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Illustration of AI in CX

How Does AI Affect Customer Experience?

Lance Concann

Mar 30, 2023

The majority of businesses today compete primarily on a basis of customer experience (CX). However, companies are losing anywhere from $75 billion to $1.6 trillion per year due to poor customer service. Simply put, if your main competitive advantage is costing you revenue, it’s time for a different approach. Could AI customer experience provide a solution?

Artificial intelligence and customer experience might sound like polar opposites, but they’re quickly becoming two sides of the same coin. AI is increasingly being used to learn more about customers’ needs, wants, and preferences. You can use those insights to improve experiences across every touchpoint. 

Let’s explore the role of AI in customer service and how you can put it into practice.

Table of Contents

Defined: AI Customer Experience

AI customer experience is the act of using artificial intelligence tools to learn more about and improve the customer experience. AI technologies may include machine learning, natural language processing, automation, chatbots, virtual assistants, and even customer experience platforms (like Meltwater Radarly).

Tip: Learn how Meltwater uses AI and why 2023 was the year of AI chatbots.

AI in Customer experience

The goal is to intelligently learn more about the experiences you’re currently delivering and where you can make improvements. You can then focus your efforts and resources on areas that will make the biggest impact.

With 73% of consumers saying that experience is a deciding factor when making purchases, it’s in your best interest to provide the experiences they want.

Examples of AI in Customer Experience

AI in customer experience offers many helpful use cases.

Personalized Experiences

Let’s say Annie orders her favorite makeup from your beauty brand.

Three months later, she automatically receives an email from you reminding her to restock, as she might be running low on makeup. She clicks through to your website, which recognizes her IP address and shows her the products she previously purchased along with other recommendations. This makes it easy for Annie to stock up on her favorites and discover new products. 

In this example, AI helps you provide exceptional customer service and increase customer engagement in a very low-lift manner. Annie can reorder her makeup products in just a few clicks and doesn’t have to worry about running out. Plus, your website automatically shows the products she is interested in.

You can apply this same scenario with lots of products — coffee, tea, office supplies, cleaning items, laundry detergent, you name it.

The artificial intelligence customer experience mashup isn’t new by any means. Some of the world’s most recognized brands are already finding ways to improve CX with AI. Here are a few real-world examples.

Tip: Take a look at the top beauty influencers to inspire your brand.


Netflix AI for CX

Everyone’s favorite couch companion, Netflix tailors its recommendations based on each viewer’s history and ratings.

Users have the option to give content a thumbs up or thumbs down, and Netflix’s AI adjusts its recommendations accordingly. Users don’t keep seeing content they don’t like but also have the chance to discover new content that suits their interests.

Customer Service via Chatbots

Or let’s say Johnny has a problem with a recent order.

He goes to your website and shares his complaint with a chatbot. The chatbot provides Johnny with helpful answers on the spot based on his questions. Since Johnny’s package was damaged during shipping, the chatbot automates a refund and emails Johnny a prepaid label to return the damaged items.

Within minutes, Johnny feels better about his experience and didn’t have to wait on hold or make multiple points of contact for a resolution. Plus, your human agents could focus their attention on more complex cases while leaving simple interactions to your AI technologies.

KFC: Order Predictions

Fast-food giant KFC teamed up with Baidu (China’s leading search engine) to leverage AI and self-learning technology to predict what customers will order.

Its facial recognition system predicts orders based on a customer’s age and mood and serves up recommendations accordingly. The system (which also doubles as a payment processor) will also remember what customers order so the system can better learn about customer tastes and preferences.

Tip: Learn how to use chatbots to improve your sales

Spotify's Wrapped

Spotify AI and CX

Spotify’s Wrapped has earned worldwide recognition for its high level of personalization.

It gives users a rundown of their most listened-to tunes, podcasts, genres, and other content. The brand approaches user data in a unique way by allowing users to see their own stats at a glance.

Advantages of Using AI in Customer Experience

There’s no doubt the human element matters in customer experience.

But AI technologies can provide a surprisingly human experience that feels personalized and even empathetic. Data shows that 63% of customers engage with AI tools and don’t recognize the difference.

Let’s look at some ways AI can support a better customer experience.

AI Tools Can Predict Customer Behaviors

Predictive analytics can help companies better support customers now and prepare for future needs. For example, AI might detect a spike in demand for a product that is going viral. This allows companies to adjust their inventory and avoid backorders or stockouts.

AI predicts customer behavior

Predicting consumer behaviors can also prove helpful in sending reorder reminders or making product recommendations. Like the example above, you can estimate when a customer might need to replenish a product or recommend products based on items they’ve already purchased.

When you’re able to serve your customers with the products they need when they need them, they have one less reason to go to your competitor.

AI-Driven Insights Support Better Decision Making

In the past, decision makers relied on manual data collection and guesswork to develop their customer experience strategy. It was a time-consuming process and carried a risk of data being outdated by the time users were ready to act on it.

AI changes the game by turning data into insights at scale. What’s more, AI can produce these insights using real-time data, allowing you to take quick action.

More than 99% of companies are actively investing in Big Data for decision making. Uncovering trends, finding problems, and making high-impact improvements to CX become easier when companies shift from being data capable to data driven.

AI-Powered CX Supports Omnichannel Messaging

Today’s customer is increasingly omnichannel. They’re engaging with brands via SMS text, social media, email, chatbots, in-store, and even self-service channels. When live human agents can’t be everywhere, AI-powered technologies can fill the gaps. 

AI in customer experience allows you to be everywhere your customers are (and expect you to be, too). You can connect with them throughout the customer journey across all channels and deliver a top-notch experience every time.

What’s more, creating an omnichannel experience gives your brand a sense of unity and connection. They all work together to create a singular experience, regardless of the unique nuances of each customer journey.

AI-Based Marketing Is More Personalized and Effective

Personalization isn’t just a competitive advantage — it’s a customer expectation. More than seven out of ten customers expect brands to deliver personalized recommendations and communications, while 76% of customers feel frustrated when brands can’t deliver.

AI-based marketing removes much of the heavy lifting from creating these personalized experiences. AI connects the dots between consumer behaviors and expectations, allowing you to send highly targeted and well-timed offers via customers’ preferred channels. 

AI based marketing

AI can also support the psychological element of personalization.

AI can take into account the “why” behind consumer behaviors, personality types, and other nuances that might be missed by human analysts. Learning more about what drives customers to purchase can help you meet them where they are and give them what they need to make buying decisions.

AI-Enabled Tools Increase Productivity

When your customers have problems, their main priority is to gain resolution. It doesn’t matter to them how the problem is fixed or the question is answered, as long as they get what they need.

AI replaces the need for human interaction to solve every customer service issue while keeping customer satisfaction high. Companies can remain customer focused even when they have AI-enhanced tools working in the backend.

In our previous example, AI chatbots can answer basic questions, refund purchases, email return shipping labels, and other tasks to free up time for your customer service team. You can also create AI-powered self-service databases that provide resources based on customer queries.

Leveraging AI in Customer Experience with Meltwater

Combining artificial intelligence and customer experience begins with making AI part of your customer experience strategy. Once you understand AI’s potential in influencing CX, you’ll have a better idea of how to approach it and what tools you need to make the most impact.

At Meltwater, we help brands of all sizes harness the power of AI solutions and apply them to the customer experience. Our data is a combination of AI-generated and human-based information derived by data scientists, helping you to understand what the data means and how to turn it into actionable insights.

We scour a myriad of data sources, including social media, customer feedback, customer journey analytics, and more to give you a deeper and more meaningful understanding of your customers.

Fill out the form below to get a free consultation and demo of our platform.