customerexperience

AI Is transforming customer experience – but not always for the better

Have you ever had the experience where customer service tries to get you to use a chatbot (“the online service has all the information our representatives have”), but you know it’s not going to answer your question and you just want to get to a human? That got me wondering: are chatbots actually improving the customer experience, or are they just one more hoop we have to jump through?

It turns out that, while many companies are racing to adopt AI for customer service, research shows that customer satisfaction hinges on how AI is used – not whether it’s used at all.

AI can be brilliant – when it’s used thoughtfully. Across industries, AI is quietly powering some truly impressive improvements in customer experience. For example:

  • Sephora uses an AI chatbot to recommend makeup based on your skin tone, weather, and preferences. Customers say it feels like having a personal stylist on call.
  • Capital One’s AI assistant, Eno, flags suspicious charges or unexpected fees before you even notice. That kind of proactive help builds trust.
  • Tripadvisor now offers an AI-powered itinerary planner that can build a multi-day travel agenda based on your interests, budget, and travel dates—all in seconds.

These tools work well because they respect the customer’s time and reduce friction. They enhance the experience without replacing the human touch entirely.

However, AI doesn’t always lead to great customer service. Customers expect to escalate to a human when needed – a but many chatbots don’t make that easy. Forrester found that fewer than 20% of chatbot interactions are fully resolved without human support. In other words, customers are often left feeling stuck. And when that happens, satisfaction drops. Fast.

The problem isn’t AI itself – it’s poor implementation:

  • Bots that can’t understand nuance
  • Rigid, rule-based scripts
  • No clear way to “talk to a person”
  • Privacy and data concerns

What works best is the “human-in-the-loop” model: AI handles the repetitive, high-volume tasks, and humans step in for the complex, emotional, or nuanced ones. That is, AI works with humans, not instead of them.

MetLife, for example, uses AI to listen in on service calls and provide live coaching to agents – suggesting responses or flagging when a customer sounds frustrated. The agent stays in charge, but gets a digital co-pilot. That’s a smart use of AI. It boosts speed and empathy.

If you’re considering how to use AI to improve your company’s customer experience, here are three places to start:

  • Look for friction: Where are customers getting stuck, delayed, or dropped? AI can help – but only if you’ve clearly mapped those trouble spots first.
  • Respect escalation: Don’t make customers “prove” they deserve to talk to a human. Make the human option easy, fast, and friendly.
  • Keep it transparent: Let people know when they’re talking to a bot. Let them know what the bot can and can’t do. Set expectations up front.

And finally: make sure your AI is improving the emotional experience – not just the technical one.

The bottom line: AI can absolutely improve customer experience. But it doesn’t always. The difference lies in whether the tool is designed to make customers feel more understood – or just more processed.

Like most things in business (and life), tech works best when it’s paired with a human mindset. That means empathy, curiosity, and a deep understanding of what your customers actually need.

Want to know more about how AI can improve the customer experience at your company? Ask about our presentation “AI-Driven Customer Experience: Unlocking Loyalty, Retention, and Growth.” Email me at info at bureauwest.com.

Sources: “Consumer Insights: Trust In AI In The US, 2024,” Forrester, October 6, 2024; Bureau West research

Posted on by Jay Zaltzman

Uncovering unconscious motivators (part 1)

We’ve long known that the unconscious mind plays a major role in customer decision-making. Influential researchers like Daniel Kahneman, Dan Ariely, and Gerald Zaltman have written about how emotions and unconscious memories shape our choices. (Note: Gerald Zaltman is not related to me… as far as I know!) People’s decisions are largely based on emotions and unconscious memories; yet, when asked how we come to our decisions, we use our conscious minds to come up with a rational answer – which may or may not be accurate!

One of the advantages of qualitative research is its ability to uncover these hidden motivators. Projective techniques, for example, help us get beyond surface-level responses to reveal deeper emotions and drivers. Lately, I’ve been exploring neuro-linguistic programming (NLP) and hypnotherapy – two fields that specialize in accessing the unconscious mind – to see what qualitative researchers can learn. There are several powerful techniques we can adapt and apply in our work.

One particularly useful technique is guided visualization, commonly used in NLP to retrieve unconscious memories and imagine desired outcomes. In qualitative research, we can leverage this method to help participants recreate past experiences and envision ideal future scenarios – both of which yield richer insights than traditional questioning.

Take a retail client, for example. Instead of simply asking customers about their last visit to the store, we can immerse them in the memory:

  • In a one-on-one interview, have the participant close their eyes and relax. Guide them through their last visit: “Picture yourself walking into the store. What do you see? What do you hear? How do you feel?”
  • Move through the entire experience: browsing, interacting with staff, making a purchase. Probe for emotions: excitement, hesitation, satisfaction, regret.
  • What feelings lingered after the visit? Would they return? What made the experience memorable – or forgettable?

This technique activates the senses and emotions tied to the experience, unlocking deeper insights that may not emerge in a standard interview. It helps clients understand not just what customers do, but why they do it – and how they feel about it.

But we don’t have to stop at recreating past experiences. Once the participant is fully engaged, we can ask them to visualize an improved version of the experience.

  • “What would make shopping here more enjoyable?”
  • “If this store wanted to feel extra premium, what should change?”
  • “What would make you want to return more often?”

Instead of asking customers to rationally brainstorm improvements, this method lets them feel their way into the answer. It often reveals insights we wouldn’t get through direct questioning.

Guided visualization is just one technique that can enhance qualitative research. In my next Research Tidbit, I’ll explore the ego state approach, a method from hypnotherapy that can help uncover internal conflicts in decision-making. Customers frequently have a part of them that wants to make the purchase and part that doesn’t: we can learn how to appeal to both sides.

Let’s discuss how to uncover your customers’ unconscious motivators. Email me at info at bureauwest.com.

References: “Hidden Minds,” Harvard Business Review, June 2002; “Thinking, Fast and Slow,” Daniel Kahneman, 2011; “Predictably Irrational: The Hidden Forces That Shape Our Decisions,” Dan Ariely, 2008

Posted on by Jay Zaltzman

How to avoid unprofitable customers

Not all customers are profitable to a business. There are those who only ever buy products at a discount. There are customers who return products repeatedly. And those who utilize customer service disproportionately. (It turns out the customer isn’t always right!) Even though it goes against our instincts, there are customers that companies should not want – they should either be “fired” or, better yet, never become customers in the first place.

Some examples:

  • Years ago, Best Buy classified its customers as “angels” or “devils.” According to The Wall Street Journal, “The devils are its worst customers. They buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts.” They changed their policies to make them less vulnerable to exploitation, adding a 15% restocking fee and selling restocked goods over the Internet instead of in-store.
  • Hubspot had two main customer segments: people who run small businesses (1-10 employees) whom they called “Ollie Owner,” and marketers at companies with 10-1000 employees (“Mary Marketer”). At a certain point, the company realized that the Mary Marketers were much more loyal and profitable then Ollie Owners. They didn’t “fire” their Ollie Owner customers, but rather, focused their marketing and service efforts on pleasing Mary Marketers.

How can your company avoid unprofitable customers?

  • Analyze existing data to identify and focus on customer groups that are likely to be profitable. Consider behavioral segmentation, looking at purchase recency, frequency and value, as well as customer lifetime value.
  • Approach discounting with care, looking for ways to incentivize good customers rather than encouraging unprofitable ones. One option: make discounts part of a loyalty program.
  • Develop personas for both profitable and unprofitable customers. Those “negative” personas can help guide marketing and product offerings, making sure you appeal to the good customers and not the unprofitable ones.
  • Pamper your high-value customers. Provide an amazing customer experience to your most profitable customers. Consider having explicit customer tiers like airlines do with frequent flyer status – those who are most profitable can unlock extra bonuses and services.
  • For some companies, it may make sense to screen customers and/or have minimum purchase levels.

Let’s discuss how to find your most profitable customers. Email me at info at bureauwest.com.

Sources: “Case study: how audience-driven products built a unicorn,” GTMonday, 3/4/24; “Best Buy hopes to exorcize devil patrons,” Ars Technica, 11/8/04

Posted on by Jay Zaltzman

The customer trust gap

90% of business executives think customers highly trust their companies while only 30% of consumers actually do (according to PwC’s 2024 Trust Survey). That “trust gap” is a problem: when customers trust a company, they are more inclined to make repeat purchases, less sensitive to price changes, and more likely to recommend the brand to others. More trust equals higher profits.

How can companies actually increase customer trust? Consider the following actions:

  • Customer service: This is your frontline in the battle for trust. Ensure your customer service is responsive, empathetic, and solution-oriented. A positive service experience can turn a disgruntled customer into a loyal advocate.
  • Listen: Engage with your customers across multiple platforms. Whether it’s social media, email, or in-person interactions, make sure you’re listening and responding to their needs and feedback.
  • Care: Demonstrate that you value your customers beyond the transaction. Personalize interactions, celebrate their milestones, and make them feel part of your brand’s journey.
  • Transparency: Be open about your products, pricing, and policies. Customers appreciate honesty and are more likely to trust brands that are upfront about their limitations and strengths.
  • Social proof: Encourage satisfied customers to share their experiences through reviews and testimonials. Real stories from real people carry more weight than any marketing message. Share these testimonials widely to build credibility.

One example of a company that enjoys customer trust is Chewy.com, a pet retailer. Chewy has distinguished itself through its exceptional customer service. For instance, when customers experience the loss of a pet, Chewy has been known to send sympathy flowers to grieving customers who reach out to return pet food. This gesture not only includes a full refund but also encourages customers to donate the food to shelters, showcasing a deep understanding of customer emotions and needs.

Another example: Subaru. Known for its transparency and commitment to safety, Subaru has built a reputation for reliability and proactive customer service. This level of trust is further reinforced by the company’s consistent efforts to address customer feedback and concerns, which enhances its relationship with consumers.

Find out how to increase trust among your customers. Email me at info at bureauwest.com.

Sources: “PwC’s 2024 Trust Survey: 8 key findings,” PwC, March 12, 2024; “Translating trust into business reality,” PwC, September 23, 2022; “How Business Can Build and Maintain Trust,” Harvard Business Review, February 7, 2022

Posted on by Jay Zaltzman