AI Chatbots and Customer Loyalty among Gen Z

Abstract: The digitalization of society is a major trend that is currently transforming the businesslandscape (Parviainen et al., 2017, p. 63). Within this digital era, the AI chatbot hasemerged (Hsu & Lin, 2023, p. 2), enabling companies to provide high-quality customerservice 24/7. AI chatbots offer a range of benefits and possibilities that can be utilized invarious industries. There is evidence that AI chatbots have the potential to create loyalcustomers, making it a valuable tool for businesses. Therefore, this thesis investigateswhat AI chatbot attributes can relate to the two dimensions of customer loyalty amongGen Z.The purpose of this research is to help organizations to build relationships with customersand provide insight into which attributes of an AI chatbot can be used by companies tocreate value for customers. This to further facilitate their work of building customerloyalty. In this study, we utilize a framework to quantitatively measure AI chatbotsthrough various attributes, including Availability, Ease of Use, Accuracy of Response,Responsiveness, Assurance, and Empathy. Then the relationship of the attributes washypothesized together with the two dimensions of customer loyalty, attitudinal andbehavior loyalty. The questionnaires was distributed to Gen Z through snowball and self-selection sampling techniques. Through the online survey, 73 responses were collected totest the hypothesis. It was found that empathy has a significant relationship with bothdimensions of customer loyalty, and assurance has a significant relationship withattitudinal loyalty.We are convinced that this strengthens and reinforces the ongoing research on customerloyalty. Moreover, the study expands the quantitative work on AI chatbots by introducingand utilizing a framework to examine the attributes of AI chatbots in a general context.Furthermore, the thesis provides knowledge to companies that are currently working onor developing AI chatbots, of which attributes that should be prioritized to enhancecustomer loyalty. Our findings suggest that these attributes are assurance and empathy.