The economics of empathy: why human connection is the future of business

In an era increasingly defined by AI and automation, businesses face a critical strategic decision: how to integrate genuine human connection into their operations. The digital revolution, while offering unprecedented efficiency, has inadvertently exposed a profound "empathy gap" in the business world. Empathy, often dismissed as a “soft skill”, is actually the next competitive advantage – a measurable driver of business success. This is a strategic imperative, backed by compelling data, demanding a place in every boardroom’s KPIs. It represents a fundamental shift in business philosophy.

Why is this important now? A new global study by Zurich Insurance Group, conducted with Stanford University's Professor Jamil Zaki and YouGov across 11 countries, reveals a stark disconnect: Consumers crave genuine care, but often feel companies fall short. This represents a tangible threat to customer loyalty and a missed opportunity. You can’t ignore customers; if people aren’t happy, they’ll go somewhere else.

The findings are unequivocal. Three in five consumers (60%) say they only engage with companies that demonstrate genuine care, and 72% of consumers feel companies become less empathetic once a transaction is complete. This post-contract disconnect is damaging; the deep-rooted cynicism it creates erodes trust and undermines long-term customer relationships. This comes at a significant cost: 73% of consumers actively avoid businesses that don't show empathy, with 43% taking their business elsewhere. This is a powerful market signal businesses ignore at their peril, directly impacting their bottom line.

The rise of AI presents both immense opportunities and unique challenges. It offers undeniable efficiencies – speeding up responses, streamlining claims, and providing 24/7 service. Human empathy, however, remains irreplaceable in its depth and authenticity. Our study found that 71% of consumers believe AI cannot create genuine human connections, and a striking 92% still value direct human interaction over 24/7 availability.

As Stanford University Professor of Psychology Jamil Zaki notes: "An AI bot can understand you, but it cannot genuinely feel with you." He cautions against "LLMpathy", where AI mimics empathy without true understanding, potentially leading to deeper trust erosion. The future of customer experience demands a strategic blend of technological efficiency and genuine human connection. Leveraging AI for speed and scale allows human interaction to focus on critical, emotionally charged moments where vulnerability and complexity demand authentic care.

The good news is that empathy is a learnable skill. This insight forms the bedrock of Zurich's global customer strategy. Since 2023, we've successfully rolled out a Global Empathy Training Programme, as a key part of the customer strategy, across over a quarter of our workforce. Our employees have completed nearly 46,000 hours of bespoke training, equipping them to respond with emotional intelligence and authenticity in vulnerable moments. The impact has been tangible and measurable. Our Transactional Net Promoter Score (TNPS) has risen by seven points from January 2024 to June 2025, indicating significant improvement in customer advocacy.

Investing in empathy drives sustainable growth and loyalty, demonstrating a clear return on investment. It represents a commitment to long-term success. For leaders looking to bridge the empathy gap and unlock this competitive advantage, a clear blueprint emerges:

1. Strategic integration: Empathy must be a central pillar of your business strategy, a core component. Treat it as essential for long-term success, influencing product design, service delivery and customer engagement.

2. Empathy training and skills development: Invest in bespoke training tailored to your market and business function. Empower front-line employees with practical skills to genuinely understand and respond to customer needs, prioritizing authentic connection over scripted responses.

3. Leadership commitment and measurement: Leaders must model empathetic behaviour and champion its importance. Crucially, its impact must be tracked as a key performance indicator, integrating it into boardroom KPIs.

4. Technology and human connection: Use AI to support and streamline processes. Personal engagement remains paramount in critical customer moments.

5. Cultural embedding: Empathy must permeate the entire organization, becoming a foundational element of company culture. Foster an environment where employees feel empowered to show care and understanding, making it a collective responsibility.

In the future, driving business excellence will not be enough. Cultivating genuine human connection will be equally essential for sustainable growth and long-term profitability. By embracing empathy as a learnable skill, embedding it into operational DNA, and fostering a culture of genuine care, businesses will build resilient customer relationships, earn trust, and ultimately lead with empathy in a human-centric marketplace. The ROI of empathy is clear, and it’s a competitive edge no company can afford to ignore.