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 in order to handle customer requests, and businesses have also used algorithms to improve product recommendations and user experiences.

With the introduction of ChatGPT, artificial intelligence is advancing faster than ever before. The implications for customer service are far-reaching, as such chatbots can give customers quick and informative answers, helping them faster than a human would be able to do and allowing companies to save money on labor.

In this look at AI in customer support, we'll discuss where AI 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, artificial intelligence refers to the ability of computers and machines to perform tasks that normally require human intelligence.

One of the most common applications of artificial intelligence is machine learning, by which computers are able to teach themselves through mathematical models and by receiving new data.

Machine learning is the process that, for example, allows Facebook to block nude images and Netflix (NFLX -0.63%) to know what TV shows to recommend. In customer service, it can also help chatbots learn the best response to give based on different customer queries.

Other forms of artificial intelligence include natural language processing, which underpins large language models like ChatGPT, robotics, computer vision, voice recognition, and neural networks, showing AI applications' reach beyond machine learning.

Many of these technologies help deliver the benefits of AI in customer service.

5 Applications of AI in Customer Service

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

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 they're used by retailers or airlines, automated responses help companies handle low-hanging fruit and easy-to-resolve problems without having to get human agents involved.

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 they tend to assist with customer service as well.

Many companies offer AI customer service platforms, including Pegasystems (PEGA 4.6%), which uses tools like natural language processing and intelligent chatbots to provide customer support and guide human agents.

2. Chatbots

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 every day at all hours of the day, and by handling basic queries, for example, the type of questions you might find under 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 pre-emptive customer service for a group of consumers like new parents. One example, BabyCenter UK, a division of Johnson & Johnson (JNJ -0.46%), has launched a chatbot on Facebook Messenger to help answer questions from parents.

These tools can also give customers a more refined experience after purchase. Nike (NKE 0.19%), for example, uses chatbots on Facebook and other platforms to give customers a more personalized experience, recommending products that best fit their needs and tastes.

3. Voice assistants

3. Voice assistants

Another popular AI tool for providing customer service is voice assistants.

Perhaps the best-known voice assistants are Apple's (AAPL -0.35%) Siri, Amazon's (AMZN 3.43%) Alexa, and Alphabet's (GOOGL 10.22%) (GOOG 9.96%) Google Assistant, which all offer customer service for both the companies that make them and others that connect with them.

However, there are other ways that consumers encounter AI voice assistants, including over the phone.

One startup tech company, PolyAI, offers conversational AI voice bots that can handle customer queries over the phone.

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 as well as making bookings and reservations.

Because voice technology requires AI to understand spoken language to work, making a functional voice bot is more challenging than creating a chatbot, which runs on written text.

4. Sentiment analysis

4. Sentiment analysis

These days, chatbots have the ability to not only converse with humans but they can also detect the tone based on the words that are 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 how sentiment analysis can work in practice.

Grammarly's tools will tell you how your writing sounds, giving feedback like formal, direct, or inspirational. Those kinds of tools can also help inform how a human responds in a customer service email as they'll likely want to sound friendly and helpful, making them valuable for both bots and human customer service agents.

5. Machine learning in customer service

5. Machine learning in customer service

Though machine learning is better known for its role in AI applications like 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.

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

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Will AI revolutionize customer service?

Artificial intelligence 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.

Going forward, AI is almost certain to become an even more valuable tool in customer service, as ChatGPT shows how powerful new generative AI capabilities are. There's a natural impetus for businesses to use AI in customer service, as it provides customers with faster and sometimes better service. It also saves money on labor and avoids the other hassles of having to hire and staff human employees.

If you're looking into AI stocks, there aren't necessarily pure-play AI customer service stocks available, but you should consider AI ETFs, investing in AI chatbots, and investment opportunities around ChatGPT, 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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