AI Hype vs Customer Reality: The State of CX in 2026

If you think you understand what customers expect in 2026… this conversation might surprise you.

In this episode, Rob Wilkinson sits down with customer service and experience expert Shep Hyken to unpack insights from his State of Customer Service and CX 2026 report - and some of the findings challenge long-held assumptions about what actually drives loyalty.

They explore what customers say matters most right now, including why product quality can outweigh service, why convenience often beats friendliness, and why rudeness or apathy is a fast track to churn. They also tackle channel preferences: despite the continued push toward self-service, many customers still want to speak to a human on the phone when the issue is serious.

The conversation also explores a channel reality many teams can’t ignore. Even with the push toward automation and self-service, a significant share of customers still want to pick up the phone when the problem is serious.

With AI dominating the CX agenda, Hyken keeps the focus where it belongs: how customers perceive change, not just how organisations want to operate.

If you lead CX, contact centre operations, or digital service strategy, this interview is a grounded reset on what will actually move the needle in 2026.

Transcript

SPEAKER_01 0:08

Hello and welcome. I'm Rob Wilkinson, and today we're taking a closer look at something that most of us uh only notice when it goes wrong. So customer service. Um so the reason I'm saying that is Shep Haiken uh has just published his State of Customer Service and TX 2026 report, and it's full of those uh slightly uncomfortable truths. So for example, customers say product quality matters more than service, convenience matters more than friendliness, and rudeness or apathy is the quickest way to lose someone. So uh there's also the channel question that we're gonna touch on. So despite all the pushes towards self-service, a big chunk of customers are saying when there's a real problem, they just really want to pick that phone up still, so that's not going anywhere. Um so if you're responsible for CX, contact centre operations or digital services, then uh you might be trying to balance the expectations between costs and automation. Stay with us because Shep Heiken's here. He is a customer service and experience expert. He's a keynote speaker, he's an author, uh, and he's the person behind the data that we're going to talk about today. Um, welcome, Shep. Hey, thanks very much for joining me.

SPEAKER_00 1:20

Thank you for having me. Uh great introduction. Thank you very much. This is our sixth year doing the research. Year after year, many of the questions we asked are the same. So we have a benchmark and we see trends. So I'm excited to dive into this with you.

SPEAKER_01 1:35

Before we do, I just wanted to say thanks for keeping the word customer service alive within this report uh versus uh just CX. So why why why are you doing it that way? It's it's not uh most people are just all about CX, right?

SPEAKER_00 1:48

Right, right. And you know, if you the the leader of CX, uh CX executive is often just in charge of the contact center, which is about customer service. So a little history. Back when I started this many years ago, uh it was all customer service. Then somebody said, let's make it sexy and call it customer experience. And then somebody smarter said, customer experience is more than just service, it's every interaction the customer has. And I love that. It's the box that they open. You know, if you've ever opened something from Apple, it's really cool to open that box. That's part of the experience. If we receive a package from Amazon, seeing Amazon on the outside of the box is part of the experience. But when you need help, are we calling customer experience or are we calling it customer service? And I don't really think it matters as long as the customer is happy at the end of the day.

SPEAKER_01 2:42

Perfect. That's great. And we're gonna hear whether they are or they're not in a second. So let's get actually let's just get into that. So uh actually, before we get into the numbers, um, when you set out to do this year's report, what was the big question that you kind of set out to answer this time?

SPEAKER_00 2:59

Well, uh I really, with all the hype and excitement around AI, I wanted to really take a look at the difference in uh how customers are perceiving it. Everything that I do in my report is focused on the customer side of it. It's not about what contact center leaders are deciding what they want to do, how much they want to spend, how much they want to change. I take everything from the customer's viewpoint. So this year, even though we went back and looked at some of the same topics we always look at convenience, we look at satisfaction surveys, loyalty. I wanted to see if there's any trends that are like drastically changing as AI improves. And I think we're gonna get into that. So I don't want I'm gonna kind of hold back, that's a tease. So we'll talk a little bit about that uh just a little later on in the interview.

SPEAKER_01 3:47

For sure. And and yeah, I mean, when you say AI, what's AI? I've never heard of this thing you speak of.

SPEAKER_00 3:54

Well, that was a number of years ago, and then they started the people who knew about AI were only thinking about uh iRobot or HAL 2001, a space odyssey, and everything was oh my gosh, the world could come to an end with AI.

SPEAKER_01 4:08

So let's see if the customer journeys are all going to come to an end with AI, then let's get into some of these statures shared, okay? So uh you found that 97 sorry, 96% of customers put product quality above the service that they get, 65% put convenience above friendliness, and 45% say companies don't usually meet their expectations. So let's put that into plain English. Yeah. Um, what are customers really asking for?

SPEAKER_00 4:38

Yeah, well, you've wrapped all of this up into one kind of a neat bow. So let's hit the let's hit them one at a time, even though they all work together. First of all, no matter how good your service is, how friendly, how convenient it is, if the product they're buying doesn't do what it's supposed to do, and they call and they get help and they try it again and they try it again, and maybe they buy again and it still has problems, game over. Uh, this over 30 years ago, I sat in on a lecture by Professor Lou Stearns over at the Kellogg Business School here in the U.S., up at Northwestern University. Brilliant, brilliant marketing professor. And he said, you can have the best product in the world, but if you don't have the experience or service to support it, your customers are gonna go find somewhere else, even if the product isn't quite as good as the high-quality product you sell. Same as the opposite. If the product doesn't do what it's supposed to do, regardless of how friendly the people are, guess what happens? They're gonna go find a product that works. But when you combine the two of them, one plus one does not equal two. The sum is greater than the parts, as they say. So, number one, product has to do what it's supposed to do. If you're selling a service, you have to deliver on whatever it is you promise. The second stat you mentioned was the convenience factor, I believe. Is that right? It's interesting that people want the easiest route, and they're willing to put up with a little apathy, maybe a little uh negative attitude uh by somebody, or a little less than positive experience on the people the people side, as long as they get what they want in the most convenient fashion possible. Convenience, by the way, it's interesting that 65% number, it was a little bit higher. I think today, convenience is starting to become the expectation, just as they expect good customer service. Back in the teens, when I wrote the book, The Convenience Revolution, convenience was truly a competitive differentiator. COVID comes along, everything gets shut down, and in order to stay in business, a lot of companies had to become more convenient. They had to deliver, they had to go to the customer, they had to make it easier than ever. And as we came out of that, and it's only been four or five years, I think many of the changes are here to stay. I don't think we're ever going to go back to where, oh man, they're just so much more convenient than anyone else. So uh that's with convenience. You asked uh about a third stat, and that was the expectations that customers have now. Uh, and I want to take a look at and just make sure I give you the accurate information. It's 45% that when it comes to service, a lot of companies aren't meeting their expectations. Here's my belief. Every year I do an annual trends article in my Forbes column. I'll incorporate that in my newsletter as well. And I always open with this trend over the last four or five years, and that is the experience that customers are expecting is better, it has to be higher than ever before. And the reason is that some companies are getting it so right that they are setting the benchmark higher for every other company, regardless of the industry. So when I'm working with clients, we'll sit down and have a conversation, and I'll ask them why do people do business with you instead of a competitor? And we analyze that, we see what they're doing differently, and if there's any of what the competitor does that can be incorporated into uh this company, my client. And then I ask a broader question. Let's look at any company, any industry, who are your favorites to do business with? It could be a restaurant, a retail store, it could be a manufacturer, it doesn't matter. B2C, B2B, makes no difference. But then I want to know really specific reasons why. And we start looking at those reasons, we start to ask are any of these that we love not what we provide our customers and their experience? And is it possible that we can take some of that outside of our industry? These companies are in, outside of the industry, is there something that they're doing that we can? And then guess what? We go from best in class, which is our industry, to world class, which is, you know, really we're being compared to the best companies in the world. So customers demand more than ever, they expect it, and it's because other companies that are getting it right are creating that higher benchmark.

SPEAKER_01 9:02

And that's that's only gonna continue so the other way, right? Okay. So for those like customer service leaders that are watching this, um what's one change they can make that is gonna have a positive impact on the convenience without turning the experience cold?

SPEAKER_00 9:22

Wow, okay, so the convenience side you want to hit. This requires extensive journey mapping, and I know journey mapping is almost a cliche in today's world, but the journey map is where you analyze every interaction that that customer is having with your organization and you're determining whether it is optimal. And by the way, this isn't something you do once, it's not something you did, it's something you do ongoing. And what drives that interaction point, which I refer to as the touch point, is behind the scenes impact points. If you're gonna make it easy for the customer, you must also make it easy internally for the people to deliver on that optimal experience. So start by analyzing every touch point and saying, is it as easy as it could possibly be? Can I give you a really cool example from Amazon? They are constantly 100%. Yeah, they're constantly looking for ways to improve and make things better and easier. When I wrote the book, The Convenience Revolution, I talked about this little uh, it was like a doorbell looking kind of a button. And it was called the Dash. And the Dash was based on if you bought, for example, they had many different dash products or doorbells, if you will, a button. You can get this, and if you bought a lot of dishwashing detergent, if you started to run out of dishwashing detergent, you would just go and push the button and it would automatically place the order for you. I would say they found a way to make it more convenient than having to go online, open up the Amazon browser, look for your past order, and reorder it, right? They just incredibly made it convenient. Well, they didn't stop there because about the time I wrote that, I thought they'd figured it out, and then they come along and they do something even better and more convenient, which is why does somebody have to push a button when they could use their smart, you know, their uh I don't want to say it too loud because she's right behind me. Her name is Alexa. What do you know you mean? And just you say, hey, I need more dishwashing detergent, and you just say it out loud, and it confirms the order verbally from the you know smart device, and then the next thing you know, no pushing the button, no nothing, it just happens. They made it even easier.

SPEAKER_01 11:40

It's so true. Um and I'm thinking here, okay, if um, as your report states, that 82% of customers are saying that rudeness or apathy is gonna is gonna make them leave. I mean, there's not a lot of risk around Alexa being rude, so that's good. Oh sorry if I set that off.

SPEAKER_00 12:00

No, no, she's not I think I'm the one that has to say it. Yeah, yeah, I'm sure. She recognises it's not my voice. That's scary.

SPEAKER_01 12:08

Yeah, that's okay. So um she's not likely to be rude to customers. That's that's that's a good thing, since that's gonna make people leave. Um 41% think that service is better than last year. That's a good thing. But it should be higher. Well, that's the thing. Yeah, we're we're why what's usually behind that improvement though? When in in because you've been doing this for so long, how the how does that normally kind of position itself?

SPEAKER_00 12:33

Wow, great, great, great question. I would think that number would be getting better and better and higher and higher as companies try. My take on this is that companies are making the effort. The fact that just four out of ten customers feel this way, it kind of bothers me because companies are striving to do better. But we'll go back to something I said earlier, and that rock star companies, and by the way, if you ask uh in my audience is when I do my keynote speeches, I'll ask uh, hey, anybody, just blurt it out loud. What's your favorite company to do business with? Almost every time the first company is, I'll bet you can guess. The one we've just talked about, maybe exactly Amazon. And then there's other companies like Apple, or somebody might say Ritz Carlton, Four Seasons, Chick-fil-A. Now, these are U.S. companies. I realize we're worldwide, but uh not all of them are U.S., some are international. But as we get into this, these are the companies that are setting the benchmark high. And that's if if that's who they think the favorite companies are, we need to strive to be at least uh uh be able to play in the same game. Uh get it. You know, when we can't outspend Amazon when it comes to research development and the customer experience, but by golly, we can learn from them. And perhaps today, because things like AI are so much less expensive than they were five and ten years ago, and I mean fractionally less, that we can afford to put in uh great self-service solutions that aren't clunky, easy ways to get to the customer if they can't get the self-service taken care of on their own end. There's all kinds of things we can do to create that great experience. I'm probably getting ahead of our interview because I know some of the questions coming up are probably going to address AI.

SPEAKER_01 14:18

No, no, that's cool. No, we can we can talk about that. That's amazing. I think it's really relevant as well. Um, and I think but to just to kind of pull up on the kind of Amazon thing, they managed to do so much really, really well early on to make sure that you don't that's like you don't have to contact them. Um in my experience, when you do have to contact them, if you had that if you wanted to ring them, you then come up. It's not great. There's kind of like that final end stage. So I guess when your report says 68% of people would rather call than use self-service to to solve a problem, especially if it's a it's at the point where there is a problem, um, not just for kind of like transactional stuff. Um if the phone's still winning, um isn't that the one that we're supposed to be reducing?

SPEAKER_00 15:02

Well, like Amazon has. Let's talk about that. First of all, um let's talk about Amazon since you just mentioned it's hard to get someone on the phone. They believe AI first or or self-service first. I'm totally in favor of that. So as much as I say you need to make sure the human is available, I want companies to train their customers to use the digital experience first, especially for simple, easy issues. If I have a problem with Amazon, the first thing I do is go to their website. Now, here's what's really interesting. People don't realize, and you mentioned 68% want to use the phone and prefer the phone to have a problem resolved. There's a lot of interesting behind the scenes kind of thinking on that number that I I interpreted this. So basically that's seven out of ten people. So let's talk about it for a moment. The first thing you do, and I'll ask you, when you have a problem, where do you go to get the phone number? You go to a website, right?

SPEAKER_01 16:03

Website, op, whatever.

SPEAKER_00 16:04

Whatever. That's what you just did. You went digital first, whether you know it or not, or whether you think you are doing it or not. You're just going there to get the phone number. Well, wouldn't it be nice if there's a little button next to it that says, hey, if your problem is one of these five, click here, and it can get easily resolved. Or in Amazon's case, you go to the Amazon app, you go to the order, you there's a all kinds of little buttons that you push and it takes you through a sequence. It asks you what the problem is. And guess what? If you get to a point where you're stuck, right next to it says, do you it you'll click here if you want to talk to the agent or or rep. And you do, and then you have to put in your phone number. Okay. They they don't give you a phone number, you put in your phone number, and about the time you hint enter, it's almost instantaneous. That phone will ring. At least this is my experience, and when I talk to other people, theirs as well. And that phone rings, and on the other end is somebody saying, Hello, this is so-and-so from Amazon. Um, I understand you have a problem. Are you calling about whatever you're looking at on your screen? And the answer is, yes, I am. Great. It looks to me, and they're reading, it looks to me like the the package came and it was damaged. Tell me a little bit more about that. Great. We're gonna send you one out immediately. There's gonna be a return authorization, just put it on there, drop it off at UPS or give it to your post office, uh, you know, the post mail when he stops by or she stops by, post person, I guess, to be uh diplomatically and politically correct. Uh and then they make it so easy. I love that that's the what they're doing. They're trying to push people digitally. Now, when we ask the question, if you have a problem, do you prefer to use the phone or use digital self-service, which includes AI? And I think uh it's really interesting that last year the number was uh seven, or number was sixty-eight percent, again, seven out of ten. But it was eighty-eight percent baby boomers were driving that. So we do this generationally and we match it up to the U.S. population for age, geography, gender, ethnicity, et cetera, et cetera. It's a gen pop study. And it was about 51% Gen Z. Well, this year, the baby boomers came down to 80%. That's a pretty good significant jump, right? It means they're starting to adopt self-service a little bit more. Guess what the boom or guess what the Gen Z did? They went up to 60%. What? This is not going the right way. But here's my belief that Gen Z is defining a real issue is something different than just I want to get my password reset, I want to find out if this shipment's been made, I want to check my bank balance. To them, that's not an issue. The real issues are what they want to do, uh, where they feel they have to get in in touch with a human being to help them out. So, does that make sense to you?

SPEAKER_01 19:02

It does, it does, and it's a it's a really important point. I think you're right. And and I think it's I'm I'm so I'm just I'm questioning my uh myself with with the Amazon thing now because I've I it's probably testament to the what they're doing right, that I've not had to try and ring them for quite a long time. So it might be that they've improved stuff. So I'm I'm not gonna ring them just for the sake of it to see if it's right.

SPEAKER_00 19:23

And they're gonna try to get you not to call them, but if you need it, it's there.

SPEAKER_01 19:28

And and that is actually the way you've described it. That's how you want it to be. They've got all the information when they and and they ring you. That that that's really unheard of, I think. So that's really that's leading again. That's awesome. That really is awesome.

SPEAKER_00 19:41

By the way, there's a percentage of customers, and I can't remember right off the top of my head, that will leave you to go to another brand simply because you kept transferring them or making them repeat their story again and again, it drives them crazy.

SPEAKER_01 19:56

And that's not a new thing. The crazy thing is that's the problem we're supposed to have fixed so many times. Right. Interestingly, in your report, it says that 49% of customers say that they're now more comfortable using AI for support than they were last year. So that's really important to think about there. Uh, 86% say that great service increases trust as well. So the things we've just talked about there actually really lends itself to the my next question. Because what's got to be true for AI to help rather than actually damage that trust, which is, I think, customer trust is becoming so much more uh on people's radars now because of this transparency piece.

SPEAKER_00 20:37

What would you say to that? Yeah, trust is extremely important. Right up there with product quality, doing the product doing what it's supposed to do. If you create distrust with your customer, once again, game over. People don't want to do business with people they don't trust. And uh, by the way, some people confuse trust with values. Uh and I'll give you an example. There's there are brands that will share their political views. There were there are brands that will wear religion on their sleeve, and that's important to them. And I am not uh by the way, if that's what they want to do, I'm I'm fine with that. And if I'm in alignment with those views, great. And if I'm not, I get to make a choice. Do I still want to do business? That's not about trust. I I but I the value that I want for trust is do you do what you say you're gonna do? Are you moral and ethical in the way you do business? If not, I'm not gonna do business with you. I don't want to, I don't trust you. Who knows what's going to happen? So uh, but to the point, a great service experience increases the trust. It's natural. These people do what they say they're gonna do. If I have a problem, they do whatever they can to help me out. I trust them. When experiences become predictable and consistent, you start to build trust. Trust leads to confidence. Confidence is where loyalty is rooted. Without confidence, You have no loyalty. I actually uh wrote a white paper. Um, and if you go to my my website, it's you you can click on the research tab and you'll see the white paper about customer confidence score, the CCS. And on a scale of one to ten, do you trust this is to do what's right for you as our customer? And by the way, I believe there's only one correct number, and that's 10. Anything else? It's like, why did you not give us a 10? However, some people hate giving people a perfect score, hate giving companies a perfect score, so they give you a nine. And if they do give you a nine, I'd check with them. You know, any re anything we did to not get the 10, and often they'll say, no, I just don't like giving tens. I don't understand it. It's that simple. Yeah. I mean, I could ask a yes or no question, do you trust us or don't? But I'd like to know if they give me a five. Well, I must have done something right or something wrong. I want to drill down and get a little bit deeper. So, anyway, that trust score or confidence score is extremely important. And it starts with the simple one to ten. What's you know, do you trust us uh to do what's right for you as a customer?

SPEAKER_01 23:09

And I think that is with the uh with the advent of AI, I think that whole question isn't is has got a lot more legs to it. I think it's uh it's it it the question of trust, it it's it's not just about the customer trust in the company, but it's trusting the technology that that company's using. Yep.

SPEAKER_00 23:26

Is it protecting the data? Is it um you know is it collecting data that's going to be used for the wrong, I'll call it nefarious marketing reasons, uh that type of thing. So I have to trust that if I'm gonna share information with you, you're gonna use it. You're gonna use it, and oftentimes I'm sharing it with a bot, um, and that means not human. There are some people that just say, I don't want to share this with the computer, I want to share it with a person. They're gonna grow out of that. I remember my mom refused to buy anything from Amazon because she just didn't want to give her credit card to anything online. I go, mom, you know, you're gonna find that one day you're the only one in the world that isn't doing this.

SPEAKER_01 24:10

Right. So in this report, I I've I've thought this stuff, I thought this was a lot lower than I was expecting. But 59% of customers say um that service matters more than price. Oh, yeah. Uh which it's 59%. It does make price less relevant, but it's not as high as I'd thought it would be. So I agree with the kind of sentiment of it, but I was expecting it to be a lot more than that.

SPEAKER_00 24:34

Really, really, I'm happy that it's at least this high. Basically, six and ten people are saying if you give me a great service experience, all you need to do be is be somewhat competitively priced. Um, but keep in mind, we are in a world right now, there's economic issues, there's inflation, there's who knows what, and and uh prices are are fluctuating because in the here in the U.S., because of tariffs, you're experiencing the same thing where you are in your country. When times are tough, this number should shrink because people are going to be more price sensitive. However, especially young people, which seems kind of counterintuitive, they want to have that experience that's easy, that's friendly, that makes them feel good, and they will spend a little bit more to get that, which surprises me that the boomers who actually probably have more money are saying, hey, you know what, I'm I'm a little bit more price sensitive than others.

SPEAKER_01 25:32

Yeah, yeah, I think you're right. And and and and it that's the thing. I mean, we've we haven't got time to get into the kind of minutia of the demographics that sit behind these numbers. I'd love to, but we kind of we're we're, you know, that's something for someone to go and get the report and look at. Um, so I guess we are getting close to the end. Uh if you had to give our audience that's watching today like one sensible priority for, I don't know, the next 90 days or or or six months, whatever it is, based on the nine findings that we've we've talked around today, what's that big move that they should be making?

SPEAKER_00 26:00

Well, I I I so there's several ways to answer this question. Number one, I believe that customer service is not a department, it's a philosophy. And what that means is that your company has to be customer service or customer experience focused at every level. People behind the scenes who have no interaction with customers need to recognize the impact they have. Remember, I talked about impact points behind the scenes? They need to know what impact they have on the process or the actual touch point that's there. The baggage handler on an airline who never sees the customer's face, if they don't put the bag on the right plane and the passenger shows up, even though the passenger never interacted with that baggage handler, they created a moment of misery. So that's number one is it's cultural. Number two is journey map the heck out of everything, look at the top line touch points, look at what's driving those touch points, hence looking behind the scenes, showing our internal people, our employees, how they impact the experience. And the third thing I would look at, assuming your product does what it's supposed to do, figure out a way to be most convenient, be easy. And uh since we were talking about AI, the only tip I can give you is make sure you find the balance between technology and the human, and always give that customer the option to get to a human. That's the one thing, or four or five things that I want to leave you with today.

SPEAKER_01 27:27

That works. Succinctly put, though, so that's that that that works for me. Thank you, Chef. So uh unfortunately that that is all we've got we've got time for, though. Um thanks for joining me, answering all those questions for me. Um before we close, though, anyone who's watching this and wants to kind of learn more about what we've discussed or get their hands on that full report that you mentioned, um, how can they do that?

SPEAKER_00 27:49

Well, go to uh hiken.com, h y-ken.com, click on the little research tab at the top, and just download it. You don't have to even give me your email address. It's ungated, it's totally free, and I want you to use this report to create a uh more customer-focused experience. I mean, this is my goal in life. I want every customer to be happy with the companies they do business with. And if this helps you get there, I've done my job.

SPEAKER_01 28:19

That's awesome news. That's awesome. And uh don't forget that uh you can also find a wealth of related resources, stories, uh, other videos like this one at cxtoday.com. Um and for now that wraps everything up. I'm Rob Wilkinson from CX Today. Thanks everyone for joining us.