Effectiveness of artificial intelligence chatbots for customer service

by

Howard Azaga

B.S. Mechanical Engineering, Tuskegee University, 2009

M.S Electrical Engineering, Tuskegee University, 2011

A Research Paper Submitted to the School of Computing Faculty of

Middle Georgia State University in

Partial Fulfillment of the Requirements for the Degree

DOCTOR OF SCIENCE IN INFORMATION TECHNOLOGY

MACON, GEORGIA

2024
Effectiveness of artificial intelligence chatbots for customer service

Howard Azaga, Middle Georgia State University, [email protected]

Introduction
Customer service is assistance provided by a company to individuals who use or purchase its service or
products. Companies utilize artificial intelligence (AI) powered customer support services to provide faster
and more effective support. AI-powered chatbot applications are used by many organizations to answer
frequently asked questions or to give common instructions to customers. “Managers need to know how
their consumer groups define satisfaction and then interpret satisfaction scales to target, report, and respond
to satisfaction levels. Guided by our framework, managers should conduct postpurchase segmentation,
realizing that consumers vary concerning the components and related properties of satisfaction. Results
suggest that different industries may need to use different satisfaction scales, or a single industry may need
to tailor scales to different types of consumers" (Giese & Cote, J. A, 2000).
The use of AI is considered to provide better feedback than previous human interactions and present cost
savings to companies, eliminating the need for the overhead required of human resources. More recent
years have shown an increase of AI as an alternative to human customer service representatives, especially
since the Covid-19 pandemic. Social distancing was required, and many companies shifted to utilizing AI
chatbots for customer service (Mulyano et al, 2022). As time progresses, the services address high-fidelity
issues versus human subject matter expert interaction. With the use of artificial intelligence in customer
service platforms becoming more common, this paper will explore if this advancement in technology
equates to efficient and effective customer service experiences.

With technological advancements, companies take advantage of efficiencies that cause paradigm shifts in
their field. Customer service historically is a field that is based on human-to-human communication with
the assistance of technology. With AI-powered chatbots, companies may lower overhead costs by
decreasing human customer service operations. Ngai et al. (2021) investigated the design of a knowledge
base that can effectively support customer service chatbot applications. The intended purpose of using
chatbot applications is to improve customer experience and customer relationship management. Therefore,
it is imperative to study the topic of AI chatbot customer service effectiveness.
The purpose of the study was to identify relevant literature in the field of AI Chatbot Customer service. The
study will provide data that companies can perceive insights for customer service strategies. The
significance of the study is that findings will reveal factors influencing customer acceptance and areas for
improvement in AI chatbot implementation. This study answered the following research question:

RQ1: What are the themes in relevant literature associated with the use of artificial intelligence in customer
service platforms as it relates to effective customer service experiences for consumers?

Review of Literature
With technological advancements, companies take advantage of efficiencies that cause paradigm shifts in
their field. Customer service historically is a field based on human-to-human communication with the
assistance of technology. With AI-powered chatbots, companies will lower overhead costs by decreasing
human customer service operations. Therefore, it is imperative to study the topic of AI chatbot customer
service effectiveness.
Customer Service and Satisfaction
Customer service is assistance provided by a company to people who use or purchase its service or products.
“Managers need to know how their consumer groups define satisfaction and then interpret satisfaction
scales to accurately target, report, and respond to satisfaction levels. Guided by our framework, managers
should conduct postpurchase segmentation, realizing that consumers vary for the components and related
properties of satisfaction. Results suggest that different industries may need to use different satisfaction
scales, or a single industry may need to tailor scales to different types of consumers” (Giese & Cote, J. A,
2000). Customer satisfaction is a subjective term that can only be substantiated by an individual customer.
A company cannot simply state they provided a correct answer, and in essence, superior customer service
satisfaction was experienced. Customer service satisfaction is a human emotion-based experience.
Human Emotion Toward AI
Giroux et al (2022) study explores how individuals act morally toward AI technology. They document how
consumer behaviors differ from human-to-human interaction vs human to AI. In addition, they captured
that the intention to report an error has decreased as people use AI-powered self-checkout machines at
businesses. Overall, they discovered that decreased morality in human interaction with AI-powered
machines is caused by individuals experiencing a decrease in guilt when not interacting with a human. In
their study, Ciechanowski et al (2019) examined the nature of human and non-human interaction processes.
Their experiment consisted of two parts. The first is a measurement psychophysiological reaction of users
interacting with chatbots and the use of a questionnaire focused on assessment and interactions in a person's
willingness to work with a chat box. "We gathered the following psychophysiological data from
participants: electromyography (EMG), respirometer (RSP), electrocardiography (ECG), and electrodermal
activity (EDA). In the last, declarative stage, participants filled out a series of questionnaires related to the
experience of interacting with (chat)bots and to the overall human–(chat)bot collaboration assessment"
(Ciechanowski et al, 2019). Results of the study showed that participants preferred a simple form of a
chatbot versus a more personalized one with an avatar to mimic human effects.

Rieger et al (2022) study describes a phenomenon called the perfect automation schema. This describes the
behavior of a human getting serviced by technology understanding of failure or error from the technology.
In the case of perfect automation schema, a human will value automation technology less than human
interaction if the technology makes a mistake, the authors evaluated humans in terms of trust, reliability,
and responsibility. They captured these variables by performing 3 experiments on human subjects. The
three experiments simulated a loan acceptance task, a chemical plant instruction task, and an X-ray
assessment task. Each experiment interacted with a human subject from the points of artificial intelligence,
decision support systems, and human subjects. The findings from the study show a contrast from the
author's hypothesis that a perfect automation schema would be observed. In the end, it was found that
human trust and perceived utility were not reduced to a level lower than human support if a system failure
happened in the experiment.

AI Use in Customer Service

As technology advances, a topic that usually involves human-to-human interaction to be successful can
now be performed by the power of AI. Chaudhary and Srivastava (2022) state that digital transformation
in the realm of engineering is used to replace conventional processes with automation to process large data
problems efficiently. Artificial intelligence and other technological advances are replacing human
interaction every day. Brill et al. (2019) surveyed to confirm satisfaction with digital assistance powered
by AI. The overall study provided evidence that people are satisfied with using digital assistance. By adding
AI technology to business processes, complex tasks, and customer service tasks, businesses achieved
productivity gains. The author's study aimed to close a gap in data with the contextual experience of
respondents and the evidence of a customer service section with digital assistance.

The world now profits from the impact of AI and its many applications. Many companies are utilizing AI
chatbots to perform service communications to their customers. Data sources are available to come to a
scientific conclusion if AI-supported customer service is efficient. Ivan et al. (2022) provided background
for this with their study. It related the subject to other published content in the world of AI and technology
innovation. The authors took historical data on AI customer service applications and interviews for their
study. Using these data sources, they conducted a data content analysis and concluded that AI-powered
customer service is overall more efficient than human-based service.
Risk of AI with High-Fidelity Issues
AI applications have the potential to be implemented in many areas, and it is accepted as one of the most
disruptive technologies in business. “Artificial intelligence can be used to realize new types of protective
devices and assistance systems, so their importance for occupational safety and health is continuously
increasing" (Steimers & Schneider, 2021, add page number). Therefore, its limitations should also be
discussed to evaluate the implementation risks (Caner & Bhatti, 2020). With any technology, there are
limitations. AI can be used with a positive success rate for customer service applications, but to what level?
Commonly, bots are used to communicate the answer to frequently asked customer service questions. In
most cases, if the scope of the problem cannot be calculated because of difficulty (high fidelity issue) by
the AI, the application will elevate to human interactions for customer service. There is a gap in the literature
on AI addressing complex human-based problems. Issues that can result in loss of life or catastrophic human
injury should never be addressed by AI.
Methodology

The study consisted of a qualitative study design. Qualitative methods were employed to gather meaningful
data from multiple sources, which allowed an in-depth exploration of the intricate phenomena within a
specific context. (Rashid et al., 2019). A thematic literature review was conducted by evaluating existing
literature on AI-powered chatbot applications for customer service focusing on common themes identified.
Data collected related to the research question: What are the themes in relevant literature associated with
the use of artificial intelligence in customer service platforms as it relates to effective customer service
experiences for consumers?
Data was extracted from various literary host websites using terms applicable to the research question.
Terms were identified based on their relevance to the research question. Literature was collected from
Google Scholar, EBSCOhost, ProQuest, using the identified criteria for the study. Each database yielded
an extensive list of articles (Table 1). Proquest and EBSCOhost offered the most robust filtering processes.
Specific terms such as “chatbot”, “artificial intelligence”, and “customer service” were included. Boolean
operators (AND/OR) included the terms “business” and “computer science” to further filter literature. To
ensure the most robust research addressing the research question, specific criteria were followed including
identifying articles that were published in peer-reviewed journals. All articles must have been published in
the past 10 years. Articles were excluded (Table 2) from the analysis if they did not include a data collection
process that reflected the consumer’s perspective on using chatbots in addition to the benefits from the
company’s perspective.
Table 1. Article selection process
Step 1: Total Articles Identified search criteria (N = 2,096)
Database 1: Google Scholar (N = 12)
Database 2: EBSCOhost (N = 521)
Database 3: ProQuest (N = 1,563)
Step 2: Filtered articles based on specific terms
(N = 82)
Step 3: Articles included in analysis that met all
inclusion/exclusion criteria (N = 18)

Table 2. Inclusion and exclusion criteria

Inclusion Criteria Exclusion Criteria
Published research in a peer reviewed journal Research not in a peer reviewed journal
Research published in the past 10 years Research that only focuses on the company’s
perspective
Research reflects the consumer’s perspective on Research that only has quantitative data
customer service using chatbots
Research includes quantitative and qualitative Research published before 2014
data to show chatbot’s effectiveness with
consumers
Research offers company’s perspective or data on
cost efficiency

Data Analysis
Thematic analysis was used to identify recurring themes and patterns in the literature (Braun & Clarke,
2006). The literature search process involved intense scouring of academic literature. Using the inclusion
criteria, articles were quickly reviewed to assess if they were aligned with the purpose of this research.
Results were further refined to include full-text articles to view, Boolean operators, and specific keywords
to further narrow down the articles. A more thorough review required reading through articles to identify
if they should be included further.
Data was analyzed from relevant articles using Dedoose, which identifies themes to be coded to gain insight
into the research question. This program allows for various forms of media to be uploaded, and then
analyzed. All articles were converted from PDFs to .docx files before being uploaded into Dedoose. This
ensured a smooth coding process. As each article’s results section was analyzed, and commonalities were
identified in the articles to create themes, which were grouped.

Results
The purpose of this study was to identify the themes that would provide insight into the customer’s
perspective on using chatbots for customer service. The use of this technology is aimed at enhancing
efficiency and customer satisfaction. Through an in-depth thematic analysis of existing literature, this study
sought to uncover the strengths, limitations, and potential areas for improvement in AI chatbot use for
customer service. Four themes were identified from the thematic analysis: customer satisfaction,
resoluteness, process design, and customer reaction. Themes are patterns, or main ideas, that emerge
throughout several pieces of text. These themes weave together pieces of data that answer the research
question. Once themes were identified, the codes were created to further categorize the data. The analysis
ultimately answered the research question “What are the themes in relevant literature associated with the
use of artificial intelligence in customer service platforms as it relates to effective customer service
experiences for consumers? “
Theme 1: Customer Satisfaction
The theme of satisfaction was the most significant in the research, emerging 33 times. Several articles
highlighted the importance of customers feeling satisfied with using chatbots to address their concerns.
Park et al (2023) indicated, “When customers have positive voice interactions with a robot, it can lead to
them developing a positive attitude towards the overall service” (2023). While chatbots offer quick
resolution to problems, a customer’s overall satisfaction with the software can contribute to a customer’s
continued interest in that company (Chang & Jiang, 2020).
For many respondents in the literature, trust was seemingly extremely important when interacting with
chatbots. This theme emerged a total of 32 times. Several articles connected trust with loyalty and continued
business. Brill et al. assert that consumers with more than 2 years of experience with chatbot technology
are 17% more trusting of the service (Brill et al, 2019). Relevant literature assessed customers who used
chatbots for various customer service needs including banking and ecommerce. Customers who perceive
the chatbot to be friendly are more likely to trust the technology with their sensitive information (Cheng et
al., 2022).
Theme 2: Resoluteness
Quickly resolving customer concerns is one of the benefits that companies receive by using chatbots. This
theme was noted in several pieces of literature. Customers expect that by contacting a customer service
representative, their issues will be resolved. This code was presented a total of 22 times in the literature.
Consumers can view a chatbot as less effective than a human, so it is essential that chatbots appropriately
resolve issues. Sands et al. conducted a study examining the effects of chatbots resolving issues after
customer service failures. Their research indicated that when a “process failure” occurred due to the fault
of a chatbot, customers were less satisfied and not inclined to continue business with the company (Sande
et al, 2022). As a result, companies must design chatbots to solve the customer’s problem or connect the
customer with a live agent once the identified problem is beyond the chatbot’s scope. As noted in several
pieces of literature, resolving the customer’s concern reduces frustration for the customer.
Theme 3: Process Design
Chatbots offer the ability to be customized to the needs of the company, based on what their consumer
desires. For many companies, the impact of service is essential when employing these technologies. Park
et al asserted that chatbots should be designed to use the appropriate “language and tone” when interacting
with consumers (2023). Simple things such as designing the robot to utilize the customer’s name or other
personalizing factors should be considered as well. These custom processes can also be used to predict a
consumer’s behavior and answer key questions that will enable a smoother experience for the customer
(DeAndrade & Tumerelo, 2021).
Since chatbots are not actual humans, they offer unique benefits to companies that humans do not. For
example, chatbots are not limited to working certain hours each day or required to take breaks as humans
are. Their flexibility “operates with agility, availability, and accessibility, continuously, 24 hours a day,
seven days a week” (DeAndrade & Tumerelo, 2021). Flexibility emerged a total of 18 times throughout the
pieces of literature. Although not real, chatbots can be designed to have human-like features, which is
known as anthropomorphism. Research indicates that these lifelike bots will be more well-received by
consumers when they are frustrated with the interaction (Crolic et al, 2022).
Companies, large and small, are in business to maximize profits and minimize losses. Cost-saving strategies
are a large part of introducing artificial intelligence into the customer service realm. The upfront cost of
designing artificial intelligence for customer service is very expensive, but if it is used effectively and
received well by the consumer, then profits can potentially increase (Trivedei, 2019). In a study conducted
by Castello et al, they assert that the obvious benefit of using chatbots does have a cost-cutting effect, but
to ensure that the customer is comfortable using this technology, it is the company’s responsibility to
communicate the benefits of the technology to the consumer (Castello et al., 2023).
Theme 4: Customer Reactions
The use of chatbots introduces an additional aspect of trust but relates to the company trusting the consumer.
Because there is no physical person conducting the interaction with the chatbot, the consumer may be less
likely to report an error, which can provide a financial benefit in some instances (Giroux et al, 2022).
Extending on the theme of anthropomorphism, it may be beneficial for companies to create life-like
chatbots because this can “increase the level of perceived guilt and thus motivate people to adopt moral
actions” (Giroux et al, 2022). Furthermore, consumers expect customer service representatives to employ
empathy when interacting with them; this is inclusive of human and artificial intelligence interactions
(Cheng, 2021).
Although not mentioned in many articles, the theme of autonomy is nonetheless important when examining
customer’s perceptions of interacting with chatbots. While traditional communication is limited when
interacting with chatbots, consumers feel a desire to have a “master-servant” relationship with the chatbot
to meet whatever their customer service needs are. In a nutshell, consumers This level of autonomy is
essential in having a positive experience for the consumer.
The results listed below in Table 3 highlight relevant codes present in the literature, including 18 peer-
reviewed articles.
Table 3: Frequency of Codes

Code Frequency
Satisfaction 33

Trust 32
Resoluteness 20

Custom Processes 19

Flexibility 18

Moral Judgements 17

Efficiency 13

Cost Savings 5

Autonomy 4
 Implications of Findings
As technological advances continue to change the landscape of customer service, chatbots will continue to
be used as effective methods of resolving customer conflict. A thematic analysis of relevant literature
revealed that chatbots are used for multiple reasons including customer satisfaction, resoluteness, their
customizable process design, and their ability to manage or not manage customer reactions. Findings
revealed that all of the themes above are relevant and should be considered when a company decides to
employ this form of technology.
Furthermore, this study’s findings shed light on our future society. Companies are utilizing methods to cut
costs. These strategies can negatively affect the workforce. As indicated in several pieces of literature,
companies are creating chatbots to perform tasks that humans have been doing for years. Anything beyond
the scope of the chatbot’s design is handed off to a human customer service representative. Nonetheless,
the presence of the automated chatbot is felt as actual human jobs are eliminated and the profession becomes
more scarce.
Limitations of the Study
This study included limitations that could have influenced the results. First, there is a gap in the literature
on artificial intelligence addressing complex human-based problems. Although there were a great number
of articles found regarding customer service chatbots, the research became more limited as filters were
utilized to address the specific needs of this study. This technology is still relatively new, and although
there were a plethora of articles relating to the artificial intelligence topic, finding articles that also focused
on the consumer’s perspective was challenging. Filtering the articles using specific search terms such as
“artificial intelligence” and “customer service” in addition to Boolean operators truly narrowed down the
literature that was relevant to this study. Perhaps having more articles to siphon through would have
garnered more data, resulting in additional themes.
Second, this study only included articles with quantitative and qualitative data because the purpose was to
highlight rich anecdotal customer experiences. Limiting the scope of the study to only articles that included
both forms of data further purged a long list of possible literature that only included quantitative data.
Although numbers are valuable resources when conducting research, they were not the sole focus of this
study. This study aimed to understand the consumer’s perspective, and it was essential to include studies
that would truly highlight how consumers felt after using a chatbot product. Some examples of gathered
research included consumer interviews, situational observations, and online surveys that allowed
participants to type their responses to questions.
Recommendations for Future Research
Expanding the research process to include additional databases may provide additional research to support
another analysis. This may cast a wider net and offer additional resources to support the results of this
thematic analysis. Furthermore, since chatbots are used more frequently by businesses, it may be valuable
to explore the effect chatbots have on eliminating human jobs. Current literature that was included in this
study offered that chatbots are currently limited in their scope; they must employ a human customer service
representative for more complex situations they cannot solve. As technology continues to evolve, that
practice may become antique. Researchers are constantly fine-tuning and customizing artificial intelligence
capabilities, and eventually, there may be technology that is so life-like that it can mimic more human
capabilities. Exploring how these advanced processes affect the job market, which can in turn affect
customer service is worth exploring; especially since this study indicated that moral judgements are
valuable considerations when utilizing chatbots. Lastly, the theme of satisfaction, specifically relating to
trust, emerged several times. Further seeking an understanding of how chatbots can ease the fears of
consumers relating to financial transactions or sharing sensitive information with chatbots may be beneficial
in customers accepting the product. This study provides a peak into the capabilities of the future. It provides
 insight into the experiences of the consumer and how artificial intelligence technology assists in solving
problems for customers.
Conclusion
The data collected in this study provides insight into the emergent themes in relevant literature relating to
chatbots being used as effective customer service mechanisms for consumers. The deep dive into many
pieces of literature unveiled that chatbots can be useful tools to solve simple problems if used correctly.
More complex issues still require the use of human customer service representatives. This gap in technology
is an opportunity for further advances in technology that can eliminate human-consumer interaction in
solving issues. The twofold benefit of artificial intelligence has lasting implications for consumers and
companies. Fully analyzing the effect of utilizing artificial intelligence as a customer service mechanism
should be critical in the design of this product for each company as each company offers unique services to
their customer. The analysis of the literature included in this study revealed that chatbots are used in a
variety of industries including banking, retail, and automotive, just to name a few.
Emergent themes in this research highlighted the customer’s perspective on interacting with artificial
intelligence. The analysis unveiled that customer satisfaction is paramount when considering the
effectiveness of chatbots. A positive experience can create opportunities for long-lasting consumer-
company relationships. By considering these themes, companies can tailor chatbots to their customer’s
needs. Expanding on this research will continue to sharpen the customer service industry, creating a better
experience for consumers and improving efficiency for organizations.

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