Are brands right to allow machines to handle customer service?

We've all been there: dialling a customer service number with high hopes of speaking to a real person, only to find ourselves trapped in an automated labyrinth. You're shuffled around, stuck on hold for what feels like an eternity, until your patience wears thin and you finally surrender, hanging up in frustration. And if you try your luck with online customer service portals, you're often met by an AI chatbot that either can't grasp your question or spits out a generic response that leaves you just as clueless as when you started.

It's no surprise that people are feeling burdened by the technology interwoven into their customer experience. According to a recent report by Accenture Song on customer service, only 18% of consumers felt that technology has significantly improved their service experience and that companies are prioritising cost and efficiency ahead of customer experience.

"Companies are trying to run customer service like a factory line, measuring success by speed and volume, not connection and loyalty," says Anca Vasilescu, managing director, APAC service practice lead, Accenture Song. "The result? Poor experiences, lost customers, and reputational damage."

And this is at a time when 87% of people surveyed say they are likely to avoid a company after just one single negative experience. 

"Customers are fine in certain cases with automation when it works smoothly," adds Vasilescu. "But when there’s a delay, an issue, or an emotional moment, the need for human empathy prevails. We know this on a personal level, but our research reflects this without question."

What is clear is that across the region, people are frustrated, and it’s impacting brand loyalty. According to Accenture Song's research, 91% of Australians and 90% of Japanese consumers who had a negative service experience said they’d avoid that brand in the future—higher than the global average (87%). Across the board, people want service that feels intuitive, personal, and immediate.

Furthermore, research shows that companies have prioritised cost-cutting in customer service more than efforts to improve customer retention. Globally, 62% of executives report successfully reducing operating costs over the past three years—compared to 79% in Australia and 49% in Japan—while only 45% of executives say they have improved customer retention during the same period.

"The choices the companies make today—where they invest, how they design experiences and how they build trust—will determine their relevance and growth for years to come," says Vasilescu. "In today’s leading companies, service is now an engine for growth."

AI is a customer service game-changer

It's not all bad news for modern technology. If done right, AI could be a game-changer for customer service, allowing companies to create unique, personalised conversations and proactive experiences.

"In the APAC region, we’re seeing increased activity in organisations implementing AI to handle everyday queries, freeing up agents to focus on more complex interactions," says Vasilescu. "It improves efficiency, yes, but it also enhances the service agent and customer experience with the added benefit of improving customer loyalty and experience. That’s the real win."

While balancing cost efficiency and high service standards is crucial, it's not a zero-sum game. AI, when used effectively, can actually contribute to both.

"Rather than viewing AI solely as a cost-saving measure, businesses should focus on leveraging it to enhance customer experience and build long-term loyalty," says Elly Lau, behavioural analyst, Canvas8. "Success lies in seamlessly blending AI’s personalisation capabilities with genuine human connection to create a customer experience that feels both precise and empathetic. AI or not, the end goal should be the same—to make your customers feel truly heard."

AI is most effective when it’s deployed meaningfully to reduce the operational barriers that help human agents do their jobs better. According to survey data from Vonage, APAC consumers cite long wait times to speak to customer service agents (63%), a lack of 24/7 support (48%), and the lack of self-service support (46%) as key barriers to a good customer experience. "These are barriers that AI can tactically address very well to save costs, but companies shouldn’t automate the entire customer service process," says Lau. 

In the US, Target provides a practical example of how AI can be effectively integrated into customer service. The department store introduced an AI-enabled chatbot designed to assist employees in answering on-the-job questions, thereby streamlining tasks for customer service agents. This approach ensures that while efficiency is enhanced, the human touch that transforms a satisfactory customer experience into an exceptional one is preserved. Companies in APAC can consider adopting similar strategies to balance AI efficiency with human empathy, potentially leading to improved customer satisfaction and loyalty.

Brands that aim to transition entirely to self-service models, relying solely on AI with no human assistance, risk causing harm to both their organisation and customer experience. Moreover, these models are not inherently cost-effective. For instance, generative AI solutions, often touted as a "silver bullet," do not inherently offer cost savings. In fact, service and support leaders can easily overspend on gen AI if they lack a clear understanding of how vendor pricing structures work.

What’s driving both poor self-service usage and gen AI concerns? In Gartner's survey, just 14% of service issues customers reported were resolved in company self-service websites or chatbots.

"Often, capabilities aren’t there, are difficult to find or use, or customers just need that extra reassurance," says Christopher Sladdin, Gartner’s director analyst. "Designing channel strategies that drive adoption rather than containment in self-service is a better move and helps build customer confidence in these tools."

Navigating the complexities of modern customer service requires brands to achieve a delicate balance between the efficiency of AI and the empathy of human interaction. In Singapore, for example, 75% of consumers are open to AI handling service roles as long as quality is maintained, highlighting their desire for speed and reliability, according to a report on customer experience by ServiceNow. However, the human element remains essential for sensitive interactions, particularly when empathy is needed to resolve complex issues that customers have struggled to address on their own.

A similar sentiment is echoed in Australia, where 84% of consumers feel that service has become less personal due to the increased use of AI. Meanwhile, in India, despite the widespread adoption of AI, there is still a strong need for human intervention to overcome the limitations of technology in handling intricate scenarios. This underscores the importance of combining AI's efficiency with human empathy to provide comprehensive customer service. 

"Customers across these regions value the rule of three: quick, empathetic, and personalised service—offered best through a balanced fusion of AI's precision and human touch," says CK Tan, APJ innovation officer, Singapore at ServiceNow.

It’s important to highlight that, while media coverage may often centre on poor customer experiences and cost reduction activity (such as layoffs or longer wait times to speak to service), customer service and support leaders are acutely aware of the need to balance both CX and cost reduction. In fact, in Gartner’s 2025 survey, improving customer satisfaction with the service experience was leaders’ top priority, with improved operational efficiency also ranking a top-three priority by many.

Nevertheless, businesses risk significant long-term business by prioritising cost-cutting in customer service. Singapore's statistics show 85% of consumers are ready to switch brands due to unsatisfactory service, similar to the 57% in Australia who express a readiness to abandon brands not meeting their expectations. India's tech-savvy market emphasises seamless integration, as 44% of customers consider leaving due to overcomplicated processes. 

"Companies must recognise that while reducing costs is essential, it should not overshadow service quality," says Tan. "Embracing AI that complements human service, while ensuring quick and empathetic interactions, can create a balanced framework that meets both cost and quality goals."

Service quality sets companies apart

Companies must first acknowledge that customer service is failing to meet the needs of many customers. Globally, only 32% of customers believe that service has improved over the past five years, with slight variations in specific regions—35% in Australia and 24% in Japan. Moreover, a significant 40% feel that companies rarely grasp their preferences. However, service quality remains a crucial differentiator, with 64% of consumers citing it as the most important factor that sets companies apart from their competitors.

"Customers are telling us loud and clear that the current model isn’t working," says Vasilescu. "The fix isn’t just better tech. It’s a mindset shift. Businesses must fully rethink their approach to service. Service is not a cost to be reduced, it is a value opportunity for the enterprise."

To fix customer service, Daniel van Vorsselen, TRA’s business director and CX lead, says that companies need to stop viewing it as a process and start treating it as a high-stakes emotional experience—one that makes or breaks trust in the brand.

"If your brand stands for empathy, simplicity, or support, then don’t make the mistake of outsourcing emotionally charged service moments to a bot," says Vorsselen. "If it stands for efficiency however, then AI can play more of a role. Where customers expect speed and action, automate simple or routine processes. But for more complex activities, create opportunity for human empathy and a sense of being heard."