Many people familiar with business leadership, ownership, or investing will be familiar with the concept of a dividend, where, when companies make a profit from their activities, they pay a portion or all of that profit to their shareholders.

However, many may not be familiar with the idea of a “service dividend.”

This concept was introduced to me by Tom Eggemeier, the Chief Executive Officer of Zendesk, during an episode of the Punk CX podcast following the conclusion of Zendesk’s recent AI Summit.

During our conversation, Eggemeier recounted a conversation that he’d recently had with the CEO of an enterprise that is generating billions of dollars in revenue, where the CEO explained that instead of using the cost savings that they were achieving following their AI investments, they were now focusing on generating a “service dividend.” In their case, this meant investing the gains from their AI deployments into enhancing the service experience of their two-sided marketplace, as they believed it would “create a loyalty loop and bring our buyers and sellers even closer to our brand.”

What is interesting is that, according to Eggemeier, “six months ago the conversation was predominantly about cost savings,” but now the pattern is changing, and “the most innovative brands in the world are now thinking more about how can I take that automation and use it to increase customer satisfaction? Or, how can I take that automation and go work on things that we’ve always wanted to work on to increase, like service levels?”

This is great to hear.

However, the interesting thing about the idea of a service dividend is the deliberate choice at its core.

I was reminded of this fact the other day when speaking to the CEO of a business process outsourcing (BPO) firm, where they told me that most of their conversations about customer service and AI focused on achieving cost savings.

I pointed out to him that, in fact, those companies were choosing to pursue cost reductions and that other choices were available to them.

I shared with him the example of the multi-billion-dollar enterprise that Eggemeier had shared with me, and also told him the story of another firm.

That story featured an e-commerce company that is making different choices with the increased agent capacity now available to them after they successfully utilised AI and automation to respond automatically to a large volume of simple and straightforward queries from their customers.

Rather than thinking about rationalising their headcount and pocketing the cost savings, they are choosing to “turn the phones on”, something they hadn’t previously been able to do due to capacity and resource constraints. This will allow them to spend more time talking to customers, solving tricky problems, building connections and adding value, secure in the belief that if they do so, it will yield positive returns for the business in terms of increased loyalty, revenue and profitability.

What these stories illustrate is that the best firms understand that investing in their service and experience matters, and that you can’t cut your way to greatness.

Moreover, the emergence of service dividend thinking among the most innovative firms shows that while they may have been initially seduced by the cost savings available to them via the application of AI and automation, they are now realising that investing back into their service experience is the way they win.

That will be welcomed by customers.

However, given that research suggests that 83% of consumers in the US and UK feel undervalued by the brands they remain loyal to, customers will also hope that not only the leading and most innovative brands get the memo.

This post was originally published on Forbes.com.

Credit: Photo by Marco Kaufmann on Unsplash