Generative AI in Customer Service: Benefits & Applications

Since the launch of OpenAI’s ChatGPT in 2022, generative AI has become a global phenomenon.

The rise of this technology has had a massive impact on how businesses operate - especially in terms of customer service operations.

In fact, research suggests that by 2025, 80% of organisations will use generative AI technology to improve agent productivity and the customer experience.

As AI customer service becomes increasingly widespread, CX leaders must adapt to stay competitive.

But what do businesses and contact centres have to gain from implementing generative AI solutions?

And how can they leverage this technology effectively so that it delivers on its promises?

In this guide, we’ll answer these questions and more. We’ll cover...

• What is generative AI?
• The benefits of customer service generative AI
• 6 key use cases for generative AI in customer service

TL;DR: 

6 use cases for generative AI in customer service…

1. Enhancing CX with AI chatbots: AI-powered chatbots provide 24/7 support, personalised recommendations, appointment scheduling, and seamless escalations, improving customer experience and automating service tasks.
2. Assisting customer service agents: AI tools like response suggestions, autocomplete, and rephrasing help agents deliver faster, more accurate, and consistent service, while internal chatbots assist with real-time information.
3. Automating staff training: Generative AI simulates customer interactions for training, helping agents develop skills in a controlled environment while automating quality assurance.
4. Generating interaction transcripts: Generative AI converts voice and video calls into text transcripts, aiding quality assurance, compliance, and training, while simplifying data analysis.
5. Translating customer interactions: Real-time translation powered by AI enables seamless multilingual support, enhancing global customer communication without the need for multilingual agents.‍
6. Uncovering deeper insights: AI-generated summaries and reports use interaction data to provide insights into common customer issues, chatbot performance, and areas for knowledge base improvement, driving data-driven decisions.

What is generative AI?

Generative AI (GenAI) is a form of artificial intelligence that can create new, original content in various formats.

This content can take various forms - including text, images, audio, and video.

Unlike traditional AI systems, which are designed to follow pre-set rules, generative AI models are built to produce outputs that mimic human creativity, reasoning, and contextual understanding.

This capability is powered by advanced algorithms and deep learning transformer models like LLMs (Large Language Models).

These AI technologies use vast datasets and complex neural networks to understand and generate human-like content.

One of the most well-known examples of generative AI is OpenAI’s ChatGPT models.

ChatGPT can produce detailed text outputs on countless topics based on a given prompt.

Beyond text, generative AI has made significant strides in image, audio, and even video generation.

It has a vast range of applications across various fields - from content creation to education, business analytics, language translation, data analysis, and much more.

In the context of customer service applications, generative AI can significantly improve the speed, accuracy, and quality of support.

It has the potential to streamline workflows, reduce manual workloads, and maximise operational efficiency - all while enhancing the customer experience.

Benefits of generative AI in customer service operations

When generative AI is implemented and used effectively, it can be a valuable asset for you and your customers.

In this section, we’ll explore the key benefits of customer service generative AI.

Improve efficiency & productivity

Generative AI in customer service operations can significantly improve efficiency and performance.

In fact, GenAI chatbots alone can increase customer service productivity by 50% once implemented at scale.

The advanced capabilities of generative AI mean it can automate a wide range of interactions and tasks.

This takes some of the pressure off customer service teams, allowing them to focus more on complex customer queries and high-value cases.

For instances that do require human intervention, generative AI can offer real-time assistance during customer service interactions (more on this later).

Overall, generative AI empowers human agents to perform better and faster while reducing their workloads - leading to optimal efficiency and productivity.

Enhance customer service quality

Delivering exceptional customer experiences is crucial for business success.

High service quality is what wins customer loyalty, driving repeat business and revenue growth.

It also improves brand reputation, setting you apart from competitors and attracting new customers.

Generative AI enhances the digital customer service experience in many ways, including:

• 24/7 access to instant support and self-service from AI chatbots or virtual assistants.
• Faster and more accurate customer support due to AI assistance for agents.
• AI-driven analytics & reporting enabling targeted improvements.
• Personalised responses, recommendations, and solutions based on customer data.
• Accurate and timely assistance with reduced response times, wait times, and handling times.
• A more efficient and productive customer service system overall.

It’s why 68% of agents claim that generative AI helps them better serve their customers.

Increase revenue & reduce costs

The cost of implementing generative AI is more than compensated by the potential ROI.

In the retail and ecommerce industry, 69% of brands report an increase in annual revenue due to AI adoption.

What's more, 84% of sales agents across industries claim that generative AI helps them make more conversions.

In addition to boosting revenue and sales, generative AI in customer service also reduces operational costs.

Case in point, GenAI chatbots saved $7.3 billion globally in 2023 in the banking and financial sector alone.

These outcomes can be attributed to the key benefits of generative AI discussed above, i.e.:

• Improved efficiency, productivity, and overall performance.
• Faster, more accurate, and higher-quality service.
• A better digital customer experience overall.

The combined impact of these advantages translates into a stronger bottom line and increased profitability for businesses.

6 use cases for customer service generative AI

Now that we’ve covered the main benefits of generative AI, let’s examine this technology in action.

Below, we’ll dive into 6 use cases of generative AI in customer service.

1. Enhancing CX with AI chatbots

Customer service chatbots have evolved dramatically thanks to generative AI.

Originally, chatbots were rule-based, relying on decision trees and pre-scripted responses to operate.

This often led to frustration and a rigid or poor user experience.

It also meant that scaling their capabilities beyond basic FAQ automation was very challenging.

Now, that’s all changed.

Generative AI in customer service has taken the capabilities of chatbots to a whole new level.

These AI-powered chatbots work as intelligent virtual assistants, capable of automating a wide range of customer service tasks and queries in a human-like way.

One way they achieve this is through integration with an AI knowledge base.

With Talkative, for example, you can easily create knowledge bases using URLs from your company website - plus any file-based content or resources you have.

From there, our GenAI chatbot learns from your knowledge base datasets, becoming a brand-trained expert.

This enables the bot to answer countless questions about your business, products, and services.

It’s how leading supplement retailer and Talkative customer Healthspan achieved an 88% resolution rate for product-related chatbot queries.

In addition to handling countless customer inquiries, generative AI chatbots excel in other key areas, such as:

• 24/7 availability: Chatbots provide instant customer support and self-service options at any time, ensuring round-the-clock assistance even when your human agents are offline.
• Lead generation: Chatbots can engage website visitors and collect contact information, helping to qualify leads for sales teams.
• Order updates: Customers can use chatbots to track the status of their orders and get shipping/delivery updates.
• Appointment scheduling: Chatbots can help customers schedule appointments, service calls, and other bookings/reservations.
• Seamless escalations: When a customer query requires human intervention, chatbots can smoothly transfer the conversation to the appropriate customer service team or agent.
• Personalised recommendations: Using customer data, chatbots can offer tailored product suggestions during service interactions.
• Customer feedback collection: Chatbots can request feedback or conduct surveys after a customer interaction, helping you gather insights into customer satisfaction.

With a generative AI chatbot, you can take automated customer service to the next level and provide a user experience similar to that of ChatGPT.

It’s why 95% of global customer service leaders plan to implement an AI chatbot solution within the next year.

2. Assisting your customer service agents

Generative AI doesn’t just improve the customer experience.

It can also enhance the employee experience for your customer support teams.

Case in point, 60% of support agents report that AI tools help them save time.

AI solutions do this by providing agents with guidance and information during customer conversations.

Take Talkative’s agent-facing genAI features below as examples of this use case in action…

AI Knowledge Base Responses

In addition to integrating with chatbots, AI knowledge bases can also support agents throughout interactions.

Generative AI can achieve this by using your knowledge base content plus the conversation context to produce response suggestions for every customer message.

The agent can then either instantly send an AI suggestion back to the customer, or make amendments before sending.

This process speeds up response times while ensuring that agents provide accurate and consistent information.

The result is faster and higher-quality customer service delivery, leading to improved customer satisfaction.

AI Agent Copilot

Knowledge base responses are just one part of our AI Agent Copilot feature.

Powered by generative AI and your knowledge base, Agent Copilot is a suite of tools designed to improve the speed and quality of customer service delivery.

As well as AI response suggestions, Agent Copilot includes 'Navi', an internal-facing chatbot that acts as a personal assistant for agents.

Navi responds to agent questions using real-time context from the ongoing interaction and your knowledge base datasets.

This gives agents immediate access to information, saving time by removing the need for manual searching.

The final tool in our Agent Copilot suite is an AI autocomplete feature.

This capability can predict and complete agent messages, reducing typing time and allowing for quicker responses.

Together, these tools enable agents to deliver faster, more consistent, and higher-quality customer service - all while minimising manual effort.

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AI Agent Rephrases

AI Agent Rephrases offer real-time improvements or revisions to customer service agent messages.

Instead of agents manually editing and proofreading their responses, generative AI handles the process for them.

This results in greater clarity and accuracy without extra effort.

Your customer service agents can even select a preferred tone/format for the rephrases using the following options:

1. Better spelling/grammar
2. Longer or shorter responses
3. Friendlier tone
4. More professional tone

By enabling agents to select the most suitable writing style, AI Rephrases help ensure that communications are polished and contextually appropriate.

3. Automating staff training & quality monitoring

In addition to real-time assistance during interactions, generative AI can also help and empower agents behind the scenes.

It does this by bringing the power of AI automation to staff training, onboarding, and performance management.

With Talkative, for example, you can utilise generative AI-powered Agent Training Simulations.

This feature works by immersing agents in virtual simulations of customer interactions.

Once set up, the AI acts as a customer would in a specified scenario.

In turn, your human agents can interact with it as they would in a real-life live chat conversation.

This accelerates the onboarding of new hires while making it easier for existing agents to upskill or improve.

AI Agent Training can be leveraged in a number of ways, for example:

• New hire training: Onboard new agents by simulating common customer service queries and scenarios they’re likely to encounter most often.
• Product knowledge training: Train agents on product features, specifications, and troubleshooting processes by simulating product-related complex customer queries.
• Sales training: Provide sales reps with practice opportunities to engage with virtual leads, pitch products or services, and handle objections effectively.
• Communication skills development: Help agents improve their customer communication, empathy, and problem-solving skills by practising with AI in various scenarios.
• Compliance training: Ensure agents understand and adhere to company policies, legal regulations, and industry standards by simulating compliance-related interactions.
• Difficult conversations: Prepare agents to manage challenging or sensitive situations, such as handling rude customers or urgent complaints.
• Quality assurance/monitoring: Use AI training as a tool for automated quality monitoring, where the simulations are used to evaluate and compare agent performance. You can also test the effectiveness of other AI tools in a range of situations.

Overall, AI simulations offer an innovative and efficient way to expedite training and optimise performance.

By allowing agents to engage in real-world scenarios through automation, you'll ensure they develop the skills and knowledge to handle a wide range of customer service situations confidently.

This approach also gives your customer service team the chance to practise communication and challenging situations in a controlled, low-risk environment.

It means they can build expertise without the pressure of real-time consequences.

4. Generating interaction transcripts

Many customer interactions take place via voice or video contact channels.

In situations where you or your supervisors need to revisit these conversations, reviewing the recordings can be a lengthy and tedious process.

Generative AI in customer service offers a solution to this challenge with AI-generated transcripts.

This technology enables you to convert recordings of customer interactions into a text-based format.

With Talkative, for example, you can use generative AI to produce highly accurate written transcripts for all your web calls and video chats.

This can be a valuable resource, serving various purposes...

• Quality assurance: Supervisors can easily review transcripts to assess agent performance, identify areas for improvement, and ensure adherence to company standards.
• Training & onboarding: Transcripts provide real-world examples for new agents to study, helping them learn how experienced team members handle different customer scenarios.
• Data analysis: AI-generated transcripts can be searched for specific terms, allowing managers to quickly extract key insights and identify recurring issues in customer interactions.
• Compliance: Transcripts offer detailed records of customer-agent exchanges, ensuring that interactions comply with legal and industry regulations.

Overall, AI transcripts make the process of reviewing and analysing customer interactions faster, more efficient, and more convenient.

5. Translating live customer interactions into multiple languages

For global brands or those serving a diverse customer base, multilingual customer service is essential.

Artificial intelligence helps businesses offer this by enabling real-time translation during customer interactions.

Although translation technology is usually powered by natural language processing and machine learning techniques, it can also incorporate generative AI models.

Real-time translation tools work by detecting the language a customer is using and automatically translating their messages for the agent.

Likewise, the agent’s responses are seamlessly translated back into the customer’s language.

This capability allows you to serve a diverse, global audience without the need to hire multilingual agents.

By breaking down language barriers, real-time translation fosters better understanding and rapport.

It empowers customer service agents to communicate efficiently and effectively, regardless of language.

This ensures a seamless and inclusive customer experience for all consumers.

Additionally, multilingual support boosts overall customer satisfaction by providing a more personalised and empathetic touch.

When customers can speak in their native language, they feel more understood and valued.

That’s why Talkative’s live chat and chatbot solutions support real-time translation into over 100 languages.

Ultimately, real-time translation is a powerful AI tool that expands reach, improves accessibility, and ensures clear communication.

6. Uncovering deeper insights with your interaction data

Generative AI is a powerful tool for analysing large amounts of data.

By examining customer interactions, AI can uncover meaningful trends/patterns and generate valuable insights.

This not only saves time but also helps you make data-driven decisions and targeted improvements.

With Talkative, for example, you can leverage the following genAI reporting features…

AI Interaction Summaries

Reviewing customer interactions can be a lengthy process.

Although AI transcripts speed this up, AI Interaction Summaries take it a step further by generating automatic summaries of every chat, voice, and video interaction.

Powered by our OpeanAI integration, these concise summarises condense entire conversations into a few sentences.

This allows you and your supervisors to assess the content and outcome of any interaction at a glance.

AI Insights Report

While Interaction Summaries analyse individual conversations, the AI Insights Report reviews all your interaction data within a specified time period.

It works by analysing your interaction transcripts to generate a report that:

1. Outlines the top 10 issues raised by customers in the last month/week (depending on configured report frequency).
2. Provides a link to an example interaction transcript for each customer issue.
3. Highlights any customer queries that could be automated with your chatbot.

As a result, you’ll be able to quickly identify the main reasons driving customers to contact you - with zero manual work from your agents. 

AI Knowledge Base Insights

In addition to helping you improve customer service, AI reporting can also be used to improve your knowledge base.

For example, our Knowledge Base Misses Report can highlight all queries your chatbot failed to answer with its existing knowledge base datasets. 

It also identifies how your human agents answered these customer queries during live chat interactions.

This information is then compiled and summarised in a concise report.

Armed with these insights, you can pinpoint where your knowledge base needs enrichment or additional information.

From there, you can make targeted, data-driven updates that will improve the performance of your knowledge base and GenAI chatbot over time.

The takeaway: Transform customer service with generative AI

Whether you’re excited or dubious about it, AI customer support is here to stay.

And it’s reshaping the customer service landscape for the long term.

This means that the capabilities and popularity of generative AI technologies are only going to increase.

Customer service leaders must be willing to embrace the future - or risk getting left behind.

That said, if you want to get the most out of generative AI in customer service, you need the right platform to facilitate it.

That’s where Talkative comes in.

As we've covered, our digital customer service solution includes a variety of AI solutions.

From GenAI chatbots to AI Agent Copilot, AI knowledge bases, sentiment analysis, AI reporting/analytics, real-time translation, and much more.

Our platform also provides a suite of customer contact channels - including live chat, web calling, video chat, cobrowse, and messaging.

Want to learn more?

Book a demo with Talkative today, and check out our interactive product tour.