XM Knowledge Base
Author: Adam Bunker
Subject Matter Expert: James Skay
What is AI in customer experience?
Powered by machine learning, AI can improve customer experience in various ways.
From leveraging previous customer engagement data for personalization purposes to streamlining frontline workflows, artificial intelligence customer experience tools can transform business processes for better customer engagement, customer loyalty, and easier customer service management.
For example, businesses can implement AI-based tools like chatbots at key customer touchpoints to reduce the burden on customer service reps, or use AI to optimize user experiences automatically based on user behavior, or implement intercepts that can proactively assist people the moment a negative customer experience is detected.
Understanding AI: Your real-world CX playbook
Examples of AI in customer experience
The most common examples of AI in customer experience focus on tools for providing customer service, but artificial intelligence-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:
AI-powered chatbots:
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.
Digital analytics and UX improvements:
AI processes can also be used as part of digital session replay tools, where recreated user sessions analyze for things like rage clicks, dead clicks, and frustrated mouse/cursor shakes. The purpose here is to learn which areas of a digital property’s UX need to be streamlined for the end user.
Personalized product recommendations:
Artificial intelligence 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,improve time to resolution, and increase customer satisfaction.
Why is AI in customer experience important for business?
Customers expect personalization and deeper connections to brands. Implementing data-driven tools help businesses meet and exceed these expectations. Not only that, but using AI to facilitate customer experience improvements can help to generate more revenue and ease the burden on frontline staff.
Here are a few ways in which artificial intelligence can improve business outcomes:
Quickly analyze large quantities of customer data
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 internal departments.
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 customer experience. This allows your teams to improve customer service by anticipating behavior and taking specific customer-focused actions.
Automatically optimize customer journeys
AI-powered tools can be instrumental in eliminating the guesswork often inherent to customer journey optimization. Using customer data and real-time telemetry, users can automatically be directed to the best path to completion for their needs, reducing friction and drop-offs and helping people find the path of least resistance to their goal.
With high expectations for intuitive digital experiences, customer satisfaction can often depend on creating fluid, seamless experiences across multiple channels and platforms. Artificial intelligence customer experience tools can automatically link and optimize each customer journey to better retain customers.
Easily test and improve experiences
Iterative approaches to 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 with an AI-powered data management platform can give you a holistic view with traceable actions and impact.
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 get 24/7 service without additional pressure on your contact center. Efficiency is further increased with the addition of AI-based functions such as intelligent call routing, text analytics and more. Teams are automatically 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.
Improve revenue with better conversions
Better customer experiences are proven to improve business outcomes. Customers who have a highly satisfying customer experience are twice as likely to purchase more, as well as being three times as likely to recommend and trust a company. Using AI-powered tools can greatly help improve customer experiences, and therefore generate greater revenue.
By using AI-based personalization to automatically direct customers to the products and services they’re more likely to engage with, sales teams are able to increase their revenue while reducing customer frustration and effort. Upselling and cross-selling becomes easier because the items provided are more highly relevant to customer needs. A businesses’ marketing strategy becomes more targeted, rather than using guesswork or siloed data to make choices on what to promote to which audience and when.
By deploying AI-powered chatbots and other machine learning-enabled customer service options, customers can 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 and improve loyalty.
How AI can improve CX
1. Accurately listen and target 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 customer inquiries like 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 to outreach and resolution with AI-enabled customer service tools. Meaningful interactions become easier, drawing customers back to brands for repeat purchases or engagement.
That includes…
Social listening
AI can constantly scour social channels and third-party platforms like review aggregators – and do so at huge scale – to help brands build an ironclad view of what’s happening. Using natural language processing, AI has the ability to understand the meaning, the sentiment and the emotion behind every message.
Trend spotting
All that information builds into a portfolio of qualitative customer experience data. AI tools are uniquely positioned to analyze this ever-evolving data and spot trends that belie hidden pain points. So if people start mentioning a specific customer experience gap across a myriad channels, you’ll know about it as it happens – and can act accordingly.
Proactive outreach
Those social listening abilities also mean you can act fast with personal outreach. Any AI frontline and customer experience tool worth its salt should be able to flag priority cases that need urgent attention – for example, angry messages left on X that need a timely, human response.
2. Proactively guide customers through their journey
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 and customer experiences, utilizing predictive analytics can help speed up the conversion process, rather than waiting for customers to find the products or services they want on their own.
That includes…
Personalized service
With rich AI insights and data to draw from, you’ll be able to offer your customers personalized, powerful offers and discounts. If, for example, your system knows that it’s a customer’s birthday, you can automatically treat them to a discount code for a line you know they’ll love. If, on the other hand, they’ve recently encountered an issue, you can use AI-powered customer experience management software to suggest discounts or offers that will help keep them onside.
Behavioral analytics
AI can analyze customer behavior at scale and use that to suggest where customer experience gaps are getting in the way of sales, or driving churn. The power here is in the sheer volume of data these tools can draw from; the more data you have, the smarter your insights become.
Customer journey optimization
Those behavioral insights are a goldmine when it comes to improving the UI and UX of your customer journeys, since understanding where people struggle in the buying journey is how you’ll improve. If, for example, customers are making it through to the ‘book a demo’ page but seem to be dropping off there, AI can let you know about it – and clue you into why. The resulting UX tweaks can then be A/B tested to ensure you’re making strides in the right direction.
3. Deliver quicker and more effective customer service
With priority cases automatically flagged, customer churn can be reduced and experiences improved. AI-powered technology that can analyze customer behavior and communications can add context, offering real-time guidance and support, even scanning customer inquiries, calls, chats and SMS messages for emotional meaning.
Armed with this information, your customer service team can answer customer questions in a way that best resolves the problem and provides the highest levels of customer satisfaction.
That includes…
Smarter customer history and context
Customers hate having to repeat themselves, but frontline software powered by AI can let customer service agents know exactly what’s got them to this point by detailing their full interaction history – across every touchpoint. That information helps the customer journey become an omnichannel one, where customer support can leave one channel and join another without things feeling disconnected.
Real-time agent prompts
AI’s ability to listen and understand in real time gives it the ability to proffer prompts that help customer support agents stay on course, convey empathy, and acknowledge that things have been difficult. AI can even suggest impactful discounts that can be offered at the end of a call in order to help rescue a negative customer experience.
Automated post-call work
Customer support agents often have to balance being on hand when customers need them most with having to do time-consuming post-call writeups. AI can take some of those more monotonous jobs off of agents’ hands, though, allowing contact centers to better prioritize their most valuable assets: the human beings that make the customer experience what it is.
How AI is changing 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 from which they have to draw. With seamless experiences across channels customers prefer, you can 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 makes machine learning work effectively for these businesses, creating even more human-like, personalized and memorable experiences.
Here are a few concrete ways that AI and machine learning technology are enhancing customer engagement – and will change the future of customer experience:
Be everywhere without impacting experience quality
Customer service leaders will be able to meet customers where they are andmanage their omnichannel strategy more effectively. By basing customer experiences heavily on individual 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.
Simply scale great customer experiences
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 provide increasingly accurate personalized customer experience at scale.
Improve experiences while cutting costs
The advantage of using AI in customer experience is that it helps to streamline processes, customer conversions and retention 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) connect with customers and drive customer engagement.
Understand emotion and act with empathy
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, customer experiences can be improved in a way that feels more human. Rather than customers being faced with impersonal, boilerplate responses to questions they pose 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 customer experience tools boost your business? Find out with Qualtrics XM for Customer Experience.
With over 150 expertly-trained AI models driven by a vast collection of sentiment and experience data, your brand is able to easily deliver more personalized and relatable experiences at scale.
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.
Understanding AI: Your real-world CX playbook