The customer engagement paradox: Why AI hasn't closed the expectation gap just yet

The customer engagement paradox: Why AI hasn't closed the expectation gap just yet

Last year marked a turning point for businesses. With the rapid rise of artificial intelligence, brands gained powerful tools to boost efficiency, analyze data, and finally deliver on the promise of better personalization. 

So, nearly a year in, are we living in the golden age of personalized experiences? Not quite.

Despite major AI advancements, most consumers don’t feel any more understood by brands than they did a year ago. While 82% of business leaders say they deeply understand their customers, just 45% of consumers agree — a gap that’s slightly wider than last year. If AI is supposed to bring brands closer to their customers, why is this gap growing?

To find out, Twilio surveyed 7,640 consumers and 637 business leaders across 18 countries to uncover the key trends shaping customer engagement in 2025. The 2025 State of Customer Engagement Report reveals what today’s consumers expect from brand interactions — and how far businesses still have to go.

The result? A clearer picture of the growing disconnect between business perception and customer reality — a gap companies must close to earn trust, drive loyalty, and fuel long-term growth. Here’s a look at some of the top trends in the report:

1. AI must benefit businesses and consumers

Too often, brands focus on what AI can do for them — automating support, saving time, organizing data, and improving employee efficiency. But the more important question is: how does it benefit the customer?

Let’s take AI chatbots, for example. They can reduce ticket volume and slash response times, which is great for support teams. But if those bots can’t solve real problems — or worse, frustrate your customers with vague, irrelevant answers — they risk damaging the very experience they’re meant to improve.

There’s a clear trust gap when it comes to AI. While 88% of businesses say they’re transparent about using it, only 46% of consumers agree. More than half (54%) want to know when they’re interacting with AI, and nearly as many (49%) want clear explanations of how their data is being used.

Still, consumers aren’t anti-AI — they’re just asking brands to use it more responsibly. In fact, 71% of global consumers believe AI will positively impact their experience. That doesn’t mean consumers want all AI all the time. Rather, 54% say they want an easy opt-out option, ensuring they can connect with a human when AI isn’t cutting it.

The takeaway? Consumers don’t want more AI — they want better AI: transparent, respectful, and always with a human backup.

2. AI is reshaping how businesses personalize

As personalized experiences become table stakes, AI is no longer a luxury — it’s the only way to scale relevance with speed. And businesses are paying attention. Last year, 76% of businesses considered personalization a top priority. This year, that number rose to 87%. 

But although businesses recognize personalization’s power, most haven’t cracked the code just yet. While businesses rate their personalization efforts at 4.1 out of 5, consumers aren’t as convinced. Only 16% describe these experiences as “excellent,” with 44% calling them “good,” and 31% labeling them “average.”

For businesses that nail it, the rewards are huge: more purchases, bigger spend, and customers who recommend the brand to their friends and family. The real differentiator? Pairing real-time data with customer context. When brands understand not just what a customer is doing but why, they can deliver the kind of hyper-relevant experiences that truly feel personal — not programmed.

3. Reliability and transparency are key to consumer trust

Last year, data protection was the top driver of consumer trust. In 2025, priorities have shifted. Fast support and hassle-free returns now outrank strong data security, as consumers place a higher premium on ease and dependability.

That said, data protection is still the third most important consumer trust driver, so it should still be a top priority for your business. Handled poorly, data protection can significantly harm your relationship with customers. And with only 15% of consumers “absolutely” trusting brands with their data and 61% believing brands don’t have their best interests at heart when it comes to personal information, the stakes are high. Strong, transparent data practices aren’t just a legal requirement; they’re a critical part of earning and keeping customer trust.

The message is clear: trust is evolving. Consumers still expect strong data practices — but they also expect fast, frictionless experiences. Brands need to deliver both.

Unlock even more customer engagement insights in the 2025 State of Customer Engagement Report

The future of engagement isn’t just about being faster or smarter — it’s about being more human. The brands that will lead in 2025 and beyond are the ones that use AI not just to automate, but to elevate the customer experience, making every interaction feel relevant, intuitive, and personal.

Download the full 2025 State of Customer Engagement Report for more data, analysis, and best practices on AI, personalization, trust, and engagement.

Or, watch our upcoming event, The New Rules of Engagement: What Modern Consumers Expect (and Don't Forgive), for a fireside chat with Vanessa Thompson, VP of Revenue and Growth Marketing at Twilio and Krish Sailam, VP of Marketing Technology & AI Operations at Nextdoor, on the trends redefining customer engagement in 2025.