7 core opportunities for customer service innovation with AI + 5 easy-to-action tips

Natalie Smithson
AI enthusiast | Tea addict | Focused on using AI assistants to win the working week
Rise of AI assistant

You already know AI offers immediate improvements to customer service across various channels, helping you reach your most important goals more efficiently. In this post, we explore how AI is reshaping customer service on a broader scale, creating new opportunities for rapid innovation within your organisation. We’ll delve into the seven most promising AI opportunities for customer service leaders and share five practical tips to help set you up for quick success.

AI technology is pushing customer service leaders to adapt and evolve

If the fast-evolving technological change we see in AI at the moment gives you FOMO, it’s for good reason, but you don’t have to be hasty or do anything risky to get immediately involved.

In March 2023, McKinsey found that although “AI-enabled customer service is now the quickest and most effective route for institutions to deliver personalized, proactive experiences that drive customer engagement,” many are struggling to achieve it.

“While a few leading institutions are now transforming their customer service through apps, and new interfaces like social and easy payment systems, many across the industry are still playing catch-up… Customer service leaders face challenges ranging from selecting the most important use cases for AI to integrating technology with legacy systems and finding the right talent and organizational governance structures,” they say.

The good news is, all you need to do is make a start and you’ll quickly see momentum build.


Customer service leader climbing steps to flag showing him as a winner

AI is proven to increase productivity, creating room for innovation

In April 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 using AI today. They discovered using an “AI-based conversational assistant” increased their productivity by 14% overall. This could be the difference between your team worrying if they’ll be able to meet your Service Level Agreements this month, versus meeting them with ease and time to spare.

Increased productivity means your teams can handle more customer queries in less time, leaving more room for focus on the most rewarding and profitable tasks that grow your business or brand.

Innovating your customer service is now as vital as improving it

In the past, your focus as a customer service leader has been on consistent improvement:

  • Improving team training
  • Increasing efficiency
  • Simplifying processes
  • Bettering customer feedback
  • Advancing your tool and systems

While these aspects are still important, it’s now essential to embrace and prioritise innovation. This means rethinking the way you work to do things differently and finding unique, creative ways to provide services. In short: adopting a fresh approach.

There is naturally some fear around change, and new trends in conversational AI are moving at a phenomenal pace, which only heightens that anxiety, but all the tools you need are now readily available and totally affordable.

The goal posts have changed on excellent customer service

AI contributes to excellent customer service in many significant ways, since what customers want and expect from you has changed.

The goal posts have moved.

It’s important now to invest your time in new areas.

AI can help you find more time to do the things that are important now. In a curious cycle of reciprocation, when you make time for AI innovation it gives you time back.

Leading brands using AI to drive innovation in customer service

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 seamless customer experience.

Starbucks logo

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, which is new releases from artists people follow. Spotify’s AI means they offer diverse and appealing playlists catered to each listener’s preferences.

Spotify logo

Coop Sweden created a game for their app called the Recipe Scavenger Hunt. This interactive game encourages children shopping with their parents to explore the store and scan specific products for suggested recipes, which reveal AR characters. Using AI-powered gamification means Coop Sweden can enhance their customer engagement, support education around healthy eating, and encourage the discovery of new products and recipes.

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

H&M uses AI to offer personalised style suggestions that enhance the shopping experiences for their customers. Using machine learning algorithms and data analysis techniques, H&M analyses customers’ purchase histories, browsing habits, and preferences to create tailored recommendations. AI-powered features like H&M’s Visual Search tool, enable customers to upload images of outfits they like and receive matching or similar items available in the H&M collection. This helps customers discover trends and styles that suit their individual tastes.

H&M logo

Barking & Dagenham Council (B&D) uses an AI assistant on their website to handle common enquiries about housing benefits, waste collection, parking and council tax, among other things. The AI assistant gives people real-time information and assistance, reducing time spent on hold or waiting for email responses. In just nine months, B&D hit a 533% ROI on their AI assistant.

Barking & Dagenham Council logo

Customer service innovation: the 7 biggest AI opportunities

As the success of others shows us, it’s vital to stay ahead in today’s competitive customer service world if you want to retain and attract customers.

Focus on these seven major opportunities to see that embracing innovation is 100% manageable when you start to use AI:

1. Infinitely scale support as your business grows

As your business grows, AI plays 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, setting new standards for exceptional customer experience.

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

What now feels like way back, before the pandemic and our lives changed forever, PwC was reporting 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 and “worth paying more for”.

Since 2020, consumers have been forced to find new ways to shop online where they’ve been exposed to new brands and new ways of interacting with them.

McKinsey found convenience is just as important 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 whenever they want, any time of the day or night.

Did you know  30% of all contact is made outside office hours?

3. Personalise every customer journey for greater experiences

With the innovation of AI assistants, the promise of personalisation has truly arrived. 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 you 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. Be consistently brilliant in everything you do

Consistency pays off if you want to be well-known for what you do. Whether it’s for 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.

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 will have more rewarding work to do, 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 unique customer base needs 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 promotes loyalty.


Customer service leader using AI data to make business decisions

7. Learn continuously about your customers to offer an exemplary service

An AI assistant never stops learning on your behalf about the behaviour of your unique customer base. With AI innovation 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 anything they want to.
  • Focus groups and interviews can be costly to set up and time intensive. Use of conversational AI is affordable, especially if you only pay for what you use. Feedback can come in at the exact point a conversation is happening and then be collated for you.

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

5 crucial quick-fire tips for success

Chatbots, personalisation, real time engagement, and multi-channel experiences are all well-documented ways of disrupting traditional customer service experiences.

Our hunch is you’re either already using those methods or have already investigated using them to up your AI game.

What else do you need to do to keep one step ahead of your competition?

Take a look at these ideas to fast-track innovation in 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.

People now expect you to offer mobile-optimised customer service options like in-app support, live chat and messaging, so they can quickly get help when they need it without changing devices or channels.

So decide on your goals, get customer feedback, see what your competitors are doing, and make sure your mobile service is second to none.

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.

Using game elements and mechanics in non-game contexts (like customer service) helps boost engagement, motivation, and overall customer satisfaction. It plays into the hands of a natural human desire for competition, achievement, and recognition, ultimately enhancing your customer experience to nurture loyalty.

From simple points and rewards to interactive competitions, tutorials or quizzes, using gamification tactics is said to make you “seven times more profitable than those that don’t use them”.

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 who wouldn’t really know what it meant anyway. Now, AI brings a whole new approach to product, sales and marketing in your business. With LLMs like ChatGPT revolutionising the way we work, we all see the result of innovation for ourselves. The conversational aspect of AI means anyone can be involved, too, or get inspired.

Data you collect from an intelligent AI assistant draws in customer information from all channels and is stored in one central place. This means it can be used to inform the work of people in any department, especially customer service teams who want to know what’s niggling customers or making them happy, so they can improve their offer.

Encourage your teams to think creatively, contribute ideas, and make data-driven decisions to enhance the customer experience. All the information they’ll ever need is available using AI.


Creating an AI assistant takes teamwork

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 from their home, work ― or wherever!

Virtual reality (VR) is another technology few brands have fully utilised yet. Marriott Hotels got in relatively early to give people a groundbreaking new way to experience everything they offer. If you want people to stay with you, it’s smart to let them “attend an event, swim in your pool, or engage in different activities on hotel grounds. Presented this way,” says one hotel expert, “your offer is bound to become irresistible”.

5. Get your customers comfortable with change

While customer support leaders everywhere are freaking out about the insane rate of technological change we’re seeing right now, it’s important to remember your customers will be freaking out too. 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 (CMS) to “explain the sales process and ensure everything runs smoothly after a purchase. If customers have a question, they can directly ping their CSM and work with them to resolve any pressing issues.”

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.

While it’s almost impossible to try and follow everything that’s happening in AI right now, we’d encourage you to focus on the part that inspires your business and supports your customers.

Set up an AI assistant in 15 minutes and you’re already in the game.