What is AI customer service?

AI in customer experience is the use of artificial intelligence (AI) technologies to create a seamless, personalized customer journey — from a prospect's initial online search to your follow-up marketing to the first sale, and every interaction that follows. All the behavioral data you collect along the way gets integrated and used to remove friction at every touchpoint.

Simply put, a well-designed AI customer experience helps you better understand and engage individual customers. So whether a customer is consuming your marketing content, contacting customer service, or making a purchase, your message is consistent and personalized, and your team knows exactly who they're talking to and why.

Intelligent customer experience doesn't just make your buyer's journey more seamless. It also makes your team more efficient, thanks to AI customer service chatbots (also known as virtual agents) and voice assistants that help lighten the load, and more effective, thanks to intelligent routing and AI-derived insights and prompts.

Why customer experience matters

When customers have a great experience with your company, you earn their repeat business and perhaps even their referrals — but only if you keep engaging them and delivering consistently great service.

According to the Vonage Global Customer Engagement Report 2025, 75% of consumers will switch to another business after frustrating customer experiences, and 48% of customers only need one or two bad experiences before they leave.

Consumer expectations have skyrocketed as technology develops, but multiple studies show that a large majority of customers feel that brands are failing to deliver the customer experience they expect. Thus, it’s more important than ever to make sure you optimize the customer experience to meet those expectations.

Benefits of AI in customer service

Enterprise use of AI has expanded rapidly in recent years. Over the next three years, 92 percent of companies plan to increase their AI investments, according to 2025 McKinsey research. When you build an AI customer experience, your business gains several advantages:

1. Save customers time and money

Virtual assistants and in-app communications APIs make the customer experience more convenient. Our latest Global Customer Engagement Report emphasizes that AI can help businesses create more winning customer experiences. For example, the report reveals that 65% of customers express frustration with long wait times to speak to an agent. With AI, businesses can use virtual assistants to eliminate long hold times for common requests — saving customers time and frustration.

2. Engage customers with new sales opportunities

AI can help inspire more purchases with personalized product recommendations and special offers. It can remind customers when it's time to reorder products based on buying history. And by adding communications APIs to your website and apps, customers can ask questions about products without leaving the product page and complete purchases via virtual agent.

3. Improve customer retention

While you might be inclined to think that customers are more likely to complain after a bad customer experience, the Global Customer Engagement Report also shows that they’re eager to spread the word after a positive experience! After a great customer experience, 52% of customers will become more loyal to a business or service provider, 53% will tell their friends and family about the company, and 35% will purchase additional products.

4. Increase employee productivity

By intelligently routing customers, qualifying sales leads, and offloading customer service tasks, AI frees up human agents to focus on their core competencies and insights that help them work more efficiently. Accenture predicts that introducing AI will increase enterprise productivity up to 80% by 2035.

5. Make data-driven decisions that improve the customer experience

While your AI-powered solutions are enhancing the customer experience, they're also gathering and analyzing data that can help you better understand the customer journey and identify pain points that could lead to customer churn. This information helps you better train your team, remove friction at various touchpoints, and streamline workflows.

Examples of AI customer service software 

When it comes to creating best-in-class customer experiences, the bar is high, and so are the stakes. Fortunately, cloud-based AI customer experience technology has leveled the playing field, making it possible for businesses of all shapes and sizes to compete based on customer experience.

If you’re not sure where to start, here are some examples of AI in customer service. You might consider leveraging Communications APIs, your CRM, and a low-code AI solution to start delivering intelligent omnichannel customer experiences.

Communications APIs

Communications APIs let you integrate different communication channels and add new ones.

When building your communications stack, you can piece together apps from different vendors, using APIs to integrate them. Or you can invest in a unified communications platform, like Vonage Business Communications, which has already combined all the standard communication channels — voice calling, video conferencing, and instant messaging — into one unified user experience. That means your team can switch seamlessly from one to another based on customer preferences.

Then you can use communications APIs to build those communication channels directly into your website, mobile apps, and contact center platform. Customers will be able to call or message you in one click without closing their browser or leaving the app.

Vonage APIs also let you add new communications channels and AI functionality, such as:

• Voice: The Vonage Voice API lets you create automated, personalized customer interactions powered by sophisticated machine learning algorithms. This includes virtual assistants that intelligently route customers to the right contact center representative or voice bots that answer customers' questions, qualify sales leads, and enable 24/7 self-service. The Voice API also enables multichannel recording, interactive voice response (IVR), text-to-speech, and sentiment analysis.

• Video: The Vonage Video API lets you build a custom live chat experience into your website or mobile app. In this way, customers can communicate with you without downloading or signing into third-party apps, and you can capture the communication history and integrate it with other customer data for deeper analytics.

• Messaging: The Vonage Messages API lets you build private, two-way SMS into your apps and website so customers can safely and seamlessly book appointments, check order status, and even complete transactions via text message. It also lets you send automated, relevant messages at the right time to the right users, including appointment reminders, sale notifications, and delivery confirmations.

APIs also enable you to integrate all these communication channels with your CRM.

Customer relationship manager (CRM)

When you integrate your communications apps and APIs with your CRM, you also integrate their data, which creates new opportunities to apply and leverage AI functionality.

When a customer reaches out to your business, the call or message can be routed to the correct agent based on customer history. Before the agent joins the conversation, they see screen pops with customer history data and AI-generated predictions about why they might be calling. It also alerts the agent to other business that could be handled during the call — for example, information that needs to be updated or anticipated future needs. That conversation, and all the data derived from it, are then automatically logged into CRM to be used for marketing, sales, and the next customer service interactions.

Low-code AI solutions

While the prospect of implementing AI to enhance your customer service may seem daunting, it doesn’t have to be. AI once seemed futuristic, but now low-code AI solutions make it easier than ever to get started.

If your business is just starting to dive into the world of AI, consider how a low-code/no-code AI solution can help. Offerings like Vonage AI Studio include low-code conversation design solutions that empower developers and non-developers to create and deploy customer service experiences that operate in natural language across channels.

Other Generative AI customer service solutions

What are the most valuable AI customer service solutions?

AI customer service agents like virtual assistants

AI-driven virtual assistants can replace phone trees with conversational, intelligent routing, so customers don't have to listen and respond to lists of options to (hopefully) find the right agent. Instead, they simply tell the virtual assistant what they need, and the AI uses that information and customer history data to connect them with the appropriate person. The virtual assistant can also answer simple questions and, depending on your integrations, provide support and complete purchases.

With an advanced virtual assistant, the AI analyzes customer sentiment and feedback in real time, using words and content to respond more effectively. If at any point the customer wants to talk to a human, the virtual assistant can pass them to an agent with a full summary of what was already discussed so the customer doesn't have to repeat themselves.

Chatbots

Chatbots are like virtual assistants but in writing. They can direct inquiries, answer questions, and enable self-service. You can add them to your website, app, and social media properties, allowing customers to engage with your brand anytime and get quick answers to their questions without leaving your content or product listings.

These virtual agents are a great part of a conversational commerce strategy, particularly for in-channel engagement. After all, you’ve gone through the effort to reach customers on their favorite platform — and nothing can negate that experience faster than asking them to go elsewhere. So consider integrating virtual agents to:

• Nix the hold time: AI-powered virtual agents can help eliminate long hold times, particularly for common requests.

• Create 24/7 sales and service: Virtual agents anticipate questions and suggest appropriate products and options. Think of it as being a step ahead to provide shipping info, confirm inventory/size/color, or perhaps route customers to a personalized in-store visit. The constant in-channel engagement can help nurture customers through the purchasing cycle.

Sentiment analysis

Sentiment analysis AI bots listen in on conversations and give you real-time insight into a customer's emotions. This can help you know when they're engaged or when they're annoyed. If the AI detects escalating frustration during virtual assistant interactions, it can automatically engage a human representative. And if customers are unhappy with the agent's service, it can loop in an expert supervisor. Vonage Sentiment Analysis solution also provides agents with clear, real-time feedback they can use to improve their skills and provides managers with insights they can use to better coach their teams and improve the customer experience.

Speech recognition

Speech recognition AI uses natural language processing to better understand customers and respond conversationally. It powers everything from IVR to virtual assistants to call transcription. Speech recognition can also be used as a security measure to verify customer identity and let them access account information and self-service options.

4 ways to use generative AI for improving customer service

Generative AI transforms customer service by enhancing how businesses interact with clients. Here’s how it can be leveraged to improve customer support:

• Personalized responses: Generative AI can analyze customer interactions and create tailored responses based on their specific needs and preferences. By considering the customer’s history, sentiment, and inquiry context, AI can provide personalized answers that feel more human and relevant.

• Context-aware suggestions: Generative AI in customer service can produce real-time, context-aware suggestions for agents, helping them solve complex issues more quickly. It can analyze a customer's past interactions and provide suggested solutions, making it easier for support staff to address customer concerns promptly.

• Automating routine tasks: Generative AI can automate repetitive tasks such as answering frequently asked questions, processing orders, or providing basic troubleshooting steps. This reduces the load on human agents and allows them to focus on more complex or high-value interactions.

• Real-time support for agents: AI in customer service can provide on-the-spot support to customer service agents by suggesting responses, providing knowledge base articles, or offering guidance on next steps. This helps agents resolve issues faster and more efficiently, ensuring a smoother experience for customers.

7 things to consider when implementing AI in customer service

Implementing AI in customer service can greatly enhance efficiency and customer satisfaction, but it’s important to approach it with a clear strategy. Here are key factors to keep in mind:

1. Identify the right use cases: Not all customer service functions suit AI automation. Focus on areas where AI can add the most value, such as answering common questions, processing basic requests, or providing 24/7 support. Leave more complex tasks for human agents to handle.

2. Integration with existing systems: Ensure the AI solution can easily integrate with your current customer service platform, CRM, and knowledge base. A seamless integration allows AI to access relevant customer data, creating more personalized and accurate responses.

3. Customer experience and human touch: While AI can automate many tasks, ensure a balance between automation and human interaction. Some customers may prefer speaking to a human, especially for complex or sensitive issues. Offer easy transitions from AI to live agents when necessary.

4. Training and continual improvement: AI models require ongoing training to improve accuracy and relevance. Make sure your AI system is continuously updated with new information and capable of learning from customer interactions to better handle future inquiries.

5. Data privacy and security: Customer service often involves handling sensitive data. It’s essential to ensure your AI systems comply with data privacy regulations (e.g., GDPR, CCPA) and that customer information is protected with robust security protocols.

6. Scalability: As your business grows, so will your customer service needs. Choose a scalable AI solution that can handle an increase in customer interactions without compromising service quality.

7. Cost vs. benefit: While AI can improve efficiency and reduce operational costs, the initial implementation cost can be significant. It is important to assess the long-term benefits, such as improved customer satisfaction and reduced response times, to ensure the investment is worthwhile.

What is the future of AI in customer service?

The future of AI in customer service is all about smarter, faster, and more personalized interactions. Imagine AI-powered agents handling complex inquiries instantly, predictive AI anticipating customer needs before they even ask, and real-time sentiment analysis making every conversation feel more human.

Businesses can craft omnichannel experiences that keep customers engaged and satisfied with AI-driven insights. As AI continues to evolve, customer service won’t just be reactive, but proactive, intuitive, and completely tailored to individual preferences. The question isn’t if AI will transform customer service, but how fast your business will adapt.

Introduce AI in customer service to your business and start seeing results today

AI customer service was once a luxury only big tech companies could afford, but today, it’s everywhere, powering the apps and services we use daily. Now, businesses of all sizes can leverage AI to enhance customer interactions, streamline support, and personalize experiences. The key is understanding how customer service AI fits into your unique business needs and use cases.

Looking to deliver a seamless, personalized omnichannel experience? Explore Vonage Conversational AI solutions, designed to help businesses like yours enhance customer interactions effortlessly.