Why you should rethink AI-powered customer experience as human experience

The EY Future Consumer Index (FCI) underscores the growing importance of interlinked technology and experience to consumers, who expect improvement in both and will direct their shopping and spending accordingly: 54% of consumers expect their experience of technology to improve over the next three years, while 49% of consumers expect their experience of shopping to improve in the same period.³

Given technology’s growing importance in delivering on consumer expectations, many business leaders see promise in utilizing GenAI to close their customer experience gaps. The top-ranked GenAI focus among senior executives is enhanced customer experience and service (44%), according to IDC's global GenAI ARC Survey.⁴

A growing innovator ecosystem increases accessibility

A well-funded and rapidly growing universe of customer experience innovators will ensure that experience excellence is widely accessible. Over $100b in venture capital (VC) and private equity (PE) was invested in over 100 companies developing customer experience solutions between 2019 and 2023— see Fig. 2. VC and PE investment in experience reached $20b in 2023. That marks the highest annual figure in the last 10 years, outside the pandemic-fueled peak of $36b in 2021, when companies accelerated digital transformation.⁸

The widespread deployment of GenAI and other experiential technologies will make mastering them customer experience table stakes — crucial to creating the capabilities needed to compete, but not enabling them to differentiate as winning factors in themselves. Companies will have to go beyond technology to create customer experiences that truly resonate.

Human values, behavior and emotion will differentiate customer experience in a world increasingly driven by machine intelligence. Qualities such as empathy and imperfection will be the foil to seamless experiences delivered predictively and autonomously. Instead of delegating customer experience to machines, finding opportunities to create signature moments with human sensibility and agency will be key.

“Experiences are felt at an emotional level,” says Edwina Fitzmaurice, EY Global Chief Customer Success Officer. “This isn’t something that is often considered by engineering teams who can focus more on an action to be achieved, rather than an experience to be felt.”

Don’t fall into an Uncanny Valley

As GenAI, affective AI (which detects mood and emotion), spatial computing and other technologies enable ever more realistic interactions with customers, efforts to create hyper-realistic digital experiences run the risk of sparking negative reactions — the Uncanny Valley effect. 

The first Uncanny Valley, a term coined by the pioneering roboticist Masahiro Mori, referred to the unease or revulsion people can feel when encountering technologies such as robots or digital avatars that seem almost human. This is the territory we’re in with today’s technology. For example, a recent study found that highly human-like virtual influencers induced the Uncanny Valley effect in participants and were less likely to be followed than obviously non-human ones.⁹

As GenAI and other technologies evolve, we are also seeing the rise of a potential second Uncanny Valley: distrust caused by the perfect but generic AI interactions we’re likely to have soon. These may make experiences consistent and seamless but could also make them anodyne and soulless. Humans engaging with AI-led experiences may ultimately find the inauthentic perfection of them more alienating than endearing.

That’s because to be human is to be imperfect. This idea finds precedence in the Japanese concept of wabi sabi: finding beauty in the imperfect, authentic and simple. For example, a major retailer has launched a line of pottery made of recycled shards, each unique, where the imperfection signals purpose and human touch.

The experience of a US Fintech, which was designing an offering for retirees, demonstrates the value of connecting with authentic emotion. In contrast to the images of carefree older people, which dominate financial industry portrayals retirees, interviews with retired people revealed complex emotions: shame at needing discounts; worry about their ability to make benefits meet monthly expenses; and anxiety about fraud. The company built a highly successful offering around meeting these concerns, utilizing “imperfect” images, real family photos and videos reflecting the life journey of a retired person.

“Achieving authentic and resonating experiences enabled by tech requires even more emphasis on connecting to emotions and imperfection to avoid feeling generic,” says Lisa Lindstrom, EY Global Consulting Innovation and Experience Design Leader.

Cultivate confidence to be relevant

GenAI can create insights from unstructured data to provide an unprecedented understanding of human behavior. Yet, the technology cannot ensure experience is relevant to each customer, and there may be aspects of the customer that cannot be fully understood or anticipated by a machine. It may know what we want, but likely doesn’t know why we want it.

“GenAI knows everything, but does it know me? Customers will determine the answer to this question based on the relevancy of the experience it delivers,” says Kristina Rogers, EY Global Consumer Leader. “Achieving relevancy depends less on the quantity of data and more on the quality of it.”

Customer data has potential energy, and only the right approach can make it kinetic. Trust and loyalty today unlock the permission to obtain the right data to deliver better experiences. People have greater confidence in people than machines.

Reflecting this dynamic, a US supermarket chain has partnered with a same-day shipping specialist to increase its digital reach for grocery delivery, but still sends staff out to meet individual customers in their homes and collect “small data” on what their expectations of experience, assortment and service should be.

No matter how data is shared, meeting customer concerns about data security and privacy is essential to confidence. Consumers are “extremely concerned” about ID theft/fraud (61%), data security/breaches (59%) and selling personal data to third parties (58%), according to the FCI.¹⁰

Privacy concerns carry over to the use of data. If customers feel unsettled by the level of insight AI has into their lives without having opted in to sharing, it could prompt yet another Uncanny Valley. This underscores the need for human direction to ensure that the experience offered by AI is transparent, appropriate and contextual.

Sharing data back with the customer and what it reveals, rather than only taking from them, can engender confidence and loyalty by shifting the relationship dynamic from “the brand understands me” to “the brand helps me understand myself.”

Customers must have confidence in your empathy and that you are acting in their interest. CX is not a journey that ends with a transaction. It’s a cycle that runs through the lifetime relationship with the customer. When it fails, confidence and loyalty will disappear.

Optimize for human experience

The need to address human emotion, authenticity and agency doesn’t exist only on the customer side of experience. Care must be given to the needs and pain points of the people delivering customer experiences — employees and channel partners — because customer experience and employee experience are interdependent.

“If you map the journey of someone's positive customer experience, there is an underlying employee journey experience that shows how the dots are connected.” says David Clarke, EY Americas FSO Customer and Front Office Excellence Leader.

While most companies map customer pain points and seek to turn them into signature moments, few map and solve employee pain points along the customer journey. Only 37% of executives in a recent survey said that their organizations had invested in improving employee experience to serve customers better.¹¹

Creating a positive employee experience entails taking an ecosystem view, creating the culture and conditions that will enable employees to be productive and achieve what they’ve been asked to do. Incentives, policies, IT and the intangibles of workplace environment all come into play. As highlighted by the EY Work Reimagined Survey, leaders overestimate how well their organization is performing in employee experience, resulting in a significant employee/employer perception gap.

“To close gaps in employee experience, organizations must work differently to create more meaningful employee experiences that maximize long-term value creation — for people as much as the business,” says Maya Smallwood, EY Global People Advisory Services Employee Experience Leader.

The importance of employee experience to customer experience extends to companies whose products are sold and installed indirectly, such as household appliances, furniture or HVAC equipment. “Many of these companies have never really had a deep connection to the end customer — the relationship ends at point of sale,” notes Sachin Lulla, EY Americas Advanced Manufacturing and Mobility Sector Consulting Leader.

There’s an opportunity to change this dynamic by creating value for the customer throughout the product ownership lifecycle through transforming previously “dumb” products (e.g., water heaters) into smart connected products that meet the growing customer expectation that any product will deliver experience on par with their digital devices.

Yet, the first opportunity to create a signature experience that sets the stage for taking ownership of the product lifecycle is a human one that channel partners deliver — installation. “Better customer experience is driven by a better employee experience — supporting people with the right insights at the right time — across both your employees and channel partners,” says Lulla.

Both direct employees and people in the extended ecosystem require training, upskilling, incentives and access to real-time insights to boost their satisfaction and performance — particularly when AI is perceived as a threat to job security.

A positive customer experience will almost always be dependent on a positive experience for all the people involved in delivering it. This creates a positive cycle — satisfied employees help make satisfied customers, which in turn helps boost employee satisfaction. We should stop thinking about “customers” and “employees” and instead optimize for human experience.

Centering experience on human values creates a paradox: To be successful, experience needs both to take out friction and add friction. Seamlessness must operate alongside stickiness.

On one side, we need to make experiences scale efficiently — these are the technology table stakes.

On the other side, we need to introduce friction in the form of the human agency and interaction to make experiences authentic, real and memorable. The challenge is to find the right balance for your brand and experience portfolio.

Key considerations for making the shift from customer experience to human experience include:

• In a rapidly shifting customer landscape driven by new tech capabilities, experiences must anchor on the constant of human values.
• Technology should not be a solution looking for a problem, but an enabler to help human endeavor succeed more effectively.
• Even as technology becomes anticipatory, autonomous, and generative, double down on human agency both the customer and people that deliver the experience.
• Turning pain points into signature moments requires rethinking customer experience as a spectrum that balances between technology-led efficiency and optimal human engagement.
• Embrace uncertainty and fluidity in the spectrum of experience. The blurring line between customers and creators and the ability to integrate your ecosystem into your experience will be key.
• Over-indexing on fully immersive experiences and hyper-personalization isn’t always the answer; instead, you need to find the right place in the spectrum for your capabilities and your customer’s expectations.
• Make space for non-linear thinking to surface the human dimension in experience. Establish top-down imperatives to shift culture toward optimizing experience for everyone.
• Convene different mindsets and disciplines to explore human-centered experiences that include considerations of GenAI use cases, experience design and customer journey scenarios.

With special thanks to Michael Wheelock and Lisa LaMotta for their contributions to this article.