2025 State of Customer Engagement Report

AI is driving business growth, but is it serving consumers?

AI is the breakout technology of the moment, and businesses are going all in — integrating it across operations, customer service, and marketing. And it’s paying off: 96% of organizations using AI for personalization report seeing measurable business benefits.

Beyond personalization, AI is driving tangible operational gains. Fifty-one percent of businesses say it’s speeding up their response times, 47% cite better data organization, and 45% see higher customer satisfaction scores as a result.

But here’s the big question: Are those gains translating into better experiences for consumers — or just better metrics for businesses?

Top ways businesses are using AI

AI should work for customers, not just for businesses

Meet Sarah. She just wants to update her shipping address — a simple request, or so she thought.

Instead, she finds herself stuck in an endless loop with an AI voice agent that doesn’t quite understand her. She repeats herself. It misinterprets. She tries again. Same result. Frustration builds until she’s practically yelling 'Representative!' into her phone.

Sound familiar? For many, artificial intelligence can feel less like an assistant and more like an obstacle.

Clearly, Sarah’s not alone. While AI dominates headlines, fuels endless debates, and reshapes industries, many consumers are growing weary of the hype. More than half (55%) are exhausted from hearing about it in the news, and 45% simply couldn’t care less.

Woman holding a phone to her ear, looking thoughtful with finger on her lips, wearing a yellow shirt and a watch.

Consumers on how they want AI to improve user experience

Even though consumers are tired of the AI hype, they are open to it improving their experiences — when businesses leverage it correctly. In fact, 71% of global consumers believe AI will positively impact their experience, with moderate/strong confidence rising from 32% in 2024 to 43% in 2025.

Younger generations are even more optimistic: 73% of Gen Z and 76% of millennials say AI will improve their experiences, compared to 69% of Gen X and 61% of boomers. Sentiment is also stronger in certain regions, with 80% of APAC and 73% of LATAM* consumers expecting AI to elevate their interactions.

In short, customers are tired of the AI hype. They see its potential, but want real use cases that show how it can actually improve their experience.

*APAC (Asia-Pacific) includes respondents from Australia, Hong Kong, India, Indonesia, Japan, Philippines, Singapore, and Thailand, while LATAM (Latin America) includes respondents from Brazil, Chile, Colombia, and Mexico.

AI isn't just about efficiency, it’s about enhancing experiences

Consumers don’t want AI just for the sake of it. They want it to solve real problems, speed up service, and make interactions feel easy, not robotic. Here are their thoughts on AI-powered experiences:

They know when AI takes over. Eighty-one percent of consumers notice when they’re handed off to AI during support calls, and 69% say it’s crucial that AI-powered interactions feel human-like — a significant jump from 48% last year.
They want control over personalization. Eighty-four percent of consumers would prefer to adjust their personalization settings themselves. Instead of brands making assumptions about their preferences, consumers want the ability to choose what data businesses collect and how they can use and share it.
They expect a human fallback. Fifty-four percent want an easy opt-out option, ensuring they can connect with a human when AI isn’t cutting it.

The good news? Businesses can meet these expectations while still leveraging AI. For example, an AI chatbot could proactively ask customers about their product preferences while they browse or check out, giving users control while still enhancing their experience.

Too often, AI is framed around efficiency. But consumers aren’t just looking for speed — they want value. That means thoughtful, relevant content and meaningful interactions, not just faster resolutions to problems. The key to success is using AI to enhance, not replace, the human connection.

Top 4 things consumers want from brands using AI

84% of consumers would prefer to adjust their personalization settings themselves.

61% of consumers are concerned about privacy in an AI world

While consumers understand that AI can help build better experiences, they’re skeptical about how brands use it. In fact, 61% of consumers don’t believe brands have their best interests in mind when using their personal data.

And yet, brands think they’re nailing AI transparency. While 88% of businesses say they’re upfront about using AI, only 46% of consumers agree. Even fewer (34%) say they’re informed when their data is fed into AI systems.

Customers have good reasons for concern. When we asked businesses about their biggest challenges using AI, they didn’t hold back:

44% struggle with regulatory compliance and privacy concerns
41% face security risks
38% wrestle with data quality and accuracy issues

And these challenges hit B2B brands even harder than B2C. Issues like data quality and accuracy (43% vs. 26%) and scalability (32% vs. 20%) are significantly more pronounced.

AI holds enormous promise, but many brands still face challenges in deploying it both responsibly and effectively. So, how can businesses bridge the gap between innovation and consumer trust? It starts with transparency. Giving consumers the power to actively opt in to data sharing — not just the option to opt out — builds confidence and turns AI from a black box into a transparent, value-driven experience.

back view of man using modern computer and listening music in headphones at home in neon lights

54% of consumers want brands to inform them when they are communicating with AI.

49% of consumers want clear information about how their data is being used within AI.

Make AI work for your business and your customers

AI isn’t just on the horizon — it’s already here. With 97% of businesses planning to increase their AI investments over the next five years (and 77% within the next year), adoption is no longer optional — it’s inevitable.

When used strategically, AI can elevate engagement, boost efficiency, and redefine how brands connect with their customers. But without proper attention, it can just as easily erode trust and drive people away.

If your business wants to use AI to improve engagement, you must:

Get serious about transparency

Customers know you’re using AI, but they want clarification around when and how you’re using it. Be upfront, clear, and consistent about AI’s role in their experience.
Give customers control

Let them shape their AI-driven experiences. From adjusting personalization settings to choosing how their data is used, consumers want a say.

Make AI feel human

A robotic experience isn’t going to cut it. AI interactions should feel as natural and intuitive as talking to a real person.
Use AI to enhance, not replace

Let AI manage routine tasks, but ensure a seamless transition to a human when it matters most. The key is context: recognizing when human connection is essential and using AI to support, not substitute for it.

Explore the data

The top four ways brands are currently using AI

Consumers on whether or not they believe AI will enhance customer experience

Consumers on how important it is that AI-powered interactions feel human

Businesses vs. consumers who say brands are upfront when using customer data with AI

Brand spotlight

Universidad Uk optimizes student and employee experiences with AI

By leveraging Twilio Flex and Twilio Segment, Universidad Uk improved their overall contact center operations for employees by analyzing real-time analytics and reports. For students, Unified Profiles and Agent Copilot enables more personalized and efficient service powered by real-time data and AI.