AI in Customer Service Fails 4x More Than Other Tasks

New report reveals that AI in customer service often fails to meet expectations, with rising consumer concerns over data use and trust, highlighting the need for transparency, context-aware personalisation, and meaningful human-AI collaboration to drive lasting loyalty.

As businesses rush to integrate AI into customer service, the technology isn’t living up to its hype. While AI promises faster responses and smarter support, many consumers are finding the reality frustrating, leaving companies to wonder if their investments are paying off.

Nearly 1 in 5 consumers who have used AI for customer service saw no benefits from the experience. That’s a failure rate almost 4x higher than for AI use in general, as per the 2026 Consumer Experience Trends Report from Qualtrics.

As pressure grows on companies to demonstrate tangible returns on AI investments, the Qualtrics report reveals that efforts to scale service excellence with AI are falling short of expectations and that concerns about how customer data is being used are on the rise. 

Consumers rank AI applications for customer service among the worst for convenience, time savings, and usefulness – only “building an AI assistant” scores lower.

Misuse of personal data is now consumers’ top concern when companies use AI to automate interactions – 53% of consumers share this fear, up 8 points over the past year. Half of consumers are concerned that companies’ AI use will prevent them from connecting with a human being, and 47% are worried about job losses.

“Too many companies are deploying AI to cut costs, not solve problems, and customers can tell the difference,” said Isabelle Zdatny, Head of Thought Leadership at Qualtrics XM Institute and the Author of the Report. 

“AI should be used to build connections and enhance the human experience, with capable AI agents managing simple, transactional requests. Then, AI can aid human agents in solving complex customer problems with the relevant background details and suggested solutions.”

Customer Experience on the Rise, But Gains are Fragile

Despite AI’s initial shortcomings, global consumer experience improved across every industry measured in the report. Customers reported the strongest improvements in satisfaction, trust, and loyalty behaviours in industries where they can easily switch between brands, such as fast food or online retail. 

Harder-to-switch industries like universities and public utilities improved their consumer experiences at a slower pace, which could make them more vulnerable to disruptors targeting complacent sectors.

Beyond Price: Loyalty Comes from Experience

Price sensitivity is high for consumers amid economic uncertainty heightened by tariffs and inflation, but companies that choose to compete beyond just prices are rewarded with outsized gains.

While 46% of consumers choose companies for value, those who select brands for great customer service are more satisfied and have higher levels of trust compared with consumers who base their purchasing decisions on value, convenience, or familiarity.

“A race to the bottom on prices might win customers in the short term, but price is a temporary differentiator with fleeting impact,” said Zdatny. “Long-term customer relationships will be built on meaningful connections, not transactional interactions that won’t set an organisation apart when the economy shifts.”

Feedback Is Declining—Businesses Are Flying Blind

At a time when businesses most need insights, consumers are providing less feedback, with only 29% of customers communicating directly with organisations after bad experiences, down 7.5 points from 2021. Instead, 30% say nothing at all, up nine points since 2021.

Nearly half (47%) of bad customer experiences lead to decreased spending. This leaves business leaders in the dark when it comes to understanding changing consumer behaviours or reasons for churn, let alone addressing them.

The silence makes indirect feedback, through channels like social media or reviews, increasingly valuable for organisations to make up for the decline in direct responses. Successful businesses will connect these scattered signals to understand customer sentiment even when it’s not explicitly stated.

“Companies are flying blind while customers vote with their wallets,” according to Zdatny. “In today’s business environment, experience, operational, and behavioural data all need to come together to ensure leaders can take action to resolve systemic issues before losing customers to bad experiences.”

Personalisation Demands Trust, Not Just Data

Consumers increasingly want experiences tailored to their individual needs – 64% want to buy from companies that cater to their individual experiences, up 2.5 points year over year – but most don’t believe the benefits justify the privacy cost. 

Only 39% of people trust companies to use personal data responsibly, and nearly two-thirds worry about the security of their personal data. Fears about fraud (33%) and hacking (23%) top their worries.

Consumers are most comfortable with companies using personal info to learn their habits, such as recommending a typical coffee order – 30% of consumers say they would be okay with this. Still, this is a smaller share than the 32% of consumers who are uncomfortable with all forms of personalisation.

The research identifies a clear path forward: transparency and control can rebuild trust. Nearly half (46%) of consumers would share more data with greater transparency about the data being collected, while 45% each would do so with better control over data usage or deletion.

The Path Forward: Context Over Collection

The report underscores that collecting more data isn’t always the answer. 

Instead, companies should focus on understanding customer context and using insights to address real-time needs. Transparency and control over data usage are key to rebuilding trust and fostering lasting loyalty. 

“Companies need to stop collecting everything for the sake of having all the data – don’t ask for more than you need,” said Zdatny. 

“Understanding customer context wins out over building detailed profiles as it allows businesses to address needs based on current situations. Showing how their data improved their experience, paired with transparency and control, will build a foundation of trust that drives lasting loyalty.”

Based on a global study of over 20,000 consumers across 14 countries: Australia, Brazil, Canada, France, Germany, Japan, Mexico, Netherlands, New Zealand, Singapore, Sweden, UAE, UK, and US, the findings highlight that meaningful CX, not sheer data accumulation, will define the future of customer service.

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