The Rewards And Risks Of Using Generative AI To Personalize Customer Experiences

85% of customer service leaders are set to trial a customer-facing generative AI (genAI) tool in 2025, a recent Gartner survey reveals. The growing interest in this technology is mainly down to the benefits early adopters have already seen — companies that use AI to personalize customer experiences report a 15% boost in sales. However, genAI poses some risks that can hurt your business finances and reputation (inaccurate responses and privacy breaches being common problems). To make matters worse, only 27% of companies that use genAI have staff review generated content before it's shown to customers. Still, as long as you’re careful with how you implement it and work with a trusted provider, you can sidestep these risks and successfully use GenAI to deliver the personalized recommendations and interactions that customers now crave.  

Personalized and seamless customer interactions 

GenAI can deliver personalized product recommendations to each customer when used correctly. You don’t want to skip this — almost 50% of shoppers will make impulse purchases when recommended products hit the mark. GenAI digs through vast amounts of consumer data, from what people browse and purchase to how they feel, to generate recommendations relevant to each person.  

On top of that, GenAI can also facilitate seamless interactions between customers and staff, which is essential as 75% of customers now expect a smooth, continuous experience across multiple channels, including online, mobile, and in-store. GenAI can provide employees with a summary of a customer’s interaction history, which they can review before talking with them. So, if a customer chats with a bot first, the employee can quickly get a handle on the situation without the customer having to repeat themselves. This can do wonders for customer satisfaction. 

Prioritize data privacy

GenAI personalization work needs to collect and store customer data, which isn’t a problem as long as you comply with privacy laws and are upfront about it. So, update your privacy policy to include AI use. Be clear on what data is shared with GenAI tools, and let customers know about it. Explain why their data is needed and the potential risks if they share it. Transparency, along with the option to opt out, builds trust with customers. Remember to check your policy against regulations like GDPR and the California Privacy Rights Act, which explicitly address AI.  

Choose a trusted provider to minimize risk

Aside from privacy concerns, inaccurate outputs are also one of the top risks posed by GenAI that result in bad customer experiences, McKinsey reveals. Around 75% of customers say chatbots don’t provide accurate information, and 30% shop elsewhere after a negative experience with a chatbot. That’s why using a proven GenAI tool that delivers reliable results is essential. Fortunately, teaming with a reputable AI provider can help here — they’ll develop a tailored solution that generates accurate results, so you have less to worry about. But, before making a decision, always vet all potential AI partners you work with. Are there case studies that show concrete results? Can you talk with references who are happy with their product?

Doing your due diligence is crucial, especially as AI fraud is rising. Shockingly, around 40% of European “AI” firms don’t use AI at all; it’s just a buzzword to make their product sound good. But, even if a tool is legitimate, you still need to know it’s been well-trained on extensive data and fine-tuned for accuracy. Again, checking for provider references and case studies can provide peace of mind. 

Keep humans in the loop 

It’s also wise to keep humans in the loop, especially in the initial stages of GenAI implementation. Staff should review all GenAI outputs for accuracy before showing them to customers. You may also need to train the tool somewhat before launching it properly. Like any new hire, GenAI usually needs time to get up to speed with the company’s way of doing things before it’s ready to handle customer interactions independently. 

GenAI has the power to deliver seamless and personalized customer experiences that drive satisfaction and loyalty. As long as you implement genAI with care, you’ll successfully reap the benefits of this powerful tool and gain a competitive advantage.