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Using AI to create unrivaled customer experiences

13 min read
With the right approach, artificial intelligence (AI) can help you to launch personalized customer experiences at scale. Learn how the right AI-driven tools can help to design experiences that will increase customer engagement and boost your customer retention rate.

Author: Rosemin Anderson

Subject Matter Expert: Koren Stucki

What is AI in customer experience?

Powered by machine learning and other data-driven technology, AI can be used in various ways to improve the customer experience.

From leveraging customer data for personalization purposes to streamlining frontline workflows, AI can transform business processes for better customer engagement and customer loyalty, as well as easier management of customer service.

For example, businesses can implement AI-based tools such as chatbots at key customer touchpoints to help reduce the burden on customer service reps, or use AI to optimize the user experience automatically depending on user behavior.

Free eBook: Understanding AI: Your real-world CX playbook

Examples of AI customer experience

The most common examples of AI in customer experience focus on tools for providing customer service, but AI-powered tools can make a difference both on the customer frontend and behind the scenes of business processes.

Here are a few examples of AI being used for customer experience:

  • Chatbots powered by AI technology: Rather than utilizing human agents, sophisticated AI-driven chatbots can provide 24/7 access to information for customers, offering a human-like conversation and personalized assistance.
  • Personalized product recommendations: AI tools can automatically detect customer identities and make changes to user experiences to offer personalized product recommendations based on previous customer behavior.
  • Interactive voice response (IVR): When telephoning a company, customers may be automatically directed by an AI-based system to the best person to speak to about their reason for contact, allowing contact centers to reduce wait times and improve time to resolution.

Why is AI-driven customer experience important for business?

As customers increasingly expect personalization and a deeper connection to brands, businesses that implement data-driven tools can better meet and exceed expectations. Not only that, but using AI to facilitate customer experiences can help to generate more revenue and ease the burden on frontline staff.

Here are a few ways in which AI can improve business outcomes:

Large quantities of customer data can be analyzed quickly

With expectations of personalization at an all-time high, using customer data to direct user journeys and experiences is vital for businesses to remain competitive. Often, customer data is siloed across platforms and across internal departments. With AI tools, customer

For example, with the addition of AI-based analysis using Natural Language Processing (NLP) or Natural Language Understanding (NLU), your customer service reps are able to automatically surface insights on customer sentiment, emotion, intent and more in real-time to provide a highly tailored experience. This allows your teams to improve customer service by anticipating behavior and taking specific customer-focused actions swiftly.

omnichannel text analytics

Customer journeys are automatically optimized

AI-powered tools can be instrumental in eliminating the guesswork of customer journey optimization. Using customer data, users can automatically be directed to the best path to completion for their needs, reducing friction and drop-offs. Using advanced analytics and real-time data, customers can be sent down the path of least resistance to their goal.

customer journey drop-off alert

With high expectations for intuitive digital experiences, customer satisfaction can often depend on creating fluid, seamless experiences across multiple channels and platforms. AI customer experience tools can automatically link and optimize customer journeys to better retain customers.

Experiences can easily be tested and improved

Iterative approaches to customer experiences are made simple with automated processes for testing and learning. With data from all customer interactions captured and turned into valuable insights, it becomes easier to discover which experiences are landing and which aren’t, and then make precise improvements. Adding in details from customer feedback and other information usually kept siloed across departments, an AI-powered data management platform can give you a holistic view with traceable actions and impact.

AI can automate and improve business processes

AI can be used to automate business processes, driving efficiencies and reducing the burden on internal teams. For example, a common source of friction for businesses and customers is the provision of customer service.

With the implementation of advanced virtual agents, chatbots and other self-service options powered by AI, customers can get 24/7 service without additional pressure on your contact center. Efficiency can be further increased with the addition of AI-based functions such as intelligent call routing, text analytics and more. Teams can automatically be sent insights specific to each customer interaction, with burdensome tasks like post-call documentation handled by AI to free up their time for other actions.

This increased efficiency allows your team to focus on what matters and simultaneously improves the customer experience. They’re able to connect with customers on a more human level, channeling their energy to provide a human touch to each conversation. Instead of having to work out how to handle each customer with little context, your frontline teams are able to draw on past strategies based on in-depth data, as well as instantly understand the context for each interaction.

Businesses can make improve revenue with better conversions

Better customer experiences are proven to improve business outcomes. Customers who have a highly satisfying customer experience are 2.3 times as likely to purchase more, as well as being 3.1 times as likely to recommend and trust a company. Using AI customer experience tools can greatly help to improve customer experiences, and therefore generate further revenue.

By using AI-based personalization to automatically direct customers to the products and services they’re more likely to engage with, brands are able to increase their revenue while reducing customer frustration and effort. Upselling and cross-selling becomes easier because the items provided are highly relevant to each individual customer. A businesses’ marketing strategy becomes more targeted, rather than using guesswork or siloed data to make choices on what to promote to which audience.

By providing AI-powered chatbots and other machine learning-enabled customer service options, customers are able to quickly make purchase decisions without having to overcome obstacles such as long wait times to customer care centers. Smoothing friction points and providing whatever customers need, no matter where they are, helps to drive greater conversions.

How AI can improve CX

Accurate listening and targeted action with trained AI

Gathering customer feedback from surveys allows you to see direct feedback – but ideally, your business will hear everything a customer says about you, no matter where they share it.

With an AI-powered tool that uses machine learning, Large Language Models (LLMs) can be trained to detect customer data across the digital ecosystem, precisely and accurately surfacing comments, reviews and more that relate to your brand. Adding this information to the details gleaned through text analytics of calls, emails, surveys, chatbot interactions and more gives you an unrivaled understanding of your brand identity and your customers.

With accurate listening comes more informed action. Customer issues can be handled more sensitively from detection through to outreach and resolution, with AI-enabled customer service tools to help. Meaningful interactions become easier, drawing customers back to brands for repeat purchases or engagement.

Proactive guidance through the customer journey, no matter the starting point

No matter where your customers start their interactions with your brand, AI-driven tools can quickly and accurately get your audience through the marketing and sales funnel to conversion. Whether they start on social media posts, come in through advertising, organic search results or more, with an AI-powered system you can quickly direct customers down the path of least resistance to conversion. Basing the customer guidance on existing data, on customer experience, and  on utilizing predictive analytics can help to speed up the conversion process, rather than waiting for customers to work to find the products or services they want.

Quicker and more effective customer service

With priority cases automatically flagged, customer churn can be reduced and customer experiences improved. AI-powered technology that can analyze customer behavior and communications can add context, offering real-time guidance and support, even scanning calls, chats and SMS for emotional meaning. With this information, your customer service team can answer customer questions in a way that will best resolve the problem and provide the highest levels of customer satisfaction.

How AI will change the future of CX

The leading businesses of the future will be driven by the data they collect from an ever-increasing range of sources, as well as the power of the analytics they have to draw insights from. With seamless experiences across any channels a customer prefers, they’ll be able to boost customer retention by automatically understanding the context of customer interactions and taking targeted action.

A constant process of feeding artificial intelligence-driven technology new data and customer information will make machine learning work effectively for these businesses, creating even more human-like, personalized and memorable experiences.

Here are a few more concrete ways that AI and machine learning technology will change the future of customer experience:

Businesses can be everywhere without impacting experience quality

Customer service leaders will be able to meet customers where they are, but manage their omnichannel strategy more effectively. By basing customer experiences heavily on customer preferences, orchestrating experiences using AI will reduce process complexities and allow for in-channel resolutions or quick, seamless progress from one channel to the next.

Scaling great customer experiences will be simpler

Adding new customers to the pipeline will be increasingly easier as more data is gathered for an AI-enable customer service strategy. With further understanding of consumers’ individual and general needs and the AI-based tools learning all the time, businesses will be able to provide increasingly accurate personalized customer experience at scale.

Costs will be cut while experiences only improve

The advantage of using artificial intelligence in customer experience is that it helps to streamline processes, customer conversions and the process of retaining customers once they’ve engaged with your business. With more effective targeting, customer journey orchestration and better customer service options, you can more easily (and in the long run, more cost-effectively) reach out to customers and drive customer engagement.

Understanding emotion and acting with empathy will be easier

There is a common misconception that with AI, customer experience and customer service will become less “human” and more robotic. There is a concern that AI technology will remove the need for frontline service staff, and that brand connections will feel “false”.

It’s a valid concern. In our own research, we found that 5.2% of customers believe agent empathy makes a difference to their customer experience – and in contrast, only 2.7% valued low wait times. In 2023, 36% of consumers are unhappy with the empathy shown in their customer service interactions, meaning that the businesses that can leverage AI to improve empathy will forge ahead of the competition.

With the right tools at hand, the customer experience can actually be improved in a way that feels more human-like. Rather than customers being faced with impersonal, rote responses to queries that they have to make to unsophisticated customer service chatbots, your audience can feel more understood and as if they have a closer connection to your business. With Natural Language Processing (NLP) happening in real time and AI technology constantly getting “smarter” with new customer data inclusions, individual customer context becomes an integral part of the customer experience.

Frontline agents are able to quickly understand customer emotions and take actions proven to be effective, based on past data delivered to them as real-time insights. They’re able to focus more on the customer connection, rather than establishing the root of problems. This creates a closer relationship between customer and brand, and eases the burden on frontline staff.

How Qualtrics uses AI for unforgettable customer experiences

How can AI improve customer experience specifically for your business? Find out with Qualtrics ExperienceXM/os2. With over 150 expertly-trained AI models driven by a vast collection of human sentiment and experience data, your brand is able to deliver personalized, human-like experiences at scale easily.

qualtrics experience management insight

Spare your teams the tedious manual tasks and streamline your customer journeys for maximum ROI. Understand the changing markets, customer behavior and sentiment with real-time analytics and insights, all powered by the AI behind Qualtrics’ latest XM platform iteration.

Free eBook: Understanding AI: Your real-world CX playbook