Brands risk losing customers as AI-driven support falls short, new research finds

Australian consumers are increasingly frustrated with AI-driven customer support, with 40% uncomfortable with automated interactions and 57% saying they would consider switching brands if their issue isn’t resolved on the first contact, according to new research from experience company InMoment.

The study, which polled more than 1,200 Australian consumers, found that while brands are adopting AI-powered customer service tools, many are failing to meet expectations for speed, resolution and trust. Nearly one in 10 customers (9%) reported that their issue was never resolved at all.

Automation alone isn't enough

David Blakers, managing director of InMoment APAC, said that while AI is increasingly used in chatbots and agent-assist tools, it is failing to address deeper customer frustrations.

“With AI playing a bigger role in customer interactions, the real challenge isn’t just automation – it’s ensuring that brands listen, understand, and act on what customers are telling them,” Blakers said in a statement.

“Although AI is commonly used in chatbots, agent assist, and knowledge management, there is an emerging opportunity for brands to leverage advanced natural language processing (NLP) and natural language understanding (NLU) engines for conversational intelligence across all customer interactions. This approach not only identifies friction points and automates quality assurance at scale but also uncovers key areas for business improvement.”

The research highlights a growing disconnect between brand strategies and customer expectations. While AI is intended to streamline support, many customers feel it is making service more frustrating rather than more efficient.

The study also found that 40% of customers expect a response within an hour when reaching out for support, yet many brands are falling short. Blakers noted that while speed is important, brands also need to build trust through transparency and accountability.

“It’s clear that building trust relies on more than quick responses – it requires proactive communication and real problem-solving,” he said.

“As AI takes on a bigger role in customer interactions, brands must strike a balance between leveraging technology for efficiency and preserving the human touch that remains at the heart of effective customer support.”

The study, conducted by market research firm Glimpse, explored customer expectations, preferred support channels, and attitudes toward AI-driven interactions. It provides a warning to brands that while AI can enhance customer service, it must be implemented strategically to avoid alienating consumers.