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The Rise of AI in Customer Service: Innovation or Consumer Backlash?

2 Mins read

The customer experience should be improving, right?

Businesses have already poured billions into customer-facing chatbots, and there’s no end in sight to their investments–or their expectations.

According to a Forbes Advisor survey of 600 American business owners, nearly half (47%) say they are looking to leverage new AI tools in the form of digital personal assistants while 46% want to bring more AI into customer relationship management.

However, despite companies’ deepening investments in AI-powered virtual assistants and salespeople, it’s not always working as intended. Namely, apparently smarter bots aren’t always translating into more satisfied consumers.

Consider the results of a new study from CCW Digital and Customer Management Practice: only a small percentage (7%) of customers report improving online customer service interactions while more than half (55%) say their experiences have worsened. These findings should serve as a wake-up call for companies adopting AI to manage customer relationships: over-reliance on chatbots cannot replace genuine human connection.

In relationship-driven industries, such as law, healthcare and real estate, where trust is essential, consumers will likely resist the widespread use of impersonal, tone-deaf chatbots. Unsurprisingly, when homeowners choose between two real estate agents, they prefer the one with well-trained, empathetic human agents over one relying exclusively on bots.

AI Misfires

Large corporations with extensive customer data may automate certain aspects of the human connection, but smaller businesses and most law firms cannot—and shouldn’t attempt to. Instead, they should perceive automation and AI as tools to streamline operations and enrich human interactions. Technology should enhance agents’ capabilities, not replace them. When customers encounter difficulties and seek assistance, they frequently run into unhelpful chatbots and cumbersome self-service options.

The Limitations: Absence of Human Touch

Chatbots fall short of delivering personal connections. When individuals face challenges, they seek someone trustworthy who comprehends their situations—this holds in both business and personal relationships. Without this human connection, consumers are inclined to switch to a company that provides it. For example, consider hiring an attorney. Consumers prefer establishing trust through face-to-face interactions before committing financially and expect to rely on that trusted individual for solutions if issues arise.

There’s a gap between companies’ automation objectives and consumers’ preferences for genuine human connection in problem-solving. The same study found over half of respondents (52%) identified difficulties reaching live agents as their primary complaints.

How to Improve AI in Customer Service

Small and midsize businesses (SMBs) need tools to enhance operations and sales while preserving human-to-human interactions. AI automation can manage emails and text messages to engage with customers or prospects and help them save time and effort. However, when a consumer responds, sophisticated technology should facilitate a connection with a human representative, not persist with automated responses.

Businesses can deploy AI to offer one main benefit: the ability to connect one person to another efficiently. Programs of this kind exist today and help companies convert leads into sales and buyers into long-term customers. To effectively discover and implement these tools, businesses must grasp new AI technologies’ potential and constraints. Expecting AI to maintain human connections indefinitely creates roadblocks for both the company and the customers. Once acknowledged, businesses can identify the appropriate tools to facilitate automated connections between individuals.

Should businesses believe that chatbots can substitute—instead of complement–humans, they risk not only frustrating customers but permanently losing them.

Cory Halbardier is the Chief Operating Officer of Blazeo, an ad conversion platform laser-focused on helping local businesses thrive. Their suite of products and services includes lead capture, lead qualification, appointment setting, and retainer signing. Cory leads sales, marketing, customer success, accounting, and HR. 

AI customer service stock image by VesnaArt/Shutterstock

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