9 advantages and disadvantages of AI in customer service

In every industry, AI technology is allowing customer service leaders to rethink the way they structure their teams and operations. As more and more businesses adopt AI to aid in customer interactions, it’s important to understand both the advantages and potential drawbacks of adopting this technology.

This blog weighs up both the pros and cons of AI in customer service, giving you a comprehensive overview of its impacts, and how your business could benefit from AI in customer service operations.

Understanding AI in customer service

Artificial Intelligence (AI) in customer service refers to the application of machine learning algorithms and natural language processing (NLP) to automate and enhance customer interactions. This can include chatbots, virtual assistants, and predictive analytics tools designed to streamline support processes.

Advancements in human-like AI software over the past decade means that AI’s utility in customer service has evolved significantly. Initially, customer support teams introduced basic chatbots to handle simple inquiries. However, advancements in machine learning and NLP have created more sophisticated AI systems capable of understanding and responding to complex queries, providing personalised experiences, and analysing large datasets to predict customer behaviour.

The adoption of AI in customer service is rapidly increasing. Recent studies have suggested that the AI market will to grow to nearly 2 trillion U.S. dollars by 2030. Many businesses are using AI tools to improve customer support workflows, reduce response times, and gain valuable insights into customer behaviour.

Pros of AI in customer service

Greater efficiency and speed

AI significantly improves the efficiency and speed of operations in customer service. Automated responses with faster resolution times mean that your customer inquiries are addressed promptly, reducing wait times and improving overall satisfaction of your customers.

AI chatbots are great at handling commonly asked inquiries or introductory questions, helping your customers arrive at solutions faster, and freeing up human agents to focus on more nuanced issues which require complex resolutions. 

Cost savings

Implementing AI can lead to significant cost savings. Around 28% of businesses have used AI to cut down the operational expenditures of their customer service teams.

You can allocate resources more efficiently to where they’re needed by automating repetitive tasks and reducing need for extensive staffing.

24/7 availability & scaling hours

Depending on your industry, your customers might have inquiries in the evening and night. One of the biggest reasons to use AI is its ability to offer round-the-clock support. AI-powered systems can operate continuously without breaks, meaning that customers receive assistance at any time of day. In customer service operations, AI can handle inquiries and provide support outside of regular business hours, making your customers feel cared for.

Improved customer insights

One of the most valuable resources at your disposal is information around your customers. AI can rapidly analyse large amounts of data to give you valuable insights into customer behaviour, preferences, and pain points. With these insights, you can make data-driven decisions and tailor your services to better meet your customer needs.

AI tools can also track interactions with customers and identify inquiry patterns, letting you address issues proactively and improve the overall customer experience.

Personalisation

One of the frustrations with customer service chatbots is that they aren’t human enough, and don’t replicate human interactions. With that said, AI can play a role in delivering personalised experiences to your customers. By analysing data and building a customer profile, AI can provide tailored recommendations, personalised responses, and relevant product suggestions. Therefore, Generative AI can create customer-specific personalised interactions, providing a human-like experience.

Cons of AI in customer service

Lack of human touch

While AI in customer service has made a lot of advancements to seem more human, one of the biggest drawbacks of AI remains the lack of human empathy and understanding. AI handles routine inquiries efficiently, but it can struggle to provide the emotional connection that human agents can offer.

Furthermore in industries such as healthcare and rescue services, the initial contact often requires a human touch to address sensitive and complex situations effectively.

Implementation costs

The initial investment required for AI systems can be high. Developing, implementing, and maintaining AI technologies involve significant costs, which may be a barrier for small and medium-sized enterprises.

Businesses need to consider the ongoing expenses for updates, maintenance, and training to ensure the AI system remains effective and efficient.

Privacy concerns

Handling and securing customer data is a critical concern when implementing AI in customer service. For a lot of industries, it’s paramount that you protect your customer information.

AI systems that use machine learning in customer service must adhere to data privacy regulations to protect sensitive customer information.

Limited problem-solving abilities

While AI excels at handling routine inquiries, it may struggle with complex and unique problems. AI systems are limited by their programming and may not be able to think creatively or adapt to unforeseen situations. In scenarios requiring intricate problem-solving and nuanced understanding, human agents are better equipped to provide effective solutions.

Future of AI in customer service

Emerging trends

The future of AI in customer service is promising, with continuous advancements in technology. Developments in AI are expected to improve predictive analytics, sentiment analysis, and real-time customer interactions.

Future AI systems will likely incorporate more advanced natural language processing and machine learning capabilities. Eventually, these will enable even more sophisticated and personalised customer interactions.

Balancing AI and human interaction

To optimise customer service, businesses should aim to strike a balance between AI and human interaction. Combining the efficiency of AI with the empathy and problem-solving abilities of human agents can lead to the best outcomes.

Best practices involve using AI to handle routine tasks while reserving human agents for complex and sensitive issues, ensuring a flawless and satisfying customer experience.

Conclusion

AI in customer service offers numerous advantages, including enhanced efficiency, cost savings, 24/7 availability, improved customer insights, and personalised experiences. Of course, it also comes with challenges such as the lack of human touch, high implementation costs, privacy concerns, and limited problem-solving abilities.

Understanding both the pros and cons of AI in customer service is key for businesses looking to adopt this technology. By balancing AI and human interaction, companies can optimise their customer service operations and deliver exceptional experiences.

FAQs

How is AI being used in customer service?

AI in customer service is used primarily to automate customer interactions through machine learning (ML) algorithms and natural language processing (NLP). This includes the use of chatbots, virtual assistants, and predictive analytics to streamline support processes and provide personalised experiences.

AI tools can analyse large datasets to gain valuable insights into customer behaviour. These allow businesses to make data-driven decisions and improve overall service quality.

Is AI replacing customer service?

Even though AI augments customer service operations by handling routine inquiries and providing 24/7 support, it isn’t capable of fully replacing human agents.

AI excels at efficiency and cost savings but lacks the human touch required for complex problem-solving and emotional understanding. Human agents remain essential for addressing intricate and nuanced issues, ensuring a balance between automated efficiency and personalised care.

How is AI used in call centres?

In call centres, AI is employed to auto-summarise customer inquiries, assist in onboarding new agents, and provide wider coverage for multilingual and out-of-hours requests. AI helps reduce the workload on human agents, allowing them to focus on more complex tasks and proactive revenue-generating activities.

Despite its benefits, AI struggles with resolving complex issues and requires human intervention for nuanced problem-solving.