As November ushers in the holiday season, it marks the beginning of peak season for retail businesses and customer service teams. This time of year, customer inquiries and service tickets increase dramatically as consumers seek the best deals and finalize their gift purchases and returns. It’s a familiar experience for customer service teams, who brace for the surge in interactions—surges that, according to recent Forethought data, can range from an 18% increase to as high as 150% for some businesses.
This increased demand puts immense pressure on customer service operations. Bron Rasmussen, CX Operations at Cotopaxi, explains, “E-commerce in Q4 is always busier. People are looking for holiday gifts and deals, leading to a significant number of interactions with our agents.” Rasmussen’s observation underscores a common sentiment among businesses like Cotopaxi, which often see customer service volumes climb in Q4, only to stay elevated into January as post-holiday returns begin.
Jeff Deist, Senior Director of Support at Sendoso, also notes that the year-end rush is a critical time for his team: “This is our busiest season, no doubt about it. End-of-year gifting, budget allocations, and preparations for the new year create a tidal wave of customer service volume that no other time can match.”
Consumers Demand Fast Service—or Risk Losing Business
The pressure isn’t just on customer service agents; consumer expectations for quick resolutions are higher than ever. According to the survey, 50% of consumers will only wait a maximum of nine minutes for a response before becoming dissatisfied. If companies fail to meet these expectations, they risk significant fallout: 23% of consumers would cancel or return their order, 21% would refuse to do business with the company again, and 18% would leave a negative review.
The role of AI in addressing these challenges is paramount. Deist explains, “AI solutions, like those from Forethought, allow us to deflect simple queries, giving human agents the bandwidth to focus on more complex issues quickly.” AI has become an indispensable tool for businesses looking to streamline support operations during peak season.
The Growing Adoption of AI—But Challenges Remain
AI adoption is on the rise, with 70% of CX leaders having integrated AI tools into their customer support workflows. Despite this, only 17% of consumers report an actual reduction in wait times over the past two years. This disconnect between AI implementation and tangible improvements in response times may stem from the limitations of traditional AI solutions, often based on Retrieval Augmented Generation (RAG) models.
Forethought’s President and Executive Chairman, Deon Nicholas, emphasizes, “RAG-based solutions can only resolve about 10-20% of customer issues. They handle FAQs but fall short when it comes to nuanced problems. For companies to truly meet modern customer expectations, they need to embrace agentic AI—AI that can take action, make decisions, and resolve complex issues without human intervention.”
Cotopaxi has already seen measurable benefits from adopting more advanced AI. “Forethought’s AI helps reduce repetitive questions by creating a seamless experience for our customers,” Rasmussen shares. This proactive approach allows customers to quickly find the information they need, minimizing the need for agent intervention.
Consumer Comfort with AI-Powered Support Is Growing
Consumer sentiment toward AI-powered customer service is also evolving, particularly among younger generations. Nearly half (48%) of all consumers say that AI has made customer service more helpful. The divide by generation is striking: 56% of Millennials agree with this sentiment, compared to just 32% of Baby Boomers. As younger consumers gain greater economic influence, their increasing comfort with AI will likely shape the future of customer service interactions.
This shift toward digital-first support channels is also evident in consumer preferences. A growing number of Millennial and Gen Z consumers prefer communicating via chat, email, or text rather than making phone calls. “We’re seeing more and more customers gravitate towards chat and email to resolve their issues, particularly with issues that our Forethought AI can resolve before they even reach an agent,” Rasmussen notes. The demand for efficient, digital solutions reflects a broader trend in consumer behavior.
Human Support Remains Essential
Despite the growing role of AI, human interaction still plays a vital role in customer service, especially for emotionally charged or complex issues. The survey highlights that the number one frustration among consumers is the inability to reach a human when needed. This frustration is particularly prevalent among older consumers, but it resonates across all age groups. As Rasmussen puts it, “Our brand is built on a personal touch, and great customer service is a cornerstone of that. While AI can streamline interactions, sometimes people just want to connect with a human.”
This sentiment is reinforced by data from the survey: 95% of consumers believe that a customer service agent is more likely to help them if they can relate to their emotions. This highlights the importance of empathy in customer service.
Balancing AI and Human Support for the Future
Looking ahead, the future of customer service will likely involve a hybrid approach—where AI handles the bulk of routine queries, allowing human agents to focus on more personalized, complex interactions. As Nicholas explains, “AI will eventually handle most customer interactions seamlessly, but there will always be a need for humans to step in for more personalized support.”
While human agents will always be needed in some capacity, 61% of consumers surveyed said they still prefer using self-service options to make changes to an order, rather than waiting for a human agent. This trend reflects a growing comfort with AI and digital solutions, but it also emphasizes the importance of giving consumers the option to escalate to a human when needed.
As companies gear up for the holiday season, the message is clear: AI is an essential tool for scaling customer service operations, but it’s not a one-size-fits-all solution. Businesses need to find the right balance between the right AI tools and empathetic human support to meet rising consumer expectations.
In conclusion, businesses that successfully leverage both agentic AI and human support will be best positioned to navigate the challenges of peak season while delivering a superior customer experience.
Methodology
Results are from two online surveys. One survey of 1,091 US adults aged 18 and up was fielded from September 20 to 23, 2024 One survey of 1,136 US adults aged 18 and up was fielded from October 4 to 7, 2024. The data was weighted to the US population by 9 demographic questions. The credibility interval for questions answered by all respondents is +/- 4 percentage points.
