The 2025 holiday shopping season marked a pivotal moment for artificial intelligence in customer service. AI and automation transitioned from novelty to norm, underpinning nearly 80% of consumer interactions. While these technologies delivered demonstrable improvements in speed and accessibility, the Liveops 2025 Holiday AI & Customer Service Report reveals a critical shift in consumer expectations: the demand for quality, empathy, and transparency now outweighs the pursuit of mere automation quantity. Enterprises must strategically pivot their AI deployments to blend technological efficiency with human-centric design, ensuring that AI serves to enhance rather than diminish the customer experience.
The New Baseline: Ubiquitous AI and Accelerated Service
The 2025 holiday period cemented AI’s role as a primary interface for customer interactions. According to the Liveops 2025 Holiday AI & Customer Service Report, 78% of shoppers engaged with AI or automation, with 73% reporting more frequent use than in 2024. This widespread adoption was particularly noticeable in digital support channels, where 61% of consumers observed an increase in automated online chat and website help. Customer service phone lines also saw a significant rise, with 39% noting more AI involvement, alongside automated emails, texts, and voice assistants (Liveops 2025 Holiday AI & Customer Service Report).
This pervasive integration brought tangible benefits, primarily in service velocity. The report indicates that 85% of respondents experienced faster service and greater accessibility due to AI. For customers accustomed to extended wait times or limited contact center hours, the 24/7 availability and rapid responses offered by AI were clear advantages. For example, a telecommunications customer could instantly check billing details or data usage via a chatbot, and an e-commerce shopper could track a package or initiate a return through a self-service portal without human intervention. While overall perceptions of the experience were mixed, shoppers were twice as likely to report an improved holiday experience (29%) compared to a worse one (14%) (Liveops 2025 Holiday AI & Customer Service Report). AI has become the initial point of contact, handling routine inquiries efficiently.
Summary: AI’s widespread adoption in 2025 delivered speed and accessibility, establishing it as a foundational layer in customer service operations.
Evolving Expectations: The Demand for Intelligence, Empathy, and Transparency
Despite the gains in speed, the report underscores a growing dissatisfaction with AI when it lacks intelligence, transparency, or empathetic capabilities. Consumers are now demanding “better AI,” not simply “more AI.”
- Human Superiority in Complex Scenarios: While AI excelled at transactional tasks, human agents consistently outperformed AI in resolving more complex or emotionally charged issues. Over half of respondents (54%) stated that humans provided better service than AI, and 55% were compelled to escalate an AI-handled issue to a human. A substantial 45% reported that AI failed to comprehend their problem (Liveops 2025 Holiday AI & Customer Service Report). This highlights AI’s current limitation in handling nuanced context, especially in sectors like financial services where account disputes or fraud concerns require human judgment and rapport.
- The Trust Deficit of Non-Transparent AI: Transparency emerged as a critical factor in customer confidence. Only 22% of shoppers reported that companies clearly disclosed when AI was being used, yet 69% believe brands should always reveal it (Liveops 2025 Holiday AI & Customer Service Report). This lack of disclosure, even if unintentional, erodes trust. For instance, a healthcare patient seeking information on a complex diagnosis might feel misled if they discover they were interacting with a bot rather than a human specialist. Trust is built on clarity, not deception.
- Generational Divides and Personalization: AI adoption and satisfaction varied significantly across demographics. Gen Z demonstrated higher engagement, with 89% using AI during holiday shopping, and 44% reporting a better experience. Conversely, Boomers had lower usage (60%) and significantly less positive experiences (7%). This generational gap emphasizes the need for flexible, personalized service models, where digital natives can engage efficiently through AI, while others who value human connection can easily access it (Liveops 2025 Holiday AI & Customer Service Report). A retail CX platform must support both a self-service AI chat option for Gen Z seeking quick product information as well as a direct human agent line for Boomers with detailed product inquiries.
- AI Fatigue and the Call for Quality: The combined effect of unhelpful automation and a lack of transparency contributes to “AI fatigue.” This digital exhaustion occurs when customers are trapped in unhelpful AI loops, leading to aggravation rather than convenience. Molly Moore, COO of Liveops, concisely states, “Consumers made one thing clear: the future of retail isn’t about maximizing automation, it’s about elevating the quality of every interaction.” She further emphasizes, “AI should clear the path, and people should carry the relationship. Companies that design AI around trust, transparency, and empathy will lead the next era of customer experience” (Liveops 2025 Holiday AI & Customer Service Report). The market is not rejecting AI, but rather “bad AI.”
Summary: Consumers prioritize quality, understanding, and empathy, with human agents still essential for complex issues. Transparency is non-negotiable for building trust, and personalization across generations is critical.
Strategic Imperatives for Human-Centered AI in CX
The findings of the Liveops 2025 Holiday AI & Customer Service Report point to a clear direction for enterprises: focus on the quality and strategic deployment of AI rather than its mere quantity. Only 17% of consumers want companies to use more AI next year, while nearly twice as many (32%) desire less (Liveops 2025 Holiday AI & Customer Service Report). This indicates a call for refinement and smarter automation.
What to Do:
- Prioritize AI Quality Over Quantity: Focus AI development efforts on accuracy, contextual understanding, emotional intelligence, and personalization. AI should function as a helpful guide, not a barrier.
- Define AI’s Role as “Path Clearing”: Deploy AI for routine, transactional tasks where speed and efficiency are paramount. This includes order status inquiries, basic returns processing, password resets, identity verification (e.g., using multi-factor authentication systems), and basic troubleshooting. For a B2B SaaS company, AI can handle license key lookups or uptime status checks.
- Establish a Flexible, Hybrid Service Model: Design customer experiences that offer seamless transitions between AI and human agents.
- Operating Model and Roles: Define clear escalation paths with explicit triggers (e.g., sentiment analysis detecting frustration, multiple failed self-service attempts, specific high-risk keywords). Human agents should be positioned as Level 2 support, receiving warm handoffs with full context from the AI.
- Governance and Risk Controls: Implement a policy requiring explicit disclosure when customers are interacting with AI (e.g., “You are currently speaking with an AI assistant”). This fosters trust and provides an immediate opt-out mechanism for customers who prefer human interaction.
- Empower Agents with AI as a Partner: Integrate AI tools to augment human agent capabilities, not replace them.
- Agent Assist Tools: Provide AI-driven tools within CRM or ticketing systems that offer real-time customer context, suggest relevant knowledge base articles, draft notes, summarize interactions, and ensure compliance with regulatory guardrails (e.g., PCI DSS for financial services).
- Training: Train human agents not only on complex problem-solving but also on how to effectively leverage AI tools to enhance their efficiency and service quality.
- Measure Strategic Outcomes: Go beyond simple containment rates.
- Key Metrics: Track Customer Satisfaction (CSAT) and Net Promoter Score (NPS) specifically for AI-led interactions versus human-led interactions. Monitor First Contact Resolution (FCR) for AI, Time-to-Resolution for escalated issues, and complaint rates related to AI interactions.
- Thresholds: Establish performance thresholds (e.g., AI CSAT > 4.0 on a 5-point scale, AI escalation rate < 20% for defined routine tasks).
- Immediate Priorities (First 90 Days):
- Conduct an audit of current AI touchpoints to identify transparency gaps and potential “AI fatigue” sources.
- Define a clear “AI disclosure” policy and implement it across all relevant channels.
- Map existing AI workflows, identifying critical escalation points and integrating human handover protocols and SLAs (e.g., human agent pick-up within 30 seconds for priority escalations).
- Initiate a pilot program for agent-assist AI tools to improve human agent efficiency and consistency.
What to Avoid:
- Over-Automating Sensitive Interactions: Do not fully automate conversations requiring empathy, complex problem-solving, or handling sensitive personal data (e.g., fraud claims in financial services, complex medical inquiries in healthcare).
- Non-Disclosure of AI Use: Concealing AI involvement leads to a breach of trust and customer frustration.
- Creating AI Loops: Implement robust escape hatches to human agents when AI cannot resolve an issue or detects customer frustration, preventing endless, unhelpful automated cycles.
- Deploying AI Without Continuous Monitoring: Regular red-teaming, A/B testing, and feedback loops are essential to refine AI models, ensuring accuracy, minimizing bias, and adapting to evolving customer needs.
Summary: The future of enterprise CX with AI lies in a human-centered approach, prioritizing quality, clear governance, seamless hybrid models, and AI as a tool to empower agents for higher-value, empathetic interactions.
Summary
The 2025 holiday season unequivocally demonstrated that AI has become an indispensable component of customer service, delivering speed and efficiency at scale. However, the accompanying data from the Liveops 2025 Holiday AI & Customer Service Report makes it equally clear that consumers are not merely seeking more automation; they demand better automation. The next era of customer experience will be defined by enterprises that design AI systems around core human values: intelligence, transparency, empathy, and contextual understanding. By strategically deploying AI to clear the path for routine tasks and empowering human agents to carry the relationship for complex and emotional needs, businesses can foster trust, enhance customer loyalty, and deliver truly exceptional service in an AI-powered world.
Source: Liveops. (2025, December 1). The Liveops 2025 Holiday AI & Customer Service Report. Retrieved from https://liveops.com/customer-service/the-liveops-2025-holiday-ai-customer-service-report
