How AI Is Driving the 4th Revolution in Customer Experience
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How AI Is Driving the 4th Revolution in Customer Experience
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AI is driving the 4th evolution of customer service, dramatically reducing wait times, personalizing customer experiences, and giving agents the tools they need to perform their jobs better. Over the next year, AI will revolutionize customer service by improving the experience for both agents and customers, driving efficiencies and potential cost savings. This rapid evolution of traditional call centers and chatbots means that those who don’t adopt will fall behind.
According to Info-Tech Research Group Advisory Director Thomas Randall, the average annual savings from implementing an AI-driven chatbot could amount to a nearly 17% improvement in resource efficiency. It also frees up senior call agents’ time to focus on more complex inquiries, and a chatbot can efficiently operate 24/7.
Companies like Ada, NICE, Kore, Drift, LivePerson, Poly, and Yellow.ai are leading the market with AI-driven solutions that overcome traditional customer service challenges like scalability, availability, consistency, and personalization. It's no wonder that Customer Experience AI was chosen as a top priority in the Info-Tech Big Bets on AI.
The History of Customer Service, From Personal Touch to Automation
A few decades ago, the typical customer service call involved a direct conversation with a knowledgeable and trained human. This was the era of the dial phone, the one with a long twisting cord that wrapped around a corner or two so that you could grab a snack from the fridge while you waited. It was a service model that provided a delightful, personalized approach but was costly and difficult to scale.
Fast-forward to the early 90s, and as businesses grew and evolved, the technology also changed. During this time, we saw a shift to massive offshore call centers. What was once touted as an advancement in customer service came with its own issues.
Then we saw the rise of chatbots, a technology that offered self-containment and 24/7 availability. However, programing was challenging and fell far short of the human touch.
In fact, over this time, automated and remote customer service led to a significant decrease in satisfaction and diving CSAT scores, where 67% of customers report hanging up out of frustration1, 1 in 25 report rage-clicking2, and 65% report leaving a brand after just one lousy experience3.
Since it takes 12 positive customer experiences to make up for just one negative one4, you can see how costly a customer service problem becomes for a company.
Agent Satisfaction and Performance Also Suffered
And it wasn’t just customers that suffered. Agents did, too. The lack of human touch impacted both sides, agents and humans. Seventy-four percent of agents report high stress levels in their jobs5, and almost half state that their job negatively affects their mental wellbeing6. Wellbeing. This stress is driving high turnover rates and slashing productivity by 50%7.
The AI-Driven Transformation of Customer Service
Today, AI is defining the 4th evolution of customer service. It is reshaping the customer experience thanks to its ability to understand a wide range of human interactions without the tedious task of manually programming each possible variation. The days of shouting "human" to an IVR (interactive voice response) system or rage-clicking in a chat might very well be a thing of the past.
Given the vast amount of data involved in customer interactions, it is difficult for human minds to comprehend and process the sheer volume engaged in a complex variety of interactions. Our brains cannot begin to process the vast amounts of data available in customer experience. But, an AI-assisted agent will be equipped to handle complex multi-channel customer service interactions.
AI customer service software is bringing with it a rapidly evolving landscape. With these new AI customer service platforms, the call center will change as we know it. Human agents will increasingly be supported by AI, which helps them do their jobs better.
Where we are heading with AI in customer experience. Our key predictions for 2025:
- Those Without AI Will Fall Behind: AI will become a standard feature in customer service software. And by the end of 2025, those who haven’t embraced AI in their customer service will fall behind.
- AI as an Assistant, Not Replacement: AI will assist agents in better understanding and helping their customers across all channels and in the medium of their choice. Customers will be matched with the best agent for the job, and that agent will be equipped to understand the personalized needs of that interaction.
- Evolution of the Agent: Agents' roles are set to evolve, not disappear. AI will make agents more successful, not obsolete. A job that has become very stressful will have the tools to manage complex human-centered requests that, at their heart, have a lot of empathy, deep knowledge, and understanding to do the job right. AI will also support mundane and repetitive tasks.
- Real-Time Personalized Interaction: Customer Satisfaction Scores (CSAT) will see a tectonic shift thanks to AI’s ability to analyze massive volumes of data and craft a highly personalized experience. This will reduce resolution time and increase the containment rate across all channels.
- Voice AI & Conversations: Natural language processing models, GenAI, RAG (retrieval-augmented generation), and conversational AI will bring a human-like interaction to voice AI models. This gives customers who prefer to interact on a voice channel the ability to do so thanks to AI that delivers delightful, personalized, and similar human interactions to those we all fondly remember.
- LLM Agnostic Customer Experience AI: Software platforms will become increasingly LLM agnostic, with the right model for the job seamlessly shifting from one request to another. We call this the uberfication of the LLMS, where the right LLM is chosen for the right job, much like how Uber matches with the best driver for any ride
An Overview of Key Customer Service AI Vendors
AI customer experience vendors like NICE dominate the enterprise arena. Still, up-and-comers like Ada and Kore are becoming strong contenders for less complex CCaaS (contact center as a service) requirements, with LivePerson rounding out the pack. Yellow.ai offers one of the most straightforward solutions for small companies needing an easy chatbot installation. Additionally, for those requiring sales and marketing integration, Drift is worth a look.
Ada: Formerly a Chatbot, Now Moving Into Omnichannel CX AI
Initially known for its chatbots, Ada has expanded into interactions across all channels, including phone, email, and social media. Their platform currently operates in an all-in-one offering that offers seamless automation across support channels without needing separate products or add-on costs. Ada is suited for companies in SaaS, fintech, and e-commerce.
Drift: Marketing Meets Customer Service
This is our pick for any company looking for a combined marketing and sales solution that is supported by AI. They were acquired by Salesloft in 2024, which will further strengthen their position in sales as well. It provides real-time conversational AI response and support, focusing on customer service, lead generation, and personalized marketing.
Kore.ai: CX AI for Small to Medium-Sized Enterprises
Kore.ai is highly customizable. We primarily recommend their solution for SMBs that need a conversational AI platform with low or no-code requirements.
LivePerson: Predictive and Proactive AI CX
Their AI platform enables businesses to communicate with customers through their preferred messaging platforms, from SMS, Facebook Messenger, and WhatsApp. However, their solution may be more difficult to scale and may be more suitable for small and mid-sized businesses.
NICE: The Top Choice for Enterprise-Level CCaaS
When it comes to enterprise-level CCaaS, vendors with sophisticated internal agent interactions, compliance, and regulation, there aren’t many with the experience of NICE. Their Enlighten AI solution is recognized for its compliance with regulatory standards across geographical locations. It is particularly effective for call centers that need real-time analysis to make decisions quickly and guide agents through informed responses that meet business objectives.
Poly AI: A Leader in Voice AI
Their AI model handles complex human voice inquiries with ease. It is one of our top choices this year for business seeking a comprehensive voice AI solutions for both internal and external inquiries.
Yellow.ai: The Quick-Setup
Yellow.ai is known for its easy-to-deploy chatbot solutions. It has a quick setup with a chatbot that installs in under five minutes. Their solution is not as robust as other vendors in this area, but they are ideal for small company solutions.
Summary
The AI customer service revolution is good news for those of us who have been largely frustrated by the disappointing experiences of large call centers. As technology evolves, we are indeed experiencing the rebirth of customer service – and perhaps the days of rage-clicking and repeatedly shouting “human” into a phone will soon be gone. While the extent to which human agents will still be needed remains to be seen, it is clear that AI will, at the very least, enhance the customer experience. The vendors we have reviewed are at the forefront of this revolution, leading the way to a better customer service experience thanks to artificial intelligence.
To learn more about how these new technologies can transform your customer service offerings, read our related high-tech research or explore our AI Marketplace offerings for the best AI customer service vendors.