An introduction to AI agents for customer support

In today’s fast-paced digital landscape,  customer service is more critical than ever. Consumers, especially millennials and Gen Z, expect instant, personalized responses across channels.  According to a recent PwC survey, 73% of consumers agree that a satisfying experience plays a significant role in their choice to buy, and companies that offer outstanding customer service make 5.7 times as much money as their competition.

Many organizations have resorted to traditional chatbots to meet the increasing volume of consumer queries and the need for round-the-clock support. However, these systems, built on rigid workflows and rules, and aren’t equipped to understand the nuances or context behind customer queries. As a result, they often deliver impersonal or incomplete responses, leading to a sub-optimal and, often, frustrating customer experience. A common example in e-commerce is when a customer calls with two queries - one to enquire about the status of an order and a second related to another product's return. A typical chatbot will likely be unable to handle both parts of the query. The chatbot might lead the customer to the FAQ section for more information on order status while ignoring the return issue, forcing the customer to repeat themselves, and increasing frustration.

The consequences of such poor customer service can be severe. Dissatisfied customers are quick to share negative experiences online and in today’s hyper-connected world, a single bad experience can spread rapidly, affecting the business within hours. To prevent this, businesses are increasingly turning to AI agents, a more advanced and dynamic solution for customer service.  

Unlike traditional methods, AI agents excel at understanding context, grasping nuances, and discerning the true intent behind queries. Powered by natural language processing (NLP) and machine learning (ML), AI agents think, act, and handle even the trickiest queries in a more human-like manner. By considering the entire conversation rather than just isolated questions, AI agents deliver highly tailored, accurate solutions, effectively mitigating the risks posed by dissatisfied customers. 

In addition, AI agents use customer data—such as purchase history, preferences, and behavior—to deliver personalized responses and recommendations. What sets AI agents apart is their ability to continuously learn and adapt from each interaction, refining their understanding of customer needs and improving over time. This dynamic learning enables them to offer increasingly accurate and relevant solutions, making future interactions even smoother.  

By resolving the majority of customer queries independently, AI agents reduce the pressure on human agents and significantly speed up resolution times, enhancing the overall customer experience. This article examines how AI agents are revolutionizing customer service, enabling faster, more personalized interactions that boost customer satisfaction and loyalty.

AI agents: The future of customer support 

Unlike traditional chatbots that rely on rigid scripts and workflows, AI agents are powered by advanced algorithms, enabling them to understand nuanced customer queries and adapt to conversations with human-like intelligence. No matter how a question is phrased, AI agents can interpret the intent and provide dynamic, contextually relevant responses, delivering a more personalized and seamless customer experience.  AI agents are also able to adapt to conversations just like humans do. 

Why are AI agents the new frontline in customer service?

• They’re always available: AI agents are available 24/7 and are ready to assist customers, without the need for breaks or human intervention.

• They’re present where customers already are: They work across multiple platforms, including web chat, social media, and even email.

• Hola! Bonjour! Hallo! こんにちは (Kon'nichiwa): AI agents can talk to customers in the language they prefer, making it perfect for global businesses.

• Scalability: AI agents handle more queries, allowing businesses to extend support even during the highest volumes.

By implementing AI agents, businesses can:

• Reduce customer response time: By having AI agents handle a majority of the queries, the time it takes to respond can significantly decrease.

• Improve customer satisfaction: Tailored, precise, and relevant answers increase customer happiness and loyalty.

• Save money: By automating routine queries, human agents can concentrate on handling more complicated issues, resulting in cost reduction.

• Boosting revenue: Satisfied clients are more inclined to become loyal customers, leading to an increase in revenue.

Freddy AI Agent by Freshworks is a great option for an AI agent across businesses and use cases. Freddy gives hyper-personalized replies in a human-like manner, is easy to set up across all channels, and learns from all past interactions. Whether it's order tracking in e-commerce or technical troubleshooting in hardware, Freddy AI Agent delivers accurate and trustworthy support.

What’s under the hood: How AI agents work

AI agents rely on two core technologies: Natural Language Processing (NLP) and Machine Learning (ML).

1. Natural Language Processing (NLP): NLP enables AI agents to understand and interpret customer queries, whether written or spoken. They analyze the structure of the query, identify keywords, and use contextual understanding to provide accurate answers. An example: If a customer asks, “What’s the status of my order?” or “Can you tell me when my package will arrive?”, an AI agent equipped with NLP can recognize that both questions have the same intent and provide a consistent, accurate response.

2. Machine Learning (ML): ML allows AI agents to learn from past interactions. Over time, it helps AI agents predict customer needs better and provide more personalized responses. The more they interact with users, the more intelligent and helpful the AI agents become. An example: An AI agent uses ML, and tracks customer behavior to provide tailored product suggestions. If a customer frequently browses fitness equipment, the AI can respond to their query about new products with relevant recommendations.

These 2 core technologies help AI agents:

• Understand and respond to complex queries: Unlike traditional chatbots that follow predefined scripts, AI agents, powered by NLP, understand context, recognize sentiment, and respond appropriately, even when customers ask multiple questions or switch topics.

• Learn from interactions and improve over time: Unlike traditional chatbots that rely on static decision trees, AI agents, driven by ML, evolve by learning from previous interactions. This allows them to provide better, more accurate responses over time improving customer satisfaction and ultimately brand loyalty and revenue.

The problem with chatbots: Limitations

Chatbots are still everywhere, but most of them fall short of expectations and frustrate the customer. These old-school ‘bots’ are built based on complicated, rigid workflows making it difficult for them to understand nuances of customer queries. This ends up in their responses being impersonal, and in many cases quite futile!

A closer look at the typical issues faced when chatbots are the face of customer support:

• Rigid responses: Imagine trying to have a conversation with someone who can only stick to a script. That’s how traditional chatbots operate. Faced with unscripted or complicated questions, they falter, turning what should be a simple chat into a frustrating experience.

• Lack of context awareness: Picture having to repeatedly explain yourself each time you ask for assistance. It can be annoying to have to start over every time while using a chatbot, particularly if you have several problems to fix.

• Absence of personalization: Traditional chatbots treat everyone the same. Whether you’re a first-time buyer or a loyal customer with a dozen orders, the responses will be the same without any personal touch.

• High maintenance costs: Keeping these chatbots updated requires constant attention and money. With evolving customer needs, the cost of updating traditional chatbots can add up quickly.

Traditional chatbots to AI agents: The evolution 

In the beginning, chatbots revolutionized customer support—automating FAQs and handling simple queries, saving SMBs time and money. For a while, they were good enough. But as customer needs grew more complex, businesses began to see the cracks. Chatbots could not keep up with nuanced conversations or resolve deeper issues, leading to frustrated users and missed opportunities.

Enter AI agents: the new generation of intelligent, context-aware customer service assistants. They go beyond merely answering questions - —they solve problems. AI agents take the interactions beyond just transactions and deliver great customer experiences that foster loyalty and delight. 

Here’s a quick look at how the two stack up against each other:

How AI agents help scale customer support

AI agents, are far more advanced and can understand social interactions, and verbal cues and make decisions based on a deeper understanding of the conversation and context. AI agents continuously learn and adapt. This helps in improving the quality and accuracy of their responses and also enables them to interact in an engaging and almost ‘human’ manner.

1. Maintaining human-like conversations and context retention 

One of the key advantages of AI agents is their ability to simulate human-like interactions while retaining context across multiple conversations, significantly enhancing customer experiences. In contrast, traditional chatbots often struggle to maintain context, resulting in disjointed conversations that frustrate customers.

Freddy AI Agent, developed by Freshworks, can remember past interactions, such as a customer's previous subscription renewal issue. This allows it to bring up relevant information in follow-up conversations, for instance, when a customer asks about new product features. 

2. Ease of setup and deployment 

Unlike traditional chatbots, which frequently require complicated setups, AI agents are easy to use and train. Conventional bots use decision trees, which can be resource-intensive and require frequent updates and upkeep. However, AI agents do not require ongoing flow-building; instead, companies merely need to add more knowledge sources. They will independently crawl and learn from these, removing the need for ongoing manual updates. This makes the setup process much easier and more efficient.

3. Improved customer experience and satisfaction 

AI agents enhance customer experience by delivering timely, accurate, and personalized support. Traditional chatbots often force customers through rigid flows, but AI agents can adapt to customer queries in real-time, offering more natural and meaningful interactions.

For example, Freshworks’ Freddy AI Agent enhances customer experience with hyper-personalized responses based on past interactions and information gathered.

Unified support solutions 

While AI agents are smarter, faster, and more efficient than their traditional counterparts, customer support still needs human supervision. Leveraging both AI and human agents helps businesses maximize their customer support efforts and create an unparalleled customer experience.

Let’s explore a few ways in which they can work in tandem: 

1. Complementing each other's strengths - tiered support

In a tiered customer support system, AI agents handle routine tasks while human agents focus on more complex or sensitive inquiries. 

For example, when a customer from a large enterprise needs help configuring their software, the AI agent can guide them through basic setup steps. However, if the customer runs into a complex integration issue involving multiple systems, the AI escalates the matter to a human technical support agent with in-depth product knowledge, ensuring that the issue is resolved professionally and efficiently.

2. Enhancing efficiency and productivity - seamless handoff 

 When a customer query requires human intervention, the transition from AI to human support should be smooth and efficient. Properly implemented, it allows AI agents to gather initial information and resolve simpler issues while seamlessly handing off more complex queries to human agents. 

An example- In a logistics company, an AI agent can help track shipment status. If the customer asks about customs clearance, the AI agent would then transfer the conversation to a human compliance expert, ensuring the customer receives accurate information without repetition.

3. Improving customer satisfaction 

AI agents significantly enhance customer satisfaction by shifting interactions from simple transactions to meaningful relationships. Utilizing advanced data analytics and machine learning, they gather insights into customer preferences and behaviors, allowing for personalized recommendations that resonate with individual needs. Their ability to maintain context throughout multiple interactions fosters a sense of continuity, making customers feel valued and understood.

When AI and human agents collaborate, the result is higher customer satisfaction with maximum efficiency. For example, AI agents can proactively engage customers by reminding them of important milestones such as approaching subscription renewal deadlines, which deepens the relationship and encourages brand loyalty. 

Providing exceptional customer service is vital for success in the increasingly competitive delivery market. Recognizing the need to meet rising consumer demands, leading Indian delivery company Dunzo sought to enhance its customer support operations. To achieve this, Dunzo integrated Freddy AI Agent, an advanced AI solution from Freshworks designed to streamline customer interactions and improve the overall user experience.

The Challenge: As Dunzo scaled its services, the volume of customer inquiries surged, leading to several challenges in managing them effectively. Key issues included long response times, limited availability of support agents, and the need to address a high number of queries. These challenges not only impacted customer satisfaction but also placed additional strain on support staff, highlighting the need for a more efficient solution to handle customer interactions.

The Solution: To address these challenges, Dunzo integrated Freddy AI Agent into its customer support framework. This AI-driven solution automated responses and provided real-time assistance to customers. By leveraging natural language processing and machine learning capabilities, Freddy AI Agent accurately interpreted customer requests and delivered timely responses. This integration allowed Dunzo to maintain a high level of customer service while alleviating pressure on human agents.

Results

• Improved response time: Customers receive responses within seconds, significantly enhancing overall satisfaction.

• 24/7 availability: With Freddy AI Agent, Dunzo provides round-the-clock support, ensuring assistance is available at any time.

• Efficient issue resolution: Freddy AI Agent resolves 48% of customer queries independently, enabling human agents to focus on more complex issues.

• Cost savings: Automating routine tasks has resulted in a 30% reduction in support costs, allowing resources to be redirected toward improving service quality.

• Data-driven insights: The AI collects and analyzes interaction data, offering valuable insights that help Dunzo refine its services and enhance customer satisfaction.

By integrating Freddy AI Agent, Dunzo significantly enhanced its customer support efficiency, reduced costs, and improved user experience, driving growth in the competitive delivery market.

Embracing the AI agent-led future of customer support

For years, chatbots have frustrated customers with rigid scripts and a lack of human connection. Freddy AI Agent changes that. It understands and responds to natural language, making conversations feel like they’re with a real person who genuinely empathizes. Freddy AI Agent resolves queries instantly, and best of all, it can start managing the majority of your support inquiries in just minutes—not months.

The future of customer support is AI-driven. AI agents are key to helping businesses meet the ever-increasing expectations of today’s consumers. In this fast-paced world, staying ahead is essential.

By adopting AI agents, you ensure your customers feel valued and understood, boosting both loyalty and satisfaction. Now is the time to embrace this technology and stay ahead in delivering exceptional service.

Here’s why Freddy AI Agent is the future of customer service

Freddy AI Agent by Freshworks is the solution that turns customer interactions from simple transactions into engaging, personalized experiences.

Imagine your clients getting prompt, precise assistance whenever they need it, day or night. With Freddy AI Agent, this isn't just a pipe dream; it's a reality. Freddy AI Agent offers round-the-clock assistance and can easily handle simple and complicated questions. The outcome? Your human agents can concentrate on developing deep connections with your clients, which counts most.  Here’s how Freddy AI Agent enables this:

• Always available, always responsive: Freddy AI Agent works around the clock, ensuring customers get the help they need without waiting. Whether it’s 2 AM or midday, Freddy AI Agent delivers instant support, improving satisfaction and reducing wait times.

• Personalized experiences, every time: Freddy AI Agent leverages customer data to tailor responses to each individual. By understanding preferences and past interactions, it provides solutions that feel uniquely personal—strengthening the bond with customers.

• Effortless scalability: As business grows, so do customer queries. Freddy  AI Agent scales with the business, maintaining top-quality service even during peak times, without overwhelming the support team.

• Seamless integration for easy deployment: Freddy  AI Agent fits effortlessly into existing systems—whether it’s the CRM, e-commerce platforms, or communication channels. This makes the transition smooth, allowing teams to work more efficiently.

• Data-driven insights: Freddy AI  Agent isn’t just about automation; it’s about smarter customer support. With built-in analytics, one gains valuable insights into customer behavior. These insights can be used to identify trends, solve pain points, and refine customer service strategies.

• Cost efficiency without compromise: By automating routine inquiries, Freddy  AI Agent helps reduce operational costs. Meanwhile, the human agents can focus on higher-value tasks, optimizing both resources and the team’s productivity.

Embrace the future with Freddy AI Agent and unlock unparalleled customer satisfaction and loyalty today.