Call centres are broken - but AI is finally dialling up a fix
"The scale of the problem is significant, with businesses in the US losing $1.6 trillion each year thanks to bad customer service."
When they phone a contact centre, customers need quick, simple resolutions to their queries but often find themselves stuck on calls that are both long and unhelpful. The advent of AI in customer service, however, is set to change this state of affairs, as companies move away from traditional Interactive Voice Response systems.
IVR systems, which both route callers to agents and play pre-recorded messages in order to effectively handle queries, are a major part of the problem. Gaining popularity in the 1980s with the advent of affordable hard drive storage, IVRs were once considered a significant step forward because they could provide answers to simple information requests and connect callers with the right department or person. For example: “Press 1 to hear our refund policy. Press 2 to speak with someone from accounts”.
However, IVRs were not made for open-ended dialogue, making them ill-suited for more nuanced issues that are inevitable for a variety of customers and businesses. If a customer wants to update a name on a plane ticket but also wants to confirm if a checked bag is included in their booking they might be met with an IVR saying: “To modify your booking, press 1. To speak to someone about your baggage press 2”. Neither option answers all of the caller's questions but the caller cannot explain this to the IVR.
Additionally, since the popularisation of this software, a wealth of information has become available through other resources that can be found far more quickly. From company social media pages and websites to chatbots that answer questions, the age of instant information has aged IVRs and means that a new alternative is necessary.
The scale of the problem is significant. Inflexible menus and a lack of conversational capability create customer dissatisfaction, with businesses in the US losing $1.6 trillion each year thanks to bad customer service forcing customers to look elsewhere.
How AI powers faster, frictionless service
Unlike menu-based systems that force users to choose from predefined options, AI allows customers to describe their issues in their own words and responds appropriately. This shift turns a previously rigid, impersonal process into one that is intuitive and user-friendly.
What’s more, the demand for fast, seamless, and effective call centre support continues to increase. Indeed, UK-based provider CallCare saw call volumes jump from 300,000 to over one million per month during the 2020 pandemic. Such spikes are difficult to predict and even harder to manage without scalable solutions, and current IVR software means that when a greater number of people call, queues get longer, hold times increase, and customers grow impatient.
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AI offers the capability to handle these surges without extending wait times or paying out of pocket for emergency staffing. AI agents can speak to callers in their natural language, handle routine inquiries, and independently complete tasks including booking hotel rooms and flights, updating customer records, scheduling refunds and managing personalised follow-ups. This also allows human agents to focus on more complex tasks, improving both customer satisfaction and employee productivity.
Integration across platforms and channels is another key benefit. AI systems retain context across channels, so customers don’t need to repeat themselves when switching between voice, SMS, or apps like WhatsApp. Across messaging apps, AI can action the same queries as it can over the phone. This is particularly important as younger customers increasingly prefer text-based communication with 70% of 18–24-year-olds favouring texting over calling.
AI and human collaboration
AI is not a replacement for human agents, but a complement to them. While AI excels at managing routine queries, human agents are critical for handling complex, sensitive, or emotionally charged issues. Customers value empathy, critical thinking, and discretion - qualities that AI cannot fully replicate.
Research shows that humans prefer to receive an empathetic response from another human than from an AI bot that says exactly the same thing. A hybrid model that leverages both AI efficiency and human expertise ensures high-quality, scalable, and customer-centric service. This balanced approach not only improves operational performance but also fosters trust and long-term customer loyalty.
Replacing IVR with AI clearly benefits human agents by improving the call centre workflow. Importantly, the average turnover rate is 30-45%, which can be blamed on the stress, repetition, and demanding performance targets that come with the role.
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This is extremely expensive for businesses, with some research showing that replacing a single human agent in a contact centre can cost anywhere between $10,000 and $20,000. Therefore by leveraging AI to empower agents to focus on more rewarding tasks, businesses tackle the high attrition rate and make significant recruitment savings as a result.
As systems become digital-first, there is no longer a place in customer service for outdated IVRs. While they played an important role in the past, today’s customers expect faster, more intuitive interactions across multiple channels. Indeed, 64% of customers will spend more if a business resolves their issues where they already are. AI allows companies to meet and exceed these expectations, while enhancing operational efficiency and employee satisfaction.
By creating a workflow where humans are supported by AI, rather than by clunky IVR systems, customer service departments can consistently provide high-quality experiences for their callers. Employees also help future-proof their roles in a hybrid model that keeps humans in the loop, ensuring human work continues to hold value.
Jamie Cooper is Chief Product Officer at Natterbox
