Customer experience (CX)-focused firm NICE recently released its 2024 International Happiness Index, a benchmark for understanding consumer happiness. This comprehensive study, based on a survey of 4,000 people in the Unites States and the United Kingdom, delves into the impact of everyday interactions with customer service on consumer well-being. The findings reveal that effective customer service, particularly when supported by artificial intelligence (AI) tools, can significantly enhance brand satisfaction.

The happiness gap: Why current customer service isn't enough Before diving deeper into the key findings, it’s essential to understand the differences in happiness across various demographics. Overall, 66% of Americans reported being happy. However, men consistently rated their lives higher than women, with the most significant happiness gap occurring between ages 35 and 44, where men reported being 11% happier than women. Happiness also appears to be generational, with Generation Z (people born between 1997 and 2012) saying they feel twice as lonely as Boomers (people born between 1946 and 1964), suggesting that younger consumers seek an emotional connection with brands.

There is a significant opportunity for improvement in current customer service, as two in three customers express dissatisfaction with their experiences. This dissatisfaction can lead to long-term negative impacts for brands, as customers might avoid them for up to 10 years following bad experiences. Only 36% of those surveyed indicated being happy with current customer service. It's clear that brief encounters with brands, whether they’re online or in-person, substantially impact overall happiness, presenting a promising area for enhancement.

Undoubtedly, customer service wields a significant influence, with 97% of consumers reporting increased happiness after a positive interaction. Moreover, 52% are more likely to return to a brand that has treated them well. While discounts and freebies are common, they are less effective in fostering happiness. The majority of consumers believe that good customer service has a more profound effect on their mood than financial incentives, underscoring the importance of customer service in shaping consumer happiness and brand loyalty.

Superior service stimulates spending In terms of spending, consumers are willing to pay considerably more for better service, specifically, 50% more on average. Younger consumers are even more willing to pay a premium for superior service. For example, Gen Z is willing to pay 58% more. This willingness is evident in specific sectors like travel insurance, where better service ratings lead to significant increases in revenue.

This is consistent with my research, which found that customer experience is now the top brand differentiation. Another interesting factoid is that two-thirds of millennials have admitted to dropping a brand because of a single bad experience. Most companies “talk the talk” of improving CX but few have. The time to invest is now as customer choice has never been greater making it hard to get a customer but very easy to lose one.

AI mostly plays a positive role in customer service, with three-quarters of consumers saying it enhances their happiness. Purpose-built AI for customer service makes everyday tasks simpler and more efficient. Many are aware of AI’s use in customer service: 65% have seen it in chatbots and 62% in product suggestions. Because of this, 78% of consumers believe using AI in customer service increases happiness.

This positive perception is mainly due to AI’s fast problem-solving, as 41% of the respondents noted. Additionally, 36% like that they don’t have to repeat information when using AI, which makes them happier. Younger consumers trust AI to make them happier, especially Gen Z (91%). Almost half of the consumers surveyed (47%) feel unhappy when they have to repeat themselves, which increases to 65% for those over 65. AI designed for customer service can reduce this frustration, highlighting the benefits of everyone using AI tools, not just the young.

CX is all about connection The study’s findings underscore the importance of human connection in customer service for business success. Improving customer experience involves blending technology with human interaction. AI enhances consistency and clarity, while real human connections make consumers feel valued and happy, which builds brand loyalty. This recognition of the irreplaceable role of human interaction in customer service should make the audience feel integral to the process.

Over the first half of the year, I have attended countless events centered on customer experience. My conversations with business leaders have revealed an interesting dichotomy regarding where most brands are. Every organization understands the importance of CX, and most recognize that what is being delivered today would be classified as sub-par. One of the challenges with contact centers is the volume of data coming across an increasing number of channels, which is far too great for people to make sense of – but machines can. AI is the glue that can turn data into actionable analytics. Businesses that are currently on the fence as “to AI or not AI” need to fall to the side of deploying it as soon as possible. Some executives I’ve talked to believe there is risk in moving AI into contact centers, and I’ll counter that there’s more risk in not deploying it.