CUSTOMER PERCEPTION OF AI CHATBOTS IN SERVICE DELIVERY: ARE BUSINESSES SACRIFICING QUALITY FOR EFFICIENCY?

The rise of artificial intelligence (AI) chatbots has transformed customer service operations across various sectors, offering businesses substantial cost-saving opportunities and 24/7 service capabilities. However, as organizations increasingly replace human agents with AI-driven systems, a critical question emerges: Are businesses compromising customer service quality for operational efficiency? This paper investigates customer perception of AI chatbots in service delivery, focusing on the trade-off between cost-effectiveness and customer satisfaction. Through a review of recent literature and survey-based analysis, the study finds that while chatbots improve response speed and reduce costs, customers often express dissatisfaction with their inability to handle complex issues or convey empathy. The paper concludes by recommending a hybrid customer service model that balances AI automation with human intervention.