The activities and technology investment decisions of AI service providers runs counter to the needs of the market, according to software firm Amdocs.
Research by Forrester Consulting on behalf of Amdocs concludes that AI developers are not giving enough thought to the basic requirements of customers.
The study found that over a third of consumers interact with virtual agents at least once a week because it's more convenient and quicker, but nearly half of them had no other option.
If offered a choice, 83% would prefer to speak to a human since human agents better understand their needs and can address multiple questions at once.
Bots, on the other hand, cannot deal with complex requests, deliver personalised offers or understand human emotions.
?Consumers also have strong views on how they want bots to look and behave, with 46% preferring their bot to look like a human, as opposed to 20% who want to see an avatar. The rest don't care either way, but 36% prefer them to be female, rather than male (14%).
The best bots will be polite, caring, intelligent and funny, with no airs and graces.
Despite these customer preferences, service providers are not focusing on the right areas in terms of their AI investments, reckons the study.
Their priorities are information security, privacy and speed of response; and 42% of service providers are also creating avatar images for their bots while consumers prefer human-like ones. Other mis-matches include designing bots to be posh or authoritative, and making them sound too young.
More broadly, almost 75% of service provider AI decision makers say that 85% of customer interactions will be with software robots in five years time.
"Consumers have a good sense of how bots can serve them, and their level of frustration with today's bots is striking," said Gary Miles, GM at Amdocs. "A third even say they will take their business elsewhere if the poor service continues.
"But consumers believe that if anyone can get AI right, it's the communications and media industry. AI could be a winning gambit for service providers as long as they sync up their investment priorities with what customers actually want."
Miles believes that Amdocs and Microsoft have taken steps to give users what they want with their just launched Smartbot solution for mobile operators.
"It provides service providers with telecom-specific AI capabilities for offering highly personalised and emotionally aware bot interactions, which is something consumers are clearly missing in today's bots."