Overview

The State of Customer Engagement Report

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

Meet Alex. Alex loves running, and every few months he invests in new gear: socks, shoes, moisture-wicking shirts — the works. One brand always comes to mind when Alex is ready to shop because they offer up his preferred shoe model, remind him when it’s time to replace his worn-out pair, and even recommend new running routes based on his location. Every interaction feels like it was built just for Alex, because it was.

This is the promise of AI-powered personalization: anticipating customer needs, creating consistent experiences, and making customers feel truly understood. But for many consumers, this level of relevance is still the exception — not the rule.

Despite dramatic AI advancements, most global consumers don’t feel any more understood by brands than they did last year. While 82% of business leaders say they deeply understand their customers, just 45% of consumers agree. That gap is growing slightly; last year, it was 81% vs. 46%.

If AI is meant to bring brands closer to their customers, why isn’t this gap closing?

Runner, road or man for fitness in training, sport or exercise goals for marathon competition. Indian athlete, wellness or running challenge in cape town race in progress, city street or health body.

60% of consumers rate brands as “good” or “excellent” in providing positive customer engagement (down from 62% in 2024).

Customer expectations are a moving target

Consumer preferences are evolving and businesses are struggling to keep up. In fact, 53% of businesses now cite keeping pace with rapidly changing customer preferences as their biggest challenge — up from 44% last year.

Other obstacles holding them back from understanding customers? Compliance and data privacy concerns (45%) and the ongoing struggle to connect customer data across channels and platforms (44%). Businesses must balance personalization with privacy, navigating complex regulations and consumer concerns while gathering just enough data to enhance customer experiences.

At the same time, customer loyalty is fading. Just 44% of global consumers consider themselves “very” or “extremely” loyal to brands, down from 48% last year.

To stay competitive, businesses must move fast and build smart while bridging data gaps and balancing innovation with compliance. With one in three (37%) customers anticipating purchasing more in 2025, brands that can meet these evolving customer needs will be the ones to capture their business in an increasingly unpredictable market.

Consumers on how loyal they are to brands

Keeping up with customers in 2025

Last year, our report focused on the idea of individualization, or how brands move beyond one-to-many personalization to deliver AI-powered experiences uniquely tailored to each customer. 

This year, the challenge has deepened. Simply understanding your customers isn’t enough — brands must demonstrate that understanding in ways that inspire action, earn trust, and keep pace with constant change. Personalization remains important, but it's now just one piece of a much larger puzzle. 

In short, don’t just respond to change. Build for it. 

AI’s role in all this? Businesses need to use it wisely to help strengthen, not weaken, customer relationships.

In 2025, it’s not enough to “know” your customers. You have to keep up with them. What’s more important than knowing Alex's shoe size? Learning that he’s returning his last pair because they weren’t supportive enough for his high arches — something he told your AI chatbot. Contextual data will separate mediocre experiences from outstanding engagement this year.

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Methodology

Twilio surveyed 7,640 consumers and 637 business leaders across the globe from January 3 to February 17, 2025. 

We surveyed 7,640 global consumers who all own a smartphone and have shopped online in the past six months. In each country, the sample was balanced by gender and age, as well as racial diversity in the U.S. and U.K. Age groups were defined as follows: Gen Z (18–28), millennials (29–44), Gen X (45–60), and baby boomers (61–79).

The 637 business leaders surveyed hold senior leadership positions at the Director level or above, work full-time at companies with 500 or more employees, and are familiar with their company’s customer experience, marketing technology, or customer data strategies. The sample included minimum requirements for C-suite executives and a spread of company sizes above and below 5,000 employees.

World map with red dots marking key locations globally

Respondents were from 18 countries: Australia, Brazil, Chile, Colombia, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Mexico, Philippines, Singapore, Spain, Thailand, the United Kingdom, and the United States.  

Discover all the trends