More and more companies implement AI solutions in their customer service operations. Of course, adopting new technologies is a must to stay relevant in the market. But let's find out if this technology can deliver customer service more efficiently and at a lower cost than humans in 2023.

Regarding business applications, AI as an emerging technology has already reached its productivity plateau and is widely used in various industries. In a nutshell, AI solutions enable the automation of processes, from routine office tasks to complex top-level processes. 

AI also finds patterns that humans can't because of complex calculations or too many influencing factors. This analysis helps the company identify invisible problems and unexpected paths of development.

Last but not least, it helps with decision-making. Based on historical events, AI learns and can recommend the most effective decision for the current situation and even predict the event outcome with high probability.

As a result, many companies have already embraced AI-based solutions in their customer service strategies. Now, let's move from theory to practice and examine how different AI solutions can help you improve customer service.

AI Chatbots

AI chatbots, or virtual agent technology (VAT) solutions, are the most common use of AI in customer service. They can be stand-alone applications or integrated into enterprise systems such as CRM, websites, mobile applications, or the messaging of social networks.

Intelligent chatbots are an integral part of modern AI customer support systems. Michael Podolsky, the CEO and Co-Founder of, points out that: 

“Chatbots have an excellent chance to lower the costs of customer service operations for companies. However, the companies implementing AI now must have sufficient data sets to train chatbots and monitor the quality of interactions with consumers. Over time, AI-trained chatbots will be a very good substitute for the majority of inquiries to customer service.”

However, there is an opinion that using AI customer service solutions can negatively impact customer satisfaction when interacting with customer support. According to the IBM Institute for Business Value, companies that deployed VAT have improved customer satisfaction by 8% and support agent satisfaction by 7%.

How do they do it? Let's look at two types of intelligent chat bots and see what kind of AI customer experience they provide to the user.

Transactional chatbots

A transactional chatbot is a type of chatbot that is used to perform or automate a single function. This type of chatbot uses rules, natural language processing, human speech recognition and generation technology, and minimal machine learning (ML), which allows machines to learn.

This chatbot is designed to provide fixed options based on the user's need or desired outcome. Users describe their problems using voice or text. The system recognizes this information, looks for keywords and phrases the ML algorithm has learned in advance, and presents the user with appropriate options. After the user takes the following action, the chatbot guides them through the process, offering more options until the user's question is answered or the problem is resolved.

Also, Interactions with transactional chatbots are highly task-driven and structured. This makes them incredibly useful for businesses when they know the list of most often questions and actions their customers need help with. This could include questions about business hours, steps to change a user's password, or checking the status of an order. Because of their versatility, transactional chatbots are the most widely used type of chatbot.

Conversational chatbots

Conversational chatbots are more advanced, interactive, and capable of delivering a more personalized AI customer experience to the user. Conversational AI is the underlying technology they are built on. It allows chatbots to interpret users' messages by understanding the overall gist rather than focusing on finding familiar keywords as transactional chatbots do. 

They can also sense a user's mood, such as whether they are angry or upset, and generate a text or voice response that a live person would give. This type also uses natural language processing algorithms. However, the machine learning models' more powerful capabilities, coupled with access to large databases, allow this system to learn on the fly.

Conversational chatbots are most often implied when it comes to virtual or digital assistants. In addition to recognizing and simulating human speech, they use predictive intelligence to personalize responses based on historical data about a particular user. This is precisely what allows them to provide users with AI customer service in the truest sense of the word.

They can learn user preferences over time, make recommendations, and even anticipate needs. To take a simple example, a customer of an online store calls customer service to ask a few questions about an order. If the order was placed on that number, by the time the AI chatbot answers the call, it already knows how to address the customer by name and can guess what type of request the customer is making to customer service. 

Let's say the system sees that the order hasn't been delivered yet. It can respond in advance: "Hi John, we apologize for the delay; your order is on its way. The approximate delivery time is two days. What else can I do for you?"

Benefits of AI in Customer Service 

Leveraging AI customer service solutions provides benefits enabling companies to deliver an exceptional customer experience.

Reduce costs

AI customer service, such as the chatbots mentioned above, can reduce the cost of handling a user's customer support request. A recent study by Forrester Consulting estimates that large companies that incorporate AI into their customer service can achieve a cost savings of $5.50 per completed conversation.

Save time for customer service representatives

Automating routine tasks, such as gathering information about a customer's problem before connecting them with a customer service agent, can save up to 12% of the agent's time. This allows the agent to handle more requests during the workday or focus on specific cases that require human intervention.

Increased customer satisfaction

According to IBM's "The Value of Virtual Agent Technology" study, using VAT alone increased customer satisfaction by 8-12%.

Increase revenue

The study also found that by deploying AI customer service solutions, respondent companies have increased company revenue by an average of 3%. At the same time, 54% of respondents report having already met or exceeded their expected return on investment (ROI) for their AI implementation.

Gain customer insights

In addition to automating tasks directly related to customer communications, AI can improve customer service by working behind the scenes. It's about analyzing the large amounts of data that even small businesses can quickly accumulate. Based on this analysis, you can better understand your target audience, their real needs, and preferences. 

You can also predict future trends and seasonal changes using AI-based analysis of historical data. As a result, you can offer users more personalized and relevant products and services, increasing the likelihood of conversion.

Risks of AI in customer service 

Despite all the benefits AI customer service offers companies, before implementing AI-based solutions into your business processes, you should always keep the following in mind, especially regarding AI customer support solutions.

  1. Artificial intelligence is becoming increasingly common, and the ability to solve your problem by talking to a conversion chatbot is a familiar pattern of behavior for most people. However, it's always worth checking, but will it really be comfortable for your target audience? If it has conservative habits, you'll find that every other customer yells into the phone, "Connect me to the operator now." In that case, AI customer experience is out of the question.
  2. When you implement an innovative solution in your organization, you must ensure your employees are ready to adopt new technologies. You need to make sure that you take the time to train your employees before they start using this solution daily. In addition, some people fear AI will take their jobs, and they may resist using such solutions. Even if the solution is designed to make their jobs easier.
  3. For AI in customer service to truly benefit the business and its customers, you must be prepared that more AI solutions will not deliver exceptional results from the box. In most cases, you will need to customize the AI-based solution precisely to your company's needs and characteristics. This is true for SaaS solutions, but if you build a custom solution for your business, you won't have this problem. However, this can significantly affect the price of development.

So, AI in customer service is an excellent multifunctional tool that will make life easier for customer service agents and increase customer satisfaction. However, you need to customize AI solutions to interact with your customers specifically to deliver them truly outstanding results. One way or the other, AI can only partially replace live customer service at this point.

And while you're considering whether your company needs an AI customer service solution, we recommend reading our article for practical advice on how to improve customer service.


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