Customer service is doing AI wrong — and it’s costing more than you think
For years, companies have approached customer service with one goal in mind: cut costs.
Deflect more calls. Shrink agent headcount. Reduce handle time. The entire industry has been built around the idea that support is a cost center to minimize, not an experience to improve.
Now, AI has entered the chat (yes that pun was intentional). And instead of rethinking what's broken, companies are just using AI to double down on the same bad strategy.
They're throwing chatbots at problems, automating responses, and eliminating human interactions. Hoping that less support somehow equals better support.
It doesn't.
The great customer service illusion
Every few years, there's a new trend that's supposed to fix customer service:
IVRs were going to reduce calls.
Offshore agents were going to cut labor costs.
Self-service portals were going to eliminate the need for human agents.
And now, AI chatbots are supposed to replace humans altogether.
Yet, customer satisfaction still declined. Wait times were still long. Agents were still drowning in work. And companies were still struggling with retention.
Why?
Because cutting costs and cutting friction aren't the same thing.
Cutting costs and cutting friction isn't the same when it comes to customer service
Most AI investments in customer service aren't designed to make support better. They're designed to make support cheaper. And that's why they keep failing.
Bad AI means bad outcomes
Here's what's really happening inside most AI-driven customer service strategies:
Customers still wait. Because AI-powered chatbots are great at answering basic questions, but customers don't always reach out for basic problems. So they still end up waiting for humans to step in.
Agents still struggle. Because instead of reducing their workload, bad AI just shifts it around. Now they spend more time cleaning up AI mistakes and dealing with angrier customers.
Leaders still lack visibility. Because most AI is data-rich but insight-poor. Automating tickets doesn't tell you if customers are actually going to get what they need.
And the worst part? This race to cut costs is actually making customer service more expensive.
The hidden costs of bad AI
Here's the real cost of treating AI like a replacement for human support:
Lower CSAT and NPS. Because customers get stuck in frustrating chatbot loops.
Higher churn. Because bad support turns customers into ex-customers.
Agent burnout. Because instead of being enabled by AI, they're left picking up the pieces when it falls short.
Lost revenue. Because AI should help drive conversions, not just deflect conversations.
And when companies finally realize this approach isn't working? They rip it out and start over. Wasting millions on short-term automation experiments that never had a chance to succeed.
What good AI looks like
The companies that win with AI don't see it as just a cost-cutting tool. They see it as a force multiplier. A way to create better customer experiences, increase efficiency, and unlock new revenue opportunities, all while reducing costs the right way.
Too many businesses approach AI as a surface-level fix, slapping on chatbots and basic automations without embedding AI deeply into their workflows. That's how you leave real opportunities (and a sh*t ton of money) on the table.
When AI is fully integrated and context driven, it delivers on four key outcomes:
Better CX. AI that actually helps, not frustrates, customers. Seamless handoffs, smarter self-service, and real-time agent assistance that makes every conversation faster and smoother.
Increased efficiency. AI that removes friction, not just costs. Automating repetitive tasks, summarizing conversations, and surfacing insights so agents can resolve issues with less effort and greater impact.
Revenue growth. AI that automates routine tasks and surfaces customer context. Helping agents identify upsell opportunities and drive higher LTV through more meaningful, revenue-generating conversations.
Smart cost reductions. Cutting costs the right way. By eliminating inefficiencies, not degrading service. AI that streamlines workflows, improves self-service where it makes sense, and helps teams do more without sacrificing quality.
But here's the catch, half-baked AI won't get you there. AI needs to be fully embedded into the customer service experience, not just bolted onto existing systems. It needs to be context-aware, learning from past conversations and adapting in real time.
Otherwise, it's just another shiny tool that creates more problems than it solves.
AI Won't save customer service — but the right approach will
The future of customer service isn't AI alone. It's AI and humans, working seamlessly together.
If you're investing in AI to replace your team, you're doing it wrong. If you're investing in AI to make your team unstoppable, you're on the right track.
Don’t invest in AI to replace your team. Invest in AI to make your team unstoppable
Because the companies that stop chasing cheaper customer support and start building better support will be the ones that customers (and top talent) will flock to.
Everyone else? They'll just keep racing to the bottom.
And the bottom isn't where you want to be.
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