AI Customer Service Fails to Satisfy Consumer Needs: Verizon

Consumer frustration with AI-powered customer service remains high despite companies reporting major efficiency gains. Verizon’s CX Annual Insights reveals a significant gap between business optimism and the reality customers experience.

Executives credit AI with improving productivity, reducing costs, and supporting loyalty metrics. But for many customers, those benefits are invisible. Automated systems are often experienced not as helpful innovations but as obstacles that make resolving issues harder.

Why AI customer service falls short

The study, which surveyed 5,000 consumers and 500 executives, identifies a persistent weakness in how brands use automation. 

Nearly half (47%) of all consumers identify the inability to speak with a human agent as their primary frustration with automated systems. This barrier to human contact creates a service bottleneck that undermines the customer experience regardless of AI’s technical capabilities.

According to the report, human-led interactions achieve an 88% satisfaction rate compared to just 60% for AI-driven encounters. This 28-percentage-point gap demonstrates that efficiency gains touted by companies have not translated into better experiences for the people they serve.

Comfort levels also vary depending on the task. For instance, surveyed consumers say they are more willing to let AI process straightforward transactions, such as making basic purchases. However, when the interaction involves complaints or billing issues, reliance on automation cannot be trusted. These are precisely the moments when customers expect empathy and judgment that machines cannot yet provide.

The personalization problem

Personalization is another area where results have fallen short. Although 71% of surveyed companies cite personalization as a priority, only a minority of consumers say it has improved their experience. In fact, more report negative impacts (30%) than positive ones (26%).

The shortfall is driven by structural barriers. Two-thirds of executives admit that privacy regulations limit their use of data, while nearly half say poor data quality undermines their ability to personalize at all. As a result, many so-called personalized interactions feel generic or irrelevant.

This gap feeds into broader concerns about data handling, as over half of consumers say their trust in companies’ use of personal data has declined over the past two years. 

A gap that technology alone cannot close

The findings suggest that improving customer experience is not simply a matter of deploying more advanced AI systems. Human access remains central to trust and satisfaction, and without clear strategies for data governance and transparency, personalization will continue to underperform.

For now, businesses may see efficiency gains in their internal metrics, but customers judge value differently. Until AI is integrated in ways that respect those expectations, the human touch will remain the benchmark against which automated service is measured.

The channel angle: why partners need to stay focused on AI

We have covered AI’s impact on every facet of the channel in depth before. This study is another reminder that while demand for AI is soaring, the technology still has kinks to work out. When customers ask how they can adopt AI efficiently, partners should act as trusted advisors to keep their technology adoption from harming customer experience and satisfaction.