As the business landscape rapidly evolves, technology leaders are steering their customers toward the next frontier of customer experience, leveraging artificial intelligence and streamlined digital architectures to maintain a critical edge. During a recent discussion at ServiceNow’s Knowledge 2025 conference in Las Vegas, CEO Bill McDermott underscored the stakes, warning that “the cost of losing a customer is higher than ever.” For companies across sectors, that cost can be existential.

McDermott, at the helm of ServiceNow—a $160 billion market cap cloud computing company known for digital workflow automation—has sharpened his focus on Customer Relationship Management (CRM), a space long dominated by names like Salesforce. The reasoning, McDermott argued, is simple: the stakes for retaining customers in a turbulent economy have never been higher.

“Right now, the cost of losing a customer is higher than ever. And the lose rate of businesses is higher than ever, 30% greater than it’s been,” McDermott told CNBC’s John Fortt. “So the customers are saying, whatever you feed me, it’s not working. And so what we’re trying to do is reinvent the category.”

The End of Legacy—and the End of Second Chances

At a time when enterprises face pressure to slash costs and deliver seamless digital experiences, companies still “stuck with legacy systems” are paying, in McDermott’s words, a “$10 trillion tax in the US economy alone.” Outdated silos and fragmented processes make it harder—and riskier—than ever to maintain customer loyalty.

“In that [CRM] market, the customers have suffered a lot over the last decade,” he said. “What we’re trying to do is reinvent the category. And that includes how you order things, how you fulfill that order and how you service the customer relationship. And we’re doing that all on a single platform with a pristine architecture that’s fully integrated to enable autonomous agentic AI to serve that customer.”

Customers now expect businesses to anticipate their needs, deliver personalized service, and resolve issues before they escalate. If these expectations aren’t met, competitors with nimbler architectures and smarter AI tools are keen to swoop in—no second chance required. According to McDermott, “the net present value of a very satisfied customer is the greatest asset your listeners have.”

Enter Agentic AI

Central to ServiceNow’s push is the integration of what McDermott calls “agentic AI”—advanced autonomous agents that power smarter, more seamless workflows for both internal teams and external customers. These tools promise to connect traditionally siloed systems, eliminate repetitive manual tasks, and empower employees to focus on higher-value work.

“We’re one of [the platforms that matter],” McDermott said. “You can completely rethink how you run your company.” At Knowledge 2025, ServiceNow reported 25,000 in-person attendees and millions online—a testament to the interest in the company’s ambitions.

AI’s transformative potential is not restricted to the private sector. McDermott emphasized ServiceNow’s deepening work with government agencies, both in the U.S. and abroad. “Government has to run like a best run business,” he said, highlighting the platform’s role in bridging communication gaps within and between agencies, and driving new levels of efficiency.

The Race Against Commoditization

With Big Tech’s cloud “hyperscalers” setting the pace in infrastructure and AI, application providers like ServiceNow face the constant threat of being relegated to “dumb pipes”—mere conduits for someone else’s smarter software. The lesson, McDermott noted, comes from the cautionary tales of the telecom industry, where companies once feared being reduced to commodity bandwidth providers.

“What I see evolving here is the consolidation of the 20th century software industrial complex. And there will be a lot less apps because if you don’t need them all, why are you paying for them?” he pointed out. The bet is that businesses will seek to replace scattered, redundant applications with integrated, AI-powered platforms—cutting operating expenses and unlocking new growth.

“We’re trying to integrate with all of [the hyperscalers]. All of the large language models out there, and have a workflow data fabric that connects with data sources from those old systems of record or frankly, any data lake,” McDermott explained. “That is the game change, where you can put that platform in, exit out lots of opex on lots of legacy that you don’t need to be paying for. So you can invest in a platform that’s going to cut your costs and help you grow again.”

The Profit Equation

For both private and public sector organizations, the financial calculus is becoming more direct. Companies that once tolerated bloated software portfolios and clunky user experiences must now justify every dollar spent—not just in shaving costs, but in improving the bottom-line through customer retention.

In this climate, ServiceNow and its competitors are racing to embed AI deeper into their platforms, promising not only operational efficiency but a better, stickier customer experience. If McDermott’s vision of “agentic AI” lives up to its billing, the price of failure will only grow steeper.

“The net present value of a very satisfied customer is the greatest asset your listeners have. So they need ServiceNow,” McDermott told CNBC, highlighting the new arms race to turn customer happiness into hard cash.

For now, at least, the message from Las Vegas is clear: in an AI-powered age, the margin for error has all but disappeared.