How to Deploy AI and Smart Tech to Revolutionize Customer Experience


AI can analyze vast amounts of data. When it is combined with other smart technologies, it becomes even more powerful. Smart tech – devices and systems with advanced computing capabilities and internet connection – collects data, analyzes it and provides recommendations based on that analysis, as seen with smartphones, smart home devices (thermostats or lighting systems), wearable tech (fitness trackers and smartwatches), smart cars and smart cities leveraging IoT (Internet of things). Smart tech is transforming resource management.

Companies are just beginning to understand how to harness the power of AI and smart tech to gain insights into customer preferences, behaviors and sentiments. They are pulling from diverse data sources such as social media, customer interactions and purchase history. This kind of data-driven approach gives companies a deeper understanding of their customers so they can anticipate their needs and deliver more personalized and relevant experiences.

AI has the potential to revolutionize how companies engage with their customers.

How Is AI Improving Customer Experience?

There are clear benefits to implementing AI for customer experience. They fall in the following categories:

  1. Personalized interactions at scale: Through techniques such as collaborative filtering and natural language processing, AI algorithms can analyze customer data to provide tailored product recommendations, content suggestions and marketing messages in real time. Most of us are familiar with e-commerce platforms like Amazon that leverage AI to analyze past purchases, browse history and demographic information to recommend products that are most likely to resonate with us. Streaming services like Netflix also use AI to analyze viewing patterns to suggest relevant movies and TV shows. Personalized interactions have shown to increase customer satisfaction, drive repeat purchases and foster brand loyalty, which also lead to higher conversion rates and improved customer retention.
  2. Proactive customer support: Traditional customer support operations have been reactive, with agents responding to inquiries and issues raised by customers. AI-powered chatbots and virtual assistants can now offer proactive support that anticipates customer needs and resolves issues in real time. AI-powered chatbots are capable of handling a wide range of customer inquiries, from basic questions about products and services to troubleshooting technical issues. These chatbots use natural language processing and machine learning to understand customer queries and provide accurate and relevant responses, without the need for human intervention. AI-driven sentiment analysis enables businesses to gauge customer satisfaction and identify potential issues before they escalate. Social media channels, customer feedback and online reviews are now being monitored by AI algorithms to detect patterns and trends in customer sentiment, allowing businesses to proactively address concerns and improve the overall customer experience. By keeping humans in the loop, enterprises continue to see a higher degree of satisfaction and better customer experience.
  3. Omnichannel engagement: AI plays a critical role in enabling seamless omnichannel experiences by unifying data from disparate sources and providing a consistent experience across all touchpoints. For example, AI-powered marketing automation platforms can orchestrate personalized campaigns across email, social media and other digital channels based on customer preferences and behaviors. Similarly, AI-driven customer relationship management (CRM) systems can consolidate customer data from different sources to provide a holistic view of each customer’s journey, enabling businesses to deliver more personalized and targeted interactions. When AI is leveraged to create omnichannel experiences, businesses can enhance customer engagement, increase brand loyalty and drive revenue growth. A consistent experience is provided across all touchpoints by businesses to build trust and credibility with their customers, ultimately leading to long-term relationships.

What Are the Challenges of AI?

While AI holds tremendous potential to enhance customer experience, it also raises important ethical considerations and challenges. For instance, there are concerns about data privacy and security, as AI systems rely on vast amounts of personal data to deliver personalized experiences. There is also a risk of algorithmic bias; it has been shown that AI systems may inadvertently perpetuate discrimination or inequality based on factors such as race, gender or socioeconomic status.

There are also challenges related to transparency and accountability, as AI algorithms often operate as black boxes, making it difficult to understand how they make decisions. Also, companies must consider the risk of over-reliance on AI, leading to a loss of human touch and empathy in customer interactions.

To address these challenges, businesses must adopt ethical AI principles and practices, such as ensuring transparency and accountability in AI systems, implementing robust data privacy and security measures and mitigating algorithmic bias through diverse and inclusive data sets.

Bringing in the Human Factor in AI-supported Services

Enterprises must not to overlook the critical role of the human element in customer service. Despite advancements in AI technology, certain aspects of customer interactions are still best handled by human agents. Why? Because they can provide the following key ingredients:

  • Empathy and emotional intelligence: While AI-powered chatbots can provide quick and efficient responses to customer inquiries, they may struggle to grasp the nuances of human emotion and provide empathetic support. Human agents, on the other hand, can listen actively, express empathy and offer personalized solutions based on their understanding of the customer's unique situation.
  • Complex problem-solving: While AI algorithms excel at processing large volumes of data and identifying patterns, they may struggle with complex problem-solving tasks that require creativity, critical thinking and domain expertise. Human agents possess the cognitive flexibility and domain knowledge necessary to navigate complex issues, think outside the box and provide innovative solutions tailored to the customer's specific needs.
  • Building trust and rapport: Human interaction plays a crucial role in building trust and rapport with customers. While AI-powered chatbots can deliver scripted responses based on predefined rules and algorithms, human agents can engage in meaningful conversations, establish rapport and adapt their communication style to match the customer's preferences and personality.
  • Handling unpredictable situations: There are certain situations where human intervention is necessary to handle unpredictable or exceptional circumstances. Whether it's resolving a billing dispute, addressing a complex technical issue or providing emotional support during a crisis, human agents are better equipped to handle situations that fall outside the scope of AI algorithms.
  • Continuous improvement: Human agents have the capacity for continuous learning and improvement, allowing them to adapt to evolving customer needs and preferences over time. They actively listen to customer feedback, reflect on their experiences and hone their skills through training and development programs to continuously enhance their ability to deliver exceptional service and exceed customer expectations.

Striking the Right Balance

While AI technology offers significant benefits in enhancing efficiency, scalability and consistency in customer service, it's essential to strike the right balance between AI-driven automation and human interaction. AI can be leveraged to handle routine tasks, streamline processes, augment human capabilities and allow businesses to free up human agents to focus on high-value interactions that require empathy, creativity and problem-solving skills.

To realize the full potential of AI in customer experience, businesses must contend with a complex set of considerations and challenges – from functionality to price to ethics to security. ISG helps companies design customer experience strategies that combine the strengths of AI technology with the human touch (human in the loop) to create personalized, empathetic and memorable interactions that resonate with customers on a deeper level.


About the author

Sunder Pillai

Sunder Pillai

Sunder Pillai is based in Dallas, Texas and leads the Retail, CPG and Enterprise Practice for ISG with more than 21 years of experience.1He is an experienced Strategy and IT Consulting Executive with deep experience and expertise throughout the ITO sourcing process. He offers 21 plus years of results-driven IT outsourcing, consulting, digital business strategy and technology services industry leadership experience helping clients, within several industries, achieve their desired business outcomes.