Customer service innovation: 7 of the hottest opportunities for 2024 (+ tips for success)

Natalie Smithson
AI enthusiast | Tea addict | Focused on using AI assistants to win the working week
A woman holds a light bulb in a bubble in her hand

Gone are the days when customer service innovation meant lengthy, complex tech overhauls and uncertain ventures into unproven tech territory. Today, things are different. With the phenomenal rise of learning models like ChatGPT and Bing, AI is now a tool everyone in your business can see the benefits of, from entry-level to MD ― an evolution we’ve spent years gearing up for.

While you might already be using some new technologies to innovate customer service support, AI now stands out. It’s easy-to-use, affordable, and everywhere, introducing formidable change to the customer experience right now.

Let’s unravel AI-driven innovation for customer service with some examples from the real world, explore current thinking around untapped opportunities, and share crucial tips for your success.

TL;DR

  • Customer service innovation is about finding novel ways to boost customer experience, often using advanced technologies like AI to boost your brand reputation and business profits
  • Focusing on customer service innovation means you can help customers in real time, support them on every channel to better serve their needs, and increase your teams’ productivity
  • It’s not just tech giants, but all types of brands using AI to ramp up their customer service, from H&M helping shoppers select outfits to grocery stores helping people choose recipes
  • The biggest opportunities right now are around scaling your business, offering a 24-hour service, personalising experiences, and being consistent, efficient, proactive and informed
  • Reevaluating your mobile web and introducing gamification are just two of the things you can do to make a bigger impact and achieve success in customer service innovation today

What is customer service innovation?

Customer service innovation is finding novel and imaginative ways to boost customer experience, often using advanced technologies like artificial intelligence (AI), virtual reality (VR), and augmented reality (AR). It can help improve efficiency, increase customer engagement, and personalise support to boost your brand reputation and business profits.

How does innovation improve overall customer service?

Focusing on customer service innovation gives you freedom to rethink the way you do things. Using tech like AI to automate routine tasks, you’ll get more time to address your biggest challenges: Be more productive, broaden your communication channels, solve customer problems faster, and enhance overall service quality.

Be there to help your customers in real time

In today’s fast-paced world, instant responses to customer enquiries aren’t an option, they’re an expectation ― 52% of marketers are already using real time customer engagement to improve customer experience. Keeping customers waiting can lead to frustration, and potentially a lost sale or tarnished reputation, but customer service leaders are solving persistent problems like long wait times with the use of AI.

Support customers on every channel to better serve their needs

Using an advanced AI assistant, you can engage with customers across all their preferred platforms, including social media and messaging platforms, to rapidly improve omnichannel customer experience. This timely, consistent response across all channels means you not only meet but exceed customer expectations, building strong relationships that last.

Increase team productivity to meet customer service goals

In 2023, researchers from two of the world’s most prestigious tech and innovation institutions (Stanford University and MIT Sloan School of Management) studied 5,179 customer support agents. They discovered using an “AI-based conversational assistant” increased their productivity by 14% overall ― the difference between your team worrying about meeting your Service Level Agreements this month, versus meeting them with ease and having time to spare.

Innovation in customer service, particularly through AI-powered methods, is not a futuristic vision. It’s today’s reality, bringing about significant enhancements in efficiency and engagement to customer service teams everywhere.

Examples of AI-powered customer service innovation IRL

As customer demand for a swift, personalised service heightens, AI steps up. Our real-world examples show it’s not just tech giants, but all types of brands using AI to ramp up their customer service.

Real time innovation

Starbucks is using AI-driven technologies to enhance customer experience through their mobile app, where customers can place orders by speaking or texting. The AI assistant processes their request, gives them recommendations, and confirms the order details.

This conversational approach simplifies the ordering process for a more intuitive, engaging, and enjoyable customer experience.

Starbucks logo

Personalisation + innovation

Spotify uses AI and machine learning to deliver personalised music recommendations and tailored playlists. AI-generated playlists for listeners include Discover Weekly, built on their listening habits and favourite genres, and Release Radar, featuring new releases from artists people follow.

AI helps Spotify offer diverse playlists catered to the unique preferences of millions of listeners.

Spotify logo

Everyday innovation

Coop Sweden created a game for their grocery shopping app called the Recipe Scavenger Hunt. This interactive game encourages children shopping with their parents to explore the grocery store and scan specific products for suggested recipes, which reveal AR characters.

Using AI-powered gamification, Coop Sweden can enhance customer engagement and encourage more time in store to educate people about healthy eating and help them discover new products and recipes.

Child playing AR game at Coop Sweden grocery store
Source: Microsoft Customer Stories

Innovation in retail

H&M uses AI to offer personalised style suggestions for their customers as they shop. Using machine learning algorithms and data analysis techniques, H&M analyses purchase history, browsing habits, and preferences to create tailored recommendations for every customer.

AI-powered features like H&M’s Visual Search tool mean customers can upload images of outfits they like and see matching or similar items available in the H&M collection, helping them discover trends and styles that suit their individual tastes.

H&M logo

Innovation in local government

Barking & Dagenham Council uses an AI assistant on their website to handle common enquiries about housing benefits, waste collection, parking and council tax, among other things.

Their AI assistant gives people real-time information and assistance 24/7, reducing time spent on hold or waiting for an email response. As a result, customer satisfaction went up by 67%.

Barking & Dagenham Council logo

Unlocking your unique customer service challenges

Choosing how to use AI innovation should centre on your specific needs, not only to enhance customer service but also benefit your teams. From speeding up service to improving team efficiency, the right AI solution can transform not just the customer experience but your work environment too.

The 7 biggest innovation opportunities for customer service leaders today

New trends in conversational AI are moving at an extraordinary pace, but the good news is, you don’t need any technical skill to use advanced AI platforms these days. All the tools you need are readily available and completely affordable; you only need pay for what you use.

Today’s leaders are taking advantage of these seven major opportunities in customer service innovation to transform customer interactions, enhance team performance, and even cut costs:

1. Infinitely scale support as your business grows

As your business grows, using a dedicated next-gen AI assistant can play an essential role in managing the increasing demands of a bigger customer base. You’ll be able to effortlessly and instantly respond to tens of thousands of enquiries simultaneously, rapidly improving your omnichannel experience, and setting new standards for exceptional customer experience without overwhelming your teams.

Say goodbye to long wait times, call queues, and backlogs. Instead, picture a world where every customer receives instant, dependable replies ― even for complex queries, sending them away happy and satisfied.

2. Provide a 24-hour service for customer convenience

Before the pandemic and our lives changed forever, PwC reported in 2017 on the importance of offering customers convenience. They learnt a convenient (and efficient) customer service experience is the most important thing to people, who also said it’s “worth paying more for”.

Since 2020, consumers have been forced to find new ways to shop online and McKinsey found convenience matters in our post-pandemic environment too. “A whopping 75 percent of consumers tried new shopping behaviors, with many of them citing convenience and value” as the reason for switching brands or channels, they said.

Adding an AI assistant to your team to work outside your core team hours is one way to offer customers convenience, answering customer queries at the time they have them, day or night.

Key Fact: 30% of all contact with our AI assistants is made outside office hours

3. Personalise every customer journey for greater experiences

With the innovation of AI assistants, you can truly personalise experiences. These intelligent agents can swiftly analyse customer data and preferences to offer recommendations and experiences for every individual, regardless of how many customers you have. Like having a suit made to fit, it’s comfortable, practical and makes customers feel good.

You’re finally able to genuinely treat every customer as a unique individual, showing understanding and care, which leads to improved customer relationships and business growth.

4. Send out a consistent (correct) message to every customer

Consistency pays off if you want to be well-known for what you do. Whether it’s the drive-through at McDonalds, flatpack furniture from IKEA, or binge-worthy TV shows from Netflix, when you do one thing well and everyone knows it, you become the dependable brand.

Using AI, you can be consistent even when you have tens of thousands of customers whose data you need to instantly recall on an individual level. That’s a doddle for an advanced AI assistant, especially if it’s connected to all the business systems you already use to handle customer relationships, like your CRM, diary, or booking system. Accuracy increases too with the use of AI, leaving no room for human error.

5. Increase efficiency with affordable AI to reduce costs

Soon after Mytime Active leisure company added an AI assistant to their customer service team, they were able to stop looking for more hard-to-find talent to help them get on top of a contact backlog. By automating their routine enquiries, they were able to save the cost of hiring two more full-time employees and in just six months had revolutionised their business.

Taking advantage of innovations in AI to reduce your customer support costs means you can also pay more for top talent. With an AI assistant taking on routine enquiries, agents can be given more rewarding work to do and opportunities to develop specialist skills, so you’re more likely to keep hold of them. This helps avoid the cost of replacing agents, which is around 20% of their annual salary.

6. Be proactive and anticipate what your customers need next

When you know what people are most likely to do next, it can help you identify trends, predict concerns, and offer preventive solutions to problems. This results in a seamless customer experience that helps build and strengthen long-term relationships. Being able to anticipate and address issues before they escalate lets people known they can trust you, which drives greater loyalty.

7. Learn about your customers continuously to improve service

An AI assistant never stops learning on your behalf about the behaviour of your unique customer base. Without AI you’d typically learn what your customers want or don’t want through online questionnaires or forms, focus groups and interviews, or analysis of past data. This could create several problems that AI innovation now solves:

  • In a survey, people can only answer the questions you choose to set. Using a conversational AI assistant, your customers can feed back on any part of your offer they want to comment on.
  • Focus groups and interviews can be costly to set up and time intensive. Use of conversational AI is affordable, and feedback can come in at the exact point a conversation is happening in real time.

This ‘here and now’ customer-centric experience can only happen thanks to AI innovations today.

5 crucial tips for innovation success in customer service

While AI chatbots, personalisation, real-time engagement, and omnichannel experiences are proven disruptors in the traditional customer service journey, they’re likely already in your strategic plans or at least on your radar. What else can you do to stay one step ahead of your competition?

Here are five further tips to consider to successfully advance your customer experience:

1. Re-evaluate your mobile web

In 2022 there were almost 5 billion active mobile internet users worldwide, reports Statistica. Mobile, they say, accounts for “approximately half” of all web traffic, so if you’ve been neglecting your mobile experience in any way, it’s time to look more closely at how it can be transformed using AI technology.

2. Use gamification to add appeal

One of the biggest advantages of using conversational AI in particular is you can engage more often with your customers. Hear what they have to say, good or bad, and get to know them better. You can increase customer engagement in lots of ways (even if you’re on a tight budget), and gamification methods are a great addition to your armoury.

3. Integrate across departments and break silos

In the past, AI innovation would sit firmly in the hands of the technical department, separate from all other teams in the business. Now, AI brings a whole new approach to developing your business, across product, sales and marketing combined. With LLMs like ChatGPT revolutionising the way we work, anyone can get involved with innovation or be inspired to suggest improvements from their unique perspective.

4. Link AI with other newer technologies

Using AI means you can personalise experiences like never before, but once you know what a customer wants, what else can you do with that information? AI can analyse customer preferences, behaviours, and interactions to suggest tailored products, while augmented reality (AR) allows customers to virtually experience these recommendations in real time. L’Oreal, for example, have an AR app that lets their customers try on make-up virtually, creating a highly engaging and immersive shopping experience.

5. Get your customers comfortable with change

While customer support leaders everywhere are trying to get to grips with the insane rate of technological change we’ve seen lately, it’s important to remember your customers are doing the same. It’s great you plan to be more innovative in your service, but how will customers respond? One of the best ways to make sure your customers are comfortable with new initiatives or can use your product or service without any problem, is to create a dedicated workflow for customer success, like HubSpot does. They intentionally hire customer success managers to “explain the sales process and make sure everything runs smoothly after a purchase.”

Whether it’s a role you create for members of your team, a whole department effort, or even a specific offer, it takes dedication to get people on board with a new way of working.

Taking the first step in your innovation

Every step towards embracing AI innovation can transform customer service, leaving a lasting impact.

Remember, change starts small…

You can set up an AI assistant in 10 minutes and you’re already in the game.

FAQs

What are some examples of customer service innovation?
Starbucks is using AI-driven technologies to enhance customer experience through their mobile app, where customers can place orders by speaking or texting. Spotify uses AI and machine learning to deliver personalised music recommendations and tailored playlists. Coop Sweden created a game for their app called the Recipe Scavenger Hunt. H&M uses AI to offer personalised style suggestions that enhance the shopping experiences for their customers. Barking & Dagenham Council uses an AI assistant on their website to handle common inquiries about housing benefits, waste collection, parking and council tax, among other things.
Why is innovation important in customer service?
In the past, the focus in customer service has been on consistent improvement, but now it is essential to embrace and prioritise innovation, which helps businesses meet continually evolving customer expectations and demands. Innovation, in making the most of cutting-edge technologies or strategies, not only improves the quality of services offered but also ensures a superior, personalised customer experience. It increases operational efficiency, reduces response times, enhances customer engagement and satisfaction, and provides a competitive edge—essential factors for growth in today's dynamic market.
What are some innovative ideas to help improve customer experience?
Using AI and chatbots can significantly enhance customer experience, providing round-the-clock assistance alongside personalised, seamless services across all channels. This gives customer service agents more time to focus on challenging and rewarding tasks, bolstering their morale, which often leads to better customer interaction. By creating an interactive environment using virtual or augmented reality, you can make the customer journey richer still. To empower customers, consider establishing self-service options facilitated by a robust, AI-enhanced knowledge base. With a focus on intuitive UI/UX design and providing insightful, relevant content to address the unique needs of your customers, you can engage them in ways you’ve never been able to do before, ultimately contributing to a modern, superior customer experience.
What is the definition of customer service innovation?
Customer service innovation refers to the process of introducing, applying and integrating novel ideas, methodologies, technologies, or practices into a company's customer service operations. The aim is to enhance the customer experience, increase engagement and satisfaction, improve response times, efficiency and overall effectiveness, all while exceeding customer expectations and staying ahead of competitors.