The Biden administration recently announced a series of proposals, dubbed ‘Time Is Money,’ aimed at improving customer experience pain points. This announcement includes actions that we can all get behind, like making it easier to cancel subscriptions and cracking down on fake product or service reviews.
A couple of the proposed actions focus on the technology behind customer service – specifically ‘doom loops’ and chatbots. In most cases, the problems with these specific technologies are solvable with the strategic use of artificial intelligence.
However, as businesses consider how they should address customer experience (CX) concerns, I would urge against viewing AI as a solution on its own. Those that simply swap one technology for another without addressing the underlying cause of their CX challenges could end up doing more harm than good.
Customer experience quality is at an all-time low
Too often, we see businesses focus on technology adoption rather than customer experience transformation, and that’s a big mistake. Technology can, and should, constantly be improving customer experiences by increasing personalization, decreasing friction, and driving productivity.
However, you cannot simply apply technology like a bandage and expect these outcomes. Without first committing to improved customer experience outcomes that directly impact shareholder value and identifying corresponding processes to reach those outcomes, businesses risk creating worse experiences for customers.
Unfortunately, that’s exactly what’s happening.
Average customer experience quality in the United States is at an all-time low, according to the 2024 Forrester Customer Experience Index. Compared to a year ago, nearly 40% of brands in the Index received lower average quality scores from their customers across the categories of effectiveness, ease, and emotion.​
These low ratings are occurring despite the fact that businesses are investing even more in customer experience improvements.
What’s happening? No business leader sets out to create a worse customer experience. Surely they want to decrease costs and increase revenue, but not at the risk of widespread customer dissatisfaction.
CX lessons to be learned from digital transformation mistakes
Not that long ago, everyone was talking about digital transformation, which was defined as the use of technology to drastically improve business performance. When ChatGPT debuted in 2022, many left digital transformation behind in pursuit of the new shiny thing – generative AI. I believe now is the time to revisit what we learned from digital transformation, because in some ways it led to the current state of poor customer experience quality.
The issue with digital transformation was that too often firms were not really transforming anything.
They were migrating and replicating on-premises operations to the cloud and automating sequences of tasks. Firms were digitizing, but they weren’t eliminating steps, let alone re-inventing processes with new technology. They may have reduced invested capital but increased the long-term total cost of ownership.
One issue was that these efforts were often siloed (in either IT or business lines) without considering the implications for other parts of the business. Digitizing and moving costs from fixed to variable came first, and customer strategy and design came second – or not at all. Change management, measurable impact, and shareholder value were afterthoughts.
As AI investment grows, we’re seeing the repercussions of these oversights amplified as they disrupt many companies’ ability to capitalize on AI’s potential.
In one report, 88% of surveyed companies said they are currently in the process of implementing AI or machine learning into their operations in 2024 – yet only 25% of these companies reported directly seeing revenue growth from these AI investments. ​
Not only is customer experience quality not improving, neither is company revenue.
Now is the time to course-correct on CX
We are seeing promising signs that business leaders are learning from the mistakes of their digital transformation efforts. In the race to adopt AI, CEOs are leading the charge, with a global study finding that 61% say they are pushing their organizations to adopt generative AI more quickly than some employees are comfortable with.
That statistic highlights two key facts. First, CEOs are driving AI adoption, which is important because for any transformative initiative to take off, it needs leadership from the highest levels driving vision and adoption.
Second, employees aren’t entirely comfortable with the speed of change. That’s not surprising, but it does highlight the importance of training and ongoing change management for employees to feel confident and empowered in their roles.
AI has enormous potential to improve the customer experience, and we’re already seeing many use cases where it is doing just that. For instance, the president’s proposal calls out “doom loops†as a specific pain point. The White House briefing statement describes the issue of “doom loops†in this way: “Too often customers seeking assistance from a real person are instead sent through a maze of menu options and automated recordings, wasting their time and failing to get the support they need.â€
What the White House calls ‘doom loops’ are what we in the CX industry refer to as interactive voice response systems (IVRs). With natural language understanding (NLU) and AI, IVR systems can now allow customers to state a problem in their terms and quickly receive an accurate response or route to the right agent. Even better, AI-powered IVR systems can use advanced analytics to predict the question before the customer even asks it. Essentially, AI can put an end to doom loops.
While it may seem like the AI here was an easy fix, what my oversimplified description of AI-enabled IVR doesn’t describe is the customer experience design work and ongoing fine-tuning required to achieve the improved customer experience.
So, while AI does have the potential to solve the CX challenges outlined in Biden’s ‘Time is Money’ initiative, it will not do it on its own – after all, we know that generative AI chatbots sometimes get it wrong.
Real customer experience transformation requires concerted and connected company-wide focus, dedicated change management, and a customer-first mindset. Within that foundation, businesses can strategically use AI to transform the customer experience for the better.
