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Published on 05/15/2024
Last updated on 06/18/2024

4 ways AI personalization can improve your customer experience strategy


Imagine the best customer experience (CX) you’ve ever had. Perhaps it was with a small business you’ve been loyal to for years, where the staff already knows your name and understands your needs and preferences. They respond immediately to your requests and resolve any concerns with in-depth product knowledge and empathy. It’s the kind of interaction that keeps you coming back and inspires you to recommend the business to others. 

In the age of generative artificial intelligence (AI), advanced customer support capabilities like these are becoming accessible to any business—even for supporting first-time customers, or for companies that receive thousands of support requests every day. 

When it comes to AI in customer experience, it’s proving incredibly useful for powering chatbots, automated email, and phone response engines, as well as training and support assistants for CX agents. It can also inform product design and other aspects of the customer journey, such as your website. 

Generative AI is leveling up the performance of CX tools, enabling businesses to understand customer needs and offer highly personalized interactions at scale. This frees up your CX team to focus on more complex tasks while reducing time to resolution. 

How customer experience is changing 

Generative AI has exploded with the development of tools like OpenAI’s ChatGPT. Tech-savvy enterprises are already integrating these solutions into their customer service departments, with 84% of senior business leaders indicating that they have a financial strategy to support AI deployment.  

It’s a shift that aligns with CX priorities. While enhancing customer experience has traditionally been top of mind for CX functions, more customer care leaders are balancing this focus with meeting revenue targets and transforming technology infrastructure.  

They’re also under greater pressure to address rising call volumes, high attrition rates, and talent shortages—concerns that McKinsey & Company recently identified as the biggest customer experience challenges globally. Solutions empowered by generative AI can help fill the gaps and alleviate the burden on human-based resources without jeopardizing the quality of service. 

Improve your organization’s customer experience with AI 

Most CX functions are just starting their generative AI transformation. However, early adopters are enthusiastic about its impact and future potential, enjoying benefits like more nuanced AI personalization and better-informed product roadmaps. 

1. Provide personalized customer service 

A customer’s web activity can indicate a lot about who they are—which products they browse, how they’ve engaged with customer service in the past, and even their birthday, preferred language, or pronouns. Generative AI enables CX tools to quickly interpret this kind of data and create more personalized responses to customer requests—a process that would be virtually impossible for agents to perform efficiently on a large scale. 

Generative AI models can also be trained with specialized knowledge in your industry, or to understand cues such as customer intent and sentiment. By combining these insights, CX tools like chatbots can leverage generative AI to: 

  • Suggest best-fit products or services to customers based on their unique needs, interests, or challenges. 
  • Help marketing teams create targeted campaigns tailored to customer preferences. 
  • Identify friction points along the customer journey and encourage conversions—for example, by providing useful information or discounts. 
  • Respond to customer inquiries in the appropriate tone and language. 

AI personalization often delivers more tailored experiences than service agents can offer with their available bandwidth. Customers can enjoy more nuanced interactions specific to their needs without having a history or rapport with your brand first. Research shows that AI has a positive and significant impact on customer experiences, loyalty, and personalization, which can help your CX department drive revenue. 

2. Align offerings with customer needs 

Generative AI doesn’t just have the potential to benefit the customer—it can also help your business make more informed product or service development decisions. Generative AI models can interpret patterns across large datasets of customer interactions. External data like market trends can also be included for applications like forecasting customer demand. With the right prompts, these models can quickly summarize products or features customers prefer, market opportunities, and target market demographics. 

This approach can also illuminate gaps in the resources you offer customers. For example, after ingesting thousands of customer inquiries, imagine that your chatbot reports receiving a high volume of requests about your return policy. With this knowledge, your marketing team can make changes to your website so that it’s easier for customers to find this information throughout the buying journey. 

While generative AI helps analyze current behaviors and insights, sophisticated solutions can also anticipate your customers’ future needs, behaviors, and preferences. This aids in developing proactive product roadmaps and customer experience strategies, differentiating your offerings from competitors. 

3. Address persistent talent gaps 

Many businesses are struggling to fill customer service roles, with the average call center turnover rate between 30% and 40%. Talent shortages often mean longer support wait times and lower-quality service, which can impact customer loyalty and brand reputation. Generative AI-based tools can be trained to cover routine tasks and help agents focus on more complex or high-value customer interactions. These tools also work around the clock, mitigating staff shortages and reducing agent fatigue. 

For instance, AI customer support tools can address straightforward questions that other CX solutions cannot handle autonomously. They can also be trained to understand a customer’s tone or intent and judge when it’s appropriate to escalate the query to an agent. Depending on the nature of the request, models can even redirect customers to the best agent for the job, such as those in specific departments. 

4. Drive CX efficiency without sacrificing quality 

Some organizations also apply generative AI to internal support tools so that employees can provide customers with more knowledgeable responses while staying efficient. For example, virtual assistants can generate customer chat summaries to relieve some of an agent’s upfront work, helping expedite resolutions. 

CX professionals can also prompt AI-based virtual assistants for support, which is especially useful for new staff, complex queries, and organizations that house extensive product documentation. In one instance, a global construction equipment company used generative AI to help agents interpret thousands of pages of technical product information. The strategy helped reduce call resolution times from over two hours to a few seconds and saved customers upward of $326,000 per day in downtime. 

Enhance your CX function with responsible AI 

Generative AI is transforming the customer experience as we know it. Leading CX departments are now able to automate customer interactions with a high degree of personalization and product knowledge—not to mention enabling competitive and timely product development. With AI-augmented tools like chatbots and virtual assistants, organizations can also confidently scale their operations despite persistent labor shortages.

As you embark on your transformation journey, it’s important to remember that generative AI is one of the biggest disruptions in the history of CX. It also means confronting new legal, ethical, and governance challenges—especially when customer data is used to enhance CX services. While sophisticated AI solutions can generate lasting value in your customer experience function, the most successful organizations of the future will be those that also remain transparent, accountable, and compliant when training and implementing their models.

Partnering with Outshift by Cisco can help you enforce responsible AI when integrating new technologies into customer experience. Learn more about how to leverage AI and maintain customer trust. 

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