Chapter 4: AI in Service: Engaging and Retaining Customers Through Technology-based Encounters and Employee Service

This chapter introduces a tactical framework for leveraging Artificial Intelligence (AI) to enhance customer engagement across various service interactions. It categorises AI into Standardised AI, Cognitive AI and Emotive AI, progressing from basic automation to advanced cognitive and emotional capabilities. Standardised AI addresses routine tasks, Cognitive AI focuses on customising data-intensive service interactions and Emotive AI enhances personal and relationship-driven experiences. The framework emphasises reducing reliance on basic human intelligence as AI advances.

Drawing from previous literature, this chapter examines AI’s role in diverse service encounters, considering antecedents and consequences involving customers, employees and AI. It classifies AI-integrated service encounters into four types: AI-created, AI-enhanced, AI-mediated and AI-assisted. Additionally, the study proposes a model outlining factors influencing AI-driven interactions and their impact on service outcomes.

The study provides managerial guidelines for leveraging AI’s advantages across three domains: efficiency, personalisation and relationship-building. It emphasises AI’s potential to transform service design, delivery and customer experiences while suggesting research directions focusing on standards, design and customer perspectives.

This research contributes practically and theoretically. Practically, it offers a strategic blueprint for deploying AI to balance AI–human intelligence in service design and engagement. Theoretically, it enriches academic discourse by highlighting AI’s transformative impact on service management and applications, providing actionable strategies for service businesses aiming to optimise AI technologies.