By T. Leigh Buehler  |  05/02/2024

AI in customer service


In the world of retail, customer expectations evolve constantly. Customers expect exceptional service from every organization. As ecommerce continues to grow, retailers need to continually innovate and adapt their customer service strategies to meet the demands of today’s consumers.

Customers want retailers to blend their ecommerce strategies with their brick-and-mortar locations to provide 360-degree service. If customers buy online, they still want to be able to pick up or return items in-store.

If they shop in-store, they also want the option to deal with customer service chatbots online to address any issues. Evidently, customer sentiment indicates a strong demand for the flexibility of both online and in-store services.

Retail is no longer just retail; it is digital retail now. Companies are using technology in every aspect of the shopping or service cycle to meet customers’ expectations and needs. These strategies can apply to both big and small retailers.


AI in Customer Service

The customer experience is a crucial component of retail management. Companies are implementing AI in customer service to better serve their customers

One AI technology, which I am sure most of us at this point have experienced, is the chatbot. Chatbots are AI-powered virtual assistants that are programmed through machine learning to simulate human-like conversations. They act as customer service agents, offer assistance, answer customer queries, and provide information in real time.


How Sephora Implements AI in Customer Service

When it comes to customer service, chatbots can streamline a company’s processes and provide personalized services. Beauty products retailer Sephora® uses AI-powered chatbots to help customers with product recommendations, give skincare advice, and assist with order inquiries.

The chatbots are available on Sephora’s website and mobile app, and they mimic natural conversations to produce relevant responses. The bots also learn from each customer interaction to improve their responses over time. By using AI, Sephora can enhance customer engagement, reduce wait times, and deliver tailored recommendations.


The Key Advantages of Using AI in Customer Service

The role of AI in customer service is significant and complex. AI technology offers 24/7 availability, scalability, efficiency, and data-driven insights. However, companies need to be careful with balancing AI’s benefits and convenience with the importance of maintaining a personal touch for customer interactions.

24/7 Availability

Unlike human employees, chatbots can handle customer inquiries at any time. This availability ensures customers receive immediate responses and assistance, even if outside of business hours. This convenience is ideal for late-night shoppers.


Human customer service teams can only handle a few customer interactions at once. By contrast, chatbots can handle multiple interactions simultaneously, which makes the technology highly scalable. As customer demand changes, chatbots can efficiently serve customer inquiries at high volumes and improve the customer experience without sacrificing response times or the service quality.


AI technology using natural language processing, machine learning, and an interactive voice response can easily handle routine customer inquiries or tasks. Chatbots can provide answers to frequently asked questions, help with troubleshooting, and guide customers through simple transactions, which frees up human support agents to focus on any complex issues that need human support team intervention.

This additional freedom for service professionals also helps to improve agent productivity at contact centers. It also provides more time for a human agent to understand customer queries and develop better customer relationships.

Data-Driven Insights from Customer Service AI

AI chatbots collect valuable customer data from their interactions, including common queries, customer preferences, customer history, and recurring pain points. Companies can then analyze this customer data to gain insights into customer behavior and use predictive analytics to optimize their products, services, and customer support processes accordingly.


Customer Service Interactions and Maintaining a Personal Touch

Sometimes, the last thing a customer wants is to deal with another computer bot. Many people still want human interactions, instant support, and personalized service when it comes to complex customer requests.

Routine tasks that can be handled by using AI in customer service are fine. But if a customer has a major quality issue with a product or service, human interaction may still be desired so that the shopper is pleased with the overall customer experience.

The Journal of Retail and Consumer Services published research indicating that customers enjoy the ease and convenience of interacting with chatbots. A bot can be then viewed as an added benefit to a company’s customer service offering because it provides faster service.

For example, if consumers experience problems while shopping online, they can direct their queries to chatbots and follow the resulting prompts. From there, the chatbots can determine which customers need to be connected with company employees such as the members of a customer service team.

By maintaining a personal touch in customer service, retailers can build trust, empathy, and connection with their customers. Chatbots may excel at handling routine inquiries, but complex customer issues tend to require a human’s judgment, empathy, and problem-solving skills. Human agents can also provide emotional support throughout the customer life cycle that go beyond the capabilities of AI in customer service.

Providing personalized and human-centric customer experiences can be a powerful differentiator in a competitive retail market. Brands that prioritize human connection and personalization stand out to customers and are more likely to earn shoppers’ loyalty and advocacy.


Additional Ways Customer Service AI Is Improving the Customer Experience

Modern technology can help to improve the customer service experience in a number of meaningful ways. Companies can now provide personalized interactions, artificial intelligence (AI) support, and more efficient shopping experiences.

Personalization at Scale

With the emergence of today’s advanced technology in retail management, customers want more personalized experiences on a customer service platform. They want their shopping experiences tailored to their personal preferences. Retailers capable of delivering personalization at scale can significantly enhance customer satisfaction and loyalty.

Amazon®, for instance, is renowned for its ability to personalize the customer experience. As an ecommerce giant, it can implement sophisticated personalization algorithms into their platforms to better serve customers and enhance sales.

By analyzing customer data and individual behavior and leveraging AI, Amazon provides personalized product recommendations as well as targeted marketing messages. The machine learning capabilities of AI tools can be equally useful when used to anticipate customer needs, conduct a sentiment analysis, or predict a consumer's future purchase history as an individual grows older.

A great example on Amazon's platform is the section "Customers who bought this item also bought” and the feature of other product recommendations. Online shoppers can view which items other customers order together. This feature helps to drive additional engagement and sales.

Omni-Channel Integration

The seamless integration of multiple channels is essential for delivering a quality customer experience and meeting customer needs. Nike® is a wonderful example of a company that delivers a smooth transition between their online and offline channels.

Nike’s mobile app allows customers to browse through products, make purchases, and even access exclusive content. Meanwhile, the Nike stores offer services such as the in-store pickup of online orders and digital foot scanning for personalized recommendations.

Using an omnichannel approach like Nike’s allows customers to interact with the brand consistently across several different touchpoints. This approach fosters customer satisfaction and convenience.

Efficient Customer Support

Existing customers expect prompt and effective support, and digital retailers must resolve any issues as quickly as possible for customers to establish trust and improve customer retention. Ecommerce platform Shopify® prioritizes customer support through a 24/7 live chat, email support, and help center.

Shopify also provides its merchants with tools like order tracking and inventory management, empowering shop owners to deliver exceptional service to their own customers. By offering dynamic support resources and listening to customer feedback, Shopify guarantees its merchants can address customer questions and concerns efficiently and provide consistent service, which benefits everybody – customers, merchants, and Shopify.

Community Engagement

When retailers build a sense of community for their customers, they can foster loyalty and advocacy. Lululemon® is a great example of a company that cultivates a strong community through its online platform, “The Sweat Collective.” Fitness enthusiasts, instructors, and brand ambassadors can connect on the platform and offer exclusive content, events, and product reviews.

Lululemon fosters a sense of belonging and support through its online community. Customer conversations can help drive engagement and loyalty beyond traditional transactions.


Great Customer Service in Digital Retail

As artificial intelligence technology continues to improve, it will play an even more critical role in customer service and provide deep insights for companies seeking to better understand customer behavior and improve customer service operations. Retailers that utilize both the strengths of AI and prioritize human connection can then achieve an optimal balance in their customer service strategy as they work to achieve success in the digital retail age.


The Retail Management Degree at APU

For students who are interested in studying AI in customer service and retail management, American Public University (APU) offers an online bachelor’s degree in retail management. Courses for this degree cover topics such as retail strategy, retail innovation, retail operations, consumer behavior, and supply chain management.

o offers four concentrations: business analytics, digital retailing, marketing, and reverse logistics. For more information about degrees at APU, please visit our business and management program page.

Sephora is a registered trademark of Sephora.
Amazon is a registered trademark of, Inc.
Nike is a registered trademark of Nike, Inc.
Shopify is a registered trademark of Shopify, Inc.
Lululemon is a registered trademark of Lululemon Athletica Canada, Inc.

About the Author
T. Leigh Buehler
T. Leigh Buehler is an assistant professor who teaches retail management courses at the University. She is also a course consultant, social media specialist, and curriculum design team leader. Her academic credentials include a B.A. in history and sociology from Texas A&M University, an MBA in business administration from the University of Phoenix, and a master’s degree in American history, along with numerous certifications in digital marketing.

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