Personalized Customer Service: Why Are Customers Turning Away From Chatbots?

A whopping 70% of customers had a negative chatbot experience in 2024. With businesses increasingly incorporating chatbots in their customer support, they should stop and think before their bot goes live — will it retain customers or push them away?

Modern companies have been adopting chatbots to boost CSAT, optimize the user journey, and improve support efficiency. Yet, despite good intentions, chatbots often fall short when it comes to meaningful and personalized customer service.

Rising Chatbot Adoption vs. Rising Frustration

Businesses use chatbots to provide 24/7 support for simple tasks like checking store hours, tracking orders in case of eCommerce support, booking appointments, updating account details, and checking delivery statuses. Bots are intended to improve engagement and support scalability. However, the extra cost savings don’t always translate into better experiences.

Negative interactions have resulted in only 16% of customers choosing to use chatbots on a regular basis. This growing disconnect between what customers need and what bots deliver is becoming impossible to ignore.

Why Chatbots Are Losing Customer Trust

As chatbot adoption continues to rise, so do customer expectations — and many bots are failing to keep up. Where customers expect quick, intelligent support, they are often left with frustration, with chatbots underperforming in the areas that matter most.

Misreading Customer Needs

Most bad chatbot experiences come down to basic failures in understanding the user’s needs. The study by Verint revealed that for 68% of users, the chatbot couldn’t answer their question, and for another 68%, it didn’t understand what they needed. Such miscommunications break the rhythm of the user journey and leave customers feeling unheard and frustrated.

But the frustration doesn’t stop there — nearly 49% reported not being given the choice to speak to a human, and 36% said bots took too long to escalate when they couldn’t help. This lack of clarity and delayed human handoff can undermine trust and weaken customer loyalty.

Lack of Personalization in Customer Experience

One of the biggest pain points in chatbot interactions is their inability to deliver truly personalized customer service. Chatbots often misread intent, fail to understand emotional tone, and can’t adapt to complex or nuanced phrasing. This lack of emotional intelligence makes their responses feel generic and impersonal, ultimately driving users away.

Instead of adapting to a customer’s situation, many bots resort to scripts and canned responses. They offer broad, one-size-fits-all replies or redirect users to unattended links, making the conversation feel mechanical. For example, Chipotle’s early chatbot simply acted as a link directory, until a redesign made it more context-aware and customer-focused.

When bots fail to personalize, they interrupt the user journey and create friction. Customers expect brands to “know” them, not treat every query like a first encounter.

While automation is important, it’s best when it complements, not replaces, custom support. Let’s explore how to introduce personalization in customer experience.

The Emergence of Hyper-Personalization in 2025

By 2025, consumers don’t just want support. They expect a personalized customer experience that understands their specific context at every touchpoint.

Hyper-personalized interactions, crafted using real-time data and AI, boost loyalty and retention. But personalization today goes far beyond using someone’s name in an email. Customers now expect relevant product suggestions, tailored messaging that reflects their needs or behaviors, and consistent follow-ups based on their interaction history. 

Personalized customer service has become a deciding factor in where people shop, how they engage with brands, and whether they return. When done well, it turns routine transactions into experiences that feel intuitive, effortless, and genuinely helpful.

But what is personalized customer service? Let’s break down actionable strategies.

How to Deliver Personalized Customer Support

Creating a personalized customer experience doesn’t require reinventing your entire support strategy, but it does demand more intentionality. Personalization is about building familiarity and trust at every touchpoint, using what you already know about your customers to make their experience feel more human.

Leverage Customer Data Smartly

Personalized assistance starts with understanding the customer’s history, what they’ve purchased, what issues they’ve had, how they prefer to engage. When a returning customer reaches out, simple touches like greeting them by name or acknowledging an open issue can make the interaction feel thoughtful and relevant. These small details signal that your brand listens and remembers.

Boost Conversational Design

A well-designed chatbot doesn’t just respond, it engages. Good conversational design means knowing when to offer a direct answer, when to clarify, and when to escalate. For instance, NatWest’s Cora chatbot was redesigned to handle more natural conversation flow and recognize multi-part queries, reducing friction and confusion. Bots should be able to follow the thread of a conversation, personalize suggestions, and know when to step aside for a human.

Prioritize Smooth Handoff

When bots hand over a conversation to a human agent, they should transfer the full context, not just the customer. Repeating information is one of the fastest ways to lose trust. Preserving the chat history allows the agent to quickly pick up the conversation, keeping the interaction personal and fluid. This type of personalized customer interaction makes the experience feel effortless and connected.

Balance Automation With Empathy

When choosing between chatbots vs. live chat, think about this: not every conversation needs a human, but not every question can be answered by a bot. Use automation for routine updates like delivery status or password resets, but ensure there’s a clear path to a person when needed. Bots should be able to detect frustration or confusion and escalate in a timely, respectful way. 

Together, these practices reflect what personalization really means in customer service: being attentive, responsive, and consistently relevant. And as consumers want personalization more than ever, meeting that demand will be key to building lasting customer relationships.

KLM Royal Dutch Airlines Case

Here’s one of the examples of personalized customer service. KLM blends automation and human support seamlessly. Their chatbots manage flight updates and check-in, while live agents add individual flair when issues arise. Agents may suggest lounge access due to flight delays or note frequent flyer status, helping maintain personalized CX that drives loyalty.

Benefits of Personalized Customer Service

Tailored interactions do more than create a pleasant experience, they build a long-term relationship. When brands treat customers as individuals, it shows attentiveness, relevance, and care. Here are three key benefits that highlight the importance of personalized customer service in your support strategy.

1. Stronger Customer Loyalty

When customers feel understood, they’re more likely to stay. Personalized customer support increases emotional connection and trust, which are critical for loyalty. Recognizing past interactions, preferences, or pain points makes customers feel valued — encouraging them to return and recommend your products or services over time.

2. Higher Customer Satisfaction 

Tailored responses and proactive solutions lead to faster resolution times and fewer frustrations. Instead of repeating themselves or navigating generic replies, customers get help that actually fits their situation. This level of care improves satisfaction and reduces the risk of churn.

3. Increased Revenue Opportunities

Personalized interactions open doors to upselling and cross-selling based on real needs. Whether it’s a product recommendation or a well-timed follow-up, custom support drives conversion. Customers are more likely to buy when suggestions are relevant, timely, and feel like a natural extension of their journey.

While tailored support has become essential, it’s only one part of the bigger picture. In 2025, customers also expect proactive support, instant resolution, data security, and more. Our latest eBook, CX in a Post-Chatbot World: What Customers Expect Now, breaks down the evolving expectations and offers practical strategies for meeting them — all in one place.

Sneak Peek: CX in a Post-Chatbot World

Download our ebook CX in a Post-Chatbot World: What Customers Expect Now to:

• Get a full view of customer expectations in 2025
  
• Learn what real-world companies are doing to meet them
  
• Assess your CX against the Post-Chatbot World Readiness Scorecard

Summary

Customers are turning away from robotic chatbots and seeking unique, customized experiences. To meet these latest demands, you need to embrace personalization and ensure each exchange maintains a sense of emotional connection.

In 2025, success hinges on combining scalable bot automation with heartfelt human support, creating the personalized customer service experience that wins loyalty, retention, and trust.

❤︎ Like it? — Share: Share on LinkedIn or Share on Facebook