer support is probably a conservative estimate

The same can probably be said about utilizing AI for marketing.

Is AI pure hype?

Obviously AI has been hyped to oblivion. My Google Chrome screenshot tool changed its name to ChatGPT Screenshoot tool as ChatGPT went viral. I doubt there's anything AI related in my screencast Chrome plugin.

However, just like the internet boom back in the late 1990s, there is actual substance in AI. Once the dust settles, winners and losers will surface. Which side will you be on? To simplify the question down to its essence, let me blatantly ask you as simply as I possibly can.

If I told you I could give you 3.6 million dollars 5 years from now for an initial investment of $300 per month, would that be OK with you?

Then realise that's what the above numbers describes. Now let's discuss if AI is only hype or has real substance ... 😉

AI needs to be Embraced INTELLIGENTLY!

However, just like all booms, you need to embrace AI carefully and intelligently. There are "a bajillion" companies out there with a chatbot. Every single day a new ChatGPT chatbot is launched at ProductHunt. Just ask our chatbot about it.

I can pretty much guarantee you that you'll find at least 3/4 new ChatGPT-based chatbots today alone. So which partner should you chose? We've got years of experience with this. We didn't start AINIRO because of the AI hype. AI is what we do, where our passion is, and what we're good at. If you need a partner you can trust in regards to AI, feel free to reach out to us below.

Thomas Hansen

Thomas Hansen I am the CEO and Founder of AINIRO.IO, Ltd. I am a software developer with more than 25 years of experience. I write about Machine Learning, AI, and how to help organizations adopt said technologies. You can follow me on LinkedIn if you want to read more of what I write.

Published 25. Aug 2023