AI Customer Service Explained: All You Need to Know

Nearly 80% of Australian businesses are already using or trialling AI customer service tools – AI use is growing in all sectors, and customer service is no exception. 

However, a staggering 77% of Australian consumers share negative experiences of AI via word of mouth – so knowing the right AI systems to use (and how to use it effectively) has never been more important.

The good news is, we’ve got you covered. After reading this blog post, you should know: 

• What AI in customer service really means
• The benefits for both customers and your business
• Real-world examples, including MaxContact’s solutions
• How to implement AI effectively
• Practical tips, KPIs, and common mistakes to avoid

What Is AI in Customer Service?

When we talk about “AI in customer service”, we’re referencing technologies such as:

• Chatbots and virtual assistants that are powered by natural-language processing (NLP) and machine learning
• Voice AI systems that understand speech and can interact in real time
• Predictive analytics and sentiment analysis that monitor customer behavior and emotional context
• Automation workflows that route enquiries, surface next best actions and free human agents to focus on high-value tasks

That means instead of purely reactive support (you call, wait, you speak to an agent), you can move to a model where systems predict, assist, and personalise. A key difference is that AI can learn over time – it improves its responses, reduces repetitive work and offers 24/7 capability.

How Can AI in Customer Service Benefit Your Customers (and Your Bottom Line)?

AI is changing the way call centres around the world operate. Customer service AI can deliver tangible business benefits that align with operational efficiency and customer experience goals, from reduced wait times to scalability:

1 - Quick Response & Reduced Wait Times

AI can instantly handle high-volume, repetitive queries such as order tracking, FAQs and basic troubleshooting automatically. This can free up human agents to focus on more complex issues that require a personal touch.

In Australia, businesses using AI have reduced average handling times by 38% (IBM, 2025), leading to shorter queue times, higher customer satisfaction (CSAT), and lower call abandonment rates.

In fact, nearly 80% of Australian consumers say they would take their business elsewhere if service is slow or poor.

The good news is that AI can help deliver a consistently great customer experience. AI can triage requests and escalate high-priority cases to the right agent, ensuring customers get the help they need quickly, improving overall satisfaction.

2 - More Personalised Support

You may already know that customers genuinely value personalised recommendations and interactions – but did you know that more than half of Australian consumers would switch brands if their experience lacked personalisation? 

Well-implemented AI can solve this. AI can provide personalised support based on past interactions and customer data, giving tailored responses and recommendations. This personal touch can go a long way in terms of customer satisfaction. 

3 - 24/7 Availability 

Customers want quick access to support, and AI systems in customer service can handle inquiries outside business hours without having to hire extra staff or switch rotas around. 

This can be extremely useful if your business has customers in different time zones, or Australian customers who simply want access to support outside of office hours. AI systems can also reduce after-hours calls that can overwhelm human agents, and ultimately improve brand reputation due to consistent and immediate responses. 

4 - Scalability

If your customer base grows, you need to be prepared. Seasonal spikes can cause agent overwhelm, and well-done marketing campaigns can do just the same. Your business needs to be able to handle these spikes – and good AI systems can help. 

AI can allow your department to handle surges in demand without having to make proportional increases in staff. AI chatbots and conversational voice AI can manage hundreds of customer interactions at the same time, reducing operational costs and maintaining the quality of service you are used to providing.

5 - Operational Efficiency

AI systems in customer service can automate existing processes and routine tasks, saving agent time and meeting customer demands. It can also provide analytics to help you streamline resource allocation. 

These analytics can help you prioritise which departments or areas need human resources. It can quickly identify potential bottlenecks and opportunities to optimise workflows. With AI, agents can focus on high-value tasks, improving their job satisfaction (as they don’t have to deal with low-value routine tasks) and overall productivity. 

6 - A Competitive Edge

Close to half of Australians are now using generative AI, and you don’t want to get left behind. It’s not a ‘fad’ – it’s something that businesses are benefiting from and will likely continue to benefit from for the foreseeable future. 

Using AI systems effectively can demonstrate to stakeholders that your business is innovative and working efficiently – and you can back this up with data. For example, Salesforce reports Australian consumers interacting with AI-powered support experience 64% higher satisfaction.

Note: Trust & Transparency Are Key 

There are countless benefits of AI use in customer service. However, Australian customers may be wary. The Australian AI Sentiment Report showed that around just 32% of Australian consumers are comfortable with AI, and 35% remain neutral. 

This is why transparency is so important. When adopted correctly, AI can be a great way to boost customer satisfaction, meet KPIs and cut costs – but when it’s not implemented right, it may do more harm than good. The good news is that we can help – so keep reading for some examples of AI in customer service and how you can implement AI into your customer service processes the right way.

Examples of AI in Customer Service

AI adoption has saved 123 million hold hours globally in 2024, equivalent to 11.1 hours per person.

Here are three real-life applications of AI in customer service to help you visualise how AI might work in your business:

Conversational Voice AI 

A great application of AI in customer service is conversational voice AI. Conversational Voice AI is a type of AI specifically designed to interact with customers through natural spoken language through the phone or voice-enabled channels.

Unlike simple IVR (Interactive Voice Response) systems that use menus and prompts, conversational voice AI can understand context, interpret intent, and respond in a natural, human-like way.

MaxContact’s Conversational Voice AI can automate and enhance routine customer interactions. It can manage up to 70% of routine queries, such as payment reminders, account updates, or FAQs, giving your human agents time to focus on complex issues. 

Using natural language processing (NLP) and understanding (NLU), it interprets customer intent, recognises sentiment, and responds in a natural, human-like way – avoiding robotic loops.

Learn more in our guide to how conversational AI works in call centres.

Chatbots & Virtual Assistants

Chatbots and virtual assistants handle common customer queries, such as FAQs, order tracking, and basic troubleshooting, across multiple channels. This gives human agents more time to focus on complex or sensitive issues while ensuring consistent, high-quality support.

MaxContact’s Conversational Voice AI is an excellent solution that automates and enhances routine customer interactions. It is easily customisable (low/no-code management for fast implementation without heavy IT resources) and provides measurable outcomes – including contact centre cost reductions of up to 40%. Learn more about our AI call centre software. 

Predictive & Proactive Support

Predictive and proactive support uses AI to anticipate customer needs and resolve potential issues before they arise. Instead of waiting for customers to reach out with problems, AI systems can analyse real-time and historical data (e.g. such as interaction patterns, sentiment, and account behaviour) to trigger a fast and personalised resolution.These systems often work together to provide a fully integrated system – learn more about our AI call centre software and how it can benefit your business.

How to Implement AI in Customer Service

Ready to implement AI into your customer service operations? Here are 5 simple steps to get started:

Step 1: Audit Your Current Operations

Before you start deploying AI, you need to understand existing workflows and spot where AI can add real value. You should:

• Identify the most repetitive tasks
• Identify average handling times
• Make note of potential bottlenecks or pain points within customer service operations (such as high wait times or low first-contact resolution)
• Determine which queries are best suited for AI (and which are best left to agents)

Step 2: Define Goals & KPIs

Decide which solutions fit your business model best. For example, chatbots for online retail or voice AI for call centres. Think about:

• What are your operational goals? Do you want to reduce AHT, improve FCR, and/ or lower cost-per-contact? Our clients at MaxContact often see up to 40% reduction in contact centre costs within weeks.
• What about customer experience goals? Do you hope to increase CSAT? Reduce queue times? Or provide 24/7 support?
• What are your general business goals? For example, do you want to prioritise reducing churn rate, or increasing retention?

Step 3: Choose the Right AI Tools

Choose the right tool or software that fits your business needs and can meet the goals you've outlined above. For example, you can choose between:

• Chatbots / Virtual Assistants 
• Conversational Voice AI
• Analytics & Predictive Tools

Step 4: Test The AI Out in a Controlled Environment

1. Start small with a single channel (for example, an FAQ chatbot or payment reminder calls)
2. Test AI responses against real customer queries
3. Measure performance against your baseline KPIs
4. Use the results from the demo or pilot to refine AI responses and workflows

Step 5: Measure, Optimise, and Evolve

AI can only work effectively with the right training and data. Feed the AI any call recordings/ emails or chat logs, and create structured and detailed knowledge bases and FAQs. Be sure to add sentiment and intent recognition for nuanced interactions to boost customer satisfaction. 

AI needs regular refining based on any errors or escalation. Human oversight is important during early deployment - any humans reviewing AI responses to begin with can quickly improve accuracy and fix any 'teething problems'. 

The goal isn’t to replace customer service teams – it’s to make them more efficient and empathetic. AI can handle routine interactions and triage calls, while humans focus on complex, emotional, or high-value situations. For example, if MaxContact’s conversational voice AI spots frustration in a caller’s tone, it can immediately transfer the call (with full context) to a live agent. This ensures empathy and faster resolutions. 

Note: When implementing AI systems, ensure compliance with the Privacy Act 1988 and Australian Privacy Principles. Be transparent with customers about data use, and choose providers (like MaxContact) who prioritise secure data handling and local hosting.

Do’s and Don’ts of AI in Customer Service

Customer Service AI Solutions with MaxContact

MaxContact offers AI solutions designed for Australian businesses, including:

• Conversational Voice AI – integrates with your contact centre for intelligent call handling
• Chatbots & workflow automation – handle routine queries efficiently
• Analytics dashboards – track KPIs and optimise processes

MaxContact helps you implement, scale, and optimise AI while maintaining high-quality human support.

Book a demo today to see how our Customer Service AI software can benefit your business. 

AI in Customer Service FAQs