How Artificial Intelligence Is Used in Customer Service

Of all the applications for artificial intelligence (AI), customer service is one of the most common. Companies big and small have been using tools like AI customer service bots and voice assistants to handle customer requests and algorithms to improve product recommendations and user experiences.

With the introduction of ChatGPT, AI is advancing faster than ever. The implications for customer service are far-reaching. As such, chatbots can give customers quick and informative answers, helping them faster than humans and allowing companies to save money on labor.

In this look at AI in customer support, we'll discuss where artificial intelligence is today, look at several examples of AI in customer service, and see what the future of AI in customer service looks like.

What is AI?

What is AI?

At a base level, AI refers to the ability of computers and machines to perform tasks that normally require human intelligence. One of the most common applications of AI is machine learning, by which computers are able to teach themselves through mathematical models and by receiving new data.

For example, machine learning is the process that allows Meta Platforms' (META -1.73%) Facebook to block nude images and Netflix (NFLX 0.78%) to know what TV shows to recommend. In customer service, it can also help chatbots learn the best response based on different customer queries.

Other forms of AI include natural language processing, which underpins large language models like ChatGPT, robotics, computer vision, voice recognition, and neural networks. These technologies show AI applications' reach beyond machine learning. Many of these technologies help deliver the benefits of AI in customer service.

5 applications

5 applications of AI in customer service

Here are some of the most common ways companies are using AI in customer support.

1. Customer service automation

Automation is one of the most common applications of AI in customer service. If you've contacted a company online, you've probably encountered some form of automation through a chatbot or another channel.

Whether used by retailers, airlines, or other types of businesses, automated responses help companies handle low-hanging fruit and easy-to-resolve problems without having to involve human agents. Automation tools also ensure that customers will get a response, even if a human agent is unavailable, and they help eliminate the risk of human error.

Automated processes can also identify leads through customer queries, setting them up for marketing contacts, and can assist with customer service. Many companies offer AI customer service platforms, including Pegasystems (PEGA 1.18%), which uses tools like natural language processing and intelligent chatbots to provide customer support and guide human agents.

2. Chatbots

Chatbots overlap with automation in AI, but there's more to them than just automation. Chatbots help supplement human customer service agents by being available 24/7 and handling basic queries, such as the type of questions you might find under an FAQ.

These bots can also be integrated across multiple platforms, including popular messaging interfaces like Facebook Messenger, WhatsApp, and Slack. A chatbot can also help introduce a new brand to customers, providing preemptive customer service for a group of consumers, like new parents.

One example is BabyCenter UK, a division of Johnson & Johnson (JNJ 0.62%), which has launched a chatbot on Facebook Messenger to help answer parents' questions. Johnson & Johnson was an early adopter of AI in customer service, with Johnson & Johnson Vision launching a virtual assistant named Andy in 2018.

These tools can also give customers a more refined experience after purchase. Nike (NKE -0.21%), for example, uses chatbots on Facebook and other social media platforms to give customers a more personalized experience, recommending products that best fit their needs and tastes.

3. Voice assistants

Another popular AI tool for providing customer service is voice assistants. Perhaps the best-known voice assistants are Apple's (AAPL 1.88%) Siri, Amazon's (AMZN 0.73%) Alexa, and Alphabet's (GOOGL 1.54%)(GOOG 1.72%) Google Assistant, which all offer customer service for the companies that make them and those that connect with them.

However, consumers encounter AI voice assistants in other ways, including over the phone. For example, start-up tech company PolyAI offers conversational AI voice bots that can handle customer queries over the phone. PolyAI says its technology allows companies to save on labor, increase their capacity, and add revenue.

The technology is based on AI components, like speech-to-text, natural language understanding, intent detection, and context. Basic voice-bot tasks include call routing and making bookings and reservations. Because voice technology requires AI to understand spoken language, making a functional voice bot is more challenging than creating a chatbot, which runs on written text.

4. Sentiment analysis

These days, chatbots can not only converse with humans but also detect the tone based on the words being used. That can inform how the chatbot handles the request. For example, it may respond to an angry customer differently than a calm one. If a customer is angry, the bot might avoid doing anything to escalate the customer's emotions.

Grammarly, the AI grammar and spell check, offers a good example of sentiment analysis in practice. Its tools will provide feedback on how your writing sounds, such as formal, direct, or inspirational.

Those kinds of tools can also help inform how a human responds in a customer service email since they'll likely want to sound friendly and helpful. That makes them valuable for bots and human customer service agents alike.

5. Machine learning in customer service

Though machine learning is better known for its role in AI applications, such as recommendation algorithms, it also plays a role in customer service. For example, it can generate a targeted marketing campaign based on demographics or a certain kind of customer profile or block credit card transactions that look fraudulent.

Machine learning helps AI agents better predict customer needs and become more efficient, allowing them to handle some customer requests entirely on their own.

It also improves customer service by analyzing support tickets to see where the customer experience needs improvement and can help inform content available on a company's website, like a FAQ list, so customers can help themselves before contacting customer service.

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Will AI revolutionize customer service?

AI has already significantly changed customer service, and it's become standard to at least be initially greeted by a bot or another form of AI when you contact a company. The Biden administration recently proposed a new rule that would make it easier for customers to talk to a human when needed, but companies are likely to continue investing in AI.

Going forward, AI is almost certain to become an even more valuable tool in customer service. There's a natural impetus for businesses to use AI in customer service since it provides customers with faster and sometimes better service. It also saves money on labor and avoids the other hassles of hiring and staffing human employees.

If you're looking into AI stocks, there aren't necessarily pure-play AI customer service stocks available, but you should consider investing in AI exchange-traded funds (ETFs) or AI chatbots or look into investment opportunities around ChatGPT, all of which provide a range of ways to get exposure to AI.

In customer service and other applications, AI will almost certainly see rapid growth over the coming years as it continues to disrupt customer service.

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