AI customer service is a quickly emerging technology that offers significant promise for improving the relationships between brands and the people who buy from them.
Done right, pairing AI and customer service leads to better customer outcomes. Brands see increased loyalty while decreasing stress and burnout for busy CS teams.
Bonus: Get a free, easy-to-use Customer Service Report Template that helps you track and calculate your monthly customer service efforts all in one place.
What is AI customer service?
AI customer service is any tool or process used to assist customers with the aid of artificial intelligence tools. The most common use case is the generative AI chatbot, or virtual agent.
How does AI customer service work?
AI customer service uses generative AI to answer up to 80% of incoming customer service and support queries.
Generative AI means that the tool is capable of generating new content based on the information you use to train it.
These are not the clunky pre-programmed chatbots of old. Generative AI chatbots use machine learning and natural language processing. This better simulates the experience of interacting with a human agent. This is sometimes known as conversational AI.
The idea is not to fool people into thinking they’re talking to a human. (That’s often illegal.) Instead, generative AI makes virtual agents more nimble and intelligent. They’re better able to understand the context and intent of customer queries. They can then provide personalized responses rather than cookie cutter replies.
A good AI customer service tool includes guardrails that protect both brands and customers with secure data standards and rigorous training protocols.
Not sure if AI customer service is right for your brand? Consider that 48% of customer service leaders expect generative AI to have a high impact on their organization in the next 12 to 18 months. The generative AI market as a whole is projected to increase from $20 billion in 2023 to more than $350 billion in 2030.
6 benefits of using AI for customer service
1. Streamline your customer service process
Most modern businesses have more than one digital touchpoint. If customers can’t get immediate help on one channel, they may try to contact your team through multiple channels. Or, they may give up entirely, damaging brand loyalty and repeat purchase intent.
A growing number of customers actually prefer self-serve customer service models, where a company provides resources to allow them to solve problems themselves. This is especially true for younger consumers. Nearly 40% of Millennials and Gen Z say they’ll abandon an attempt to get customer service if they can’t find a solution themselves online.
Source: Gartner
AI-enabled chatbots are a critical tool to enable self-serve customer service that actually solves problems rather than sending customers around in circles looking for help documentation.
This creates an immediate reduction in queries that require agent intervention. This streamlining of the support process frees up agent time to focus on high-value touchpoints. Both customers and agents are more satisfied with this new process that makes better use of their time.
2. Offer 24/7 customer service (without a 24/7 call center)
The always-on nature of AI chatbots means that your customers’ queries are taken care of in real time, no matter what time of the day or night it is, in any time zone. Adaptive, responsive customer service is always available, even when your human agents are at rest.
Perhaps it’s no surprise, then, that respondents to Hootsuite’s 2024 Social Media Trends Report survey reported a 318% increase in how much they plan to use AI chatbots over 2023.
But interactive customer service tools like chatbots are not the only relevant use case for AI in customer service. Hootsuite’s survey also found a 195% increase in how many organizations will use AI to produce customer support text. That text can be used for help documentation or for scripts that assist support agents in providing the most effective customer care.
3. Improve the customer experience
Improving customer experience is the most-cited priority for customer service leaders in 2024, according to Gartner. Likewise, Forrester found that improving or personalizing the customer experience is a top use case for generative AI for 42% of AI decision makers.
AI customer service tools are designed to understand what your customers need quickly and resolve many queries on their own. For more complex queries, AI systems recognize that human intervention is required and pass the case on to the most appropriate agent. The customer is guided through the process until they get the help they need, in a satisfactory resolution time.
Compare this to the automated options of old, where customers found themselves in a sometimes endless loop of phone menus, dictating account numbers to automated systems that would often hear wrong, or waiting on hold for hours. It’s easy to see why an intuitive and easy-to-use AI chatbot customer service tool improves the customer experience.
4. Provide personalized shopping and product support
Beyond helping customers to solve their problems, AI customer service support can actually feed your sales funnel and drive revenue. Potential customers may contact your support team for advice on which product or plan is best for them, or for help navigating the purchase process.
Modern online shoppers expect access to personalized product recommendations. This is especially true for Gen Z and Millennials.
Source: Statista
Rather than spitting out recommendations based solely on keywords, AI customer service tools use machine learning to understand the customer’s intent. This results in better contextual matches and smooths the path to purchase.
5. Better understand customer needs
Good AI customer service tools have built-in analytics that help you understand deep insights into your customers.
This data may be able to help you understand where your customers’ friction points are. Is there something people often complain about or ask for help with? Are customers always asking about a potential new feature? Customers are telling your AI assistant customer service bots what they want from your company. Be sure to listen.
This may be one reason why Accenture found that companies using generative AI for customer-facing initiatives will achieve 25% higher revenue after five years than companies that use genAI only for productivity.
6. Make better use of your customer service budget
AI customer service tools allow you to improve agent productivity by dedicating less of your time and customer service budget to dealing with standard, repetitive queries.
Theoretically this could allow you to reduce the number of customer service agents on your team. Or, you can think about more effective ways to use your agents’ specialized knowledge.
Rather than being a straight cost center, a customer service team freed up to focus on improving customer relations can become a source of revenue by improving customer lifetime value. Empower your team to design new programs and strategies that drive brand loyalty and customer retention.
How to pick the right AI tool for customer service
Consider your needs and budget
As you saw above, AI chatbots are the most common use case for AI customer service, but they’re not the only one. Before you go shopping for an AI customer service tool, think about what you need that tool to do.
Do you just want to resolve very basic customer queries? Or do you want more complex capabilities that mirror a human agent? Do you need to connect your tool to your CRM? Will you use the tool to generate content like support documentation and scripts?
All of these factors affect your budget. When planning the budget, think about the potential return on investment. How much work will you offload from your existing sales team?
It’s also a good idea to check whether any of your existing tools offer an AI customer service component you can access at less cost than a standalone service.
Understand your industry’s regulations
If you’re operating in a regulated industry, compliance requirements are a consideration for your AI tools just as they are for every other component of your digital strategy.
For example, AI is not a registered health professional or financial advisor. AI certainly has the potential to improve both health and financial literacy outcomes. But it’s not a good idea to launch a chatbot that tries to answer health or investing questions. These conversations still require a professional human touch.
No matter what industry you operate in, it’s important to identify your AI as AI. Make sure your AI customer service tools allow you to clearly indicate when someone is chatting with a virtual assistant and when their case is passed along to a real person. On that note…
Make sure the AI and your team can work together
No AI customer service tool will be able to resolve 100% of customer queries. A good AI tool understands when it has reached the limits of its capabilities and can seamlessly pass the case along to the right member of your team.
At the same time, your human agents need consistent, up-to-date access to the information gathered by your AI tools, all in one central location.
Check for security and brand safety features
Do a deep dive on the data security practices of any AI tool you choose. It will have access to customer data and information that needs to be protected.
At the same time, look for brand safety features that protect your brand from reputational damage. What are the processes for AI data training and retention? You need strict control over the resources used to train the AI. And you need to be able to update that training regularly as your products and service documents evolve.
Look for easy implementation
Implementing AI into your processes sounds complicated — but the whole point of an AI customer service tool is to make things easier for your team. Look for AI-powered customer service tools that integrate easily with your existing tech stack.
Ideally, the tool should be straightforward to train with a simple upload process. Feed it your existing support documentation and the tool should take it from there. It should also be easy to update when you launch new products or versions.
3 myths about AI customer service debunked
1. AI will completely replace your CS team
While 23% of organizations expect job displacements as a result of generative AI, 49% expect that AI tools will actually create new jobs.
We’ve already talked about this a little bit. The idea is not to replace your CS team, but to offload lower-level tasks and allow your team to make the best use of their time.
2. Generative AI hallucinations make it unreliable for customer-facing use
You’ve probably heard about one of the lawyers who used ChatGPT to cite non-existent precedents at trial. (Yes, it’s happened more than once.) More relevant to brands is the case of Air Canada’s chatbot providing incorrect information about bereavement fares to a passenger. (The airline was forced to honor the incorrect fare information the chatbot provided.)
While these concerns are legitimate, they can be addressed. The most important way to prevent AI hallucinations is to use the right resources to train the AI tool. Limit the training documents to your own in-house support documentation and FAQs, and the AI tool is equipped with the right answers to provide customers.
In fact, more than half (53%) of U.S. business executives think AI-powered customer service assistants will actually provide customers with more accurate information.
3. AI is impersonal
The original online chatbots may have been impersonal, but generative AI is expressly designed to create a personalized experience. Good AI tools are built to understand customer needs and intent, then customize their responses to provide a fully personalized support strategy.
3 AI customer service tools to get started
1. Hootsuite
Source: Hootsuite
Hootsuite’s Generative AI Chatbot customer service tool uses industry-leading technology that has been thoroughly tested by a team of AI experts.
The chatbot is a brand-safe solution that’s quick and easy to set up and manage content for. Anyone on your team can set it up and update training resources on the fly. It’s strictly limited to generating responses based on your pre-approved FAQs and our training framework, so you don’t need to worry about risk to your brand. The AI Chatbot never trains on or stores customer data, your data or Hootsuite’s data.
Designed by AI experts and tested for 1,000+ hours to ensure consistency and brand compliance, the chatbot can understand the intent and context of customer messages. It’s never thrown off by spelling mistakes, emojis, or unusually phrased customer questions.
This is a chatbot designed for team collaboration. Customer conversations transferred from bot to human are managed in Hootsuite Inbox. All unanswered inquiries appear in one place so you can easily collaborate across internal teams.
Reduce response time (and your workload)
Manage all your messages stress-free with easy routing, saved replies, and friendly chatbots. Try Hootsuite’s Inbox today.
2. Kore.ai
Source: kore.ai
Kore.ai provides a suite of AI customer service tools customized for retail, banking, and healthcare. The system uses a visual builder so the AI can be set up with no coding. It allows you to create virtual assistants and even an AI-first contact center. Kore.ai also includes AI-assist tools that help human agents better interact with customers through a centralized communications hub.
3. OneReach.ai
Source: OneReach.ai
OneReach.ai describes its AI agents as “digital teammates” and “intelligent digital workers.” It embraces the idea that AI customer service is meant to make life easier for both your team and your customers. Beyond customer service applications, OneReach offers a full suite of AI business tools, from creating a contract to designing AI images. No coding is required to set it up.
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