AI boosts personalisation but consumer trust remains elusive

A recent report indicates that while artificial intelligence is enhancing customer experiences and increasing spending, consumer trust and preference for privacy remain significant challenges for businesses.

The sixth annual State of Customer Engagement Report from Twilio is based on a survey of over 7,600 consumers and more than 600 business leaders in 18 countries. The study found that 96% of companies believe that AI is improving key areas such as support, marketing, and personalisation. Personalisation efforts backed by AI are linked to a 75% increase in customer spend according to the report.

Despite these advances, only 45% of consumers feel understood by the brands they engage with, a slight decrease from 46% the previous year. Among business leaders, 83% believe they have a deep understanding of their customers, but 71% of consumers are likely to abandon purchases if the experience does not feel relevant.

Chris Koehler, Chief Marketing Officer at Twilio, commented, "AI has opened the door to more personalized customer experiences than ever before — but technology alone isn't the answer. Our research shows that to truly engage customers, brands must earn their trust, respect their preferences, and meet them in real-time with experiences that feel human. In today's climate, customer loyalty is harder to earn — and the brands that succeed will be the ones that invest in the right tools to deliver personalization at scale, while maintaining transparency and putting the customer first."

The report highlights several key findings regarding the role of AI and personalisation in customer engagement. Currently, 56% of brands employ AI to tailor customer experiences, offering personalised content, recommendations, dynamic offers, and real-time support. However, 61% of consumers do not believe companies are using their data for their benefit, and 55% are tired of hearing about AI.

Engagement in real time also proves crucial for conversion and loyalty. According to the survey, 71% of consumers will walk away from purchases if they encounter irrelevant experiences. Conversely, 88% are more likely to make purchases when engagement is personalised in real time, yet only 44% of brands report achieving this level of personalisation in practice.

Trust in brands, while generally high, remains fragile. The report found 90% of consumers trust at least some brands, but only 15% "absolutely" trust companies with their personal data. Most consumers surveyed—84%—want to control their personalisation settings, and 54% prefer to know when they are interacting with AI rather than a person.

Investment strategies are also evolving. Of the business leaders surveyed, 96% plan to build custom customer experience tools rather than using off-the-shelf solutions, aiming to improve data handling, transparency, and automation. In addition, 75% of businesses intend to adopt Rich Communication Services (RCS) in 2025 to enable richer customer conversations.

The State of Customer Engagement Report methodology involved surveying consumers from Gen Z to baby boomers and business leaders involved in customer experience, marketing technology, and customer data strategy between January and February 2025.