Smart service systems – that is, configurations of smart products and service providers that deliver smart services – are striving to increase the smartness of their offering, but potential consequences for customer well-being are largely overlooked. Therefore, this research investigates the impact of smartness on customer well-being (here, self-efficacy and technology anxiety) through (1) customer engagement with different smart service system actors (here, smart products and service providers) and (2) customer perceptions (here, personalization and intrusiveness perceptions) and their associated importance (here, need for personalization and intrusiveness sensitivity). A scenario-based experiment (n = 730) – which is preceded by a systematic review to conceptualize smartness – shows that customers perceive more personalization than intrusiveness in case of higher levels of smartness, resulting in customer engagement with the smart product and to some extent with the service provider. Via customer engagement with the smart product, higher levels of smartness stimulate self-efficacy, especially for customers with a high need for personalization. When customers' need for personalization is high and their intrusiveness sensitivity is low, higher levels of smartness also reduce technology anxiety via customer engagement with the smart product. Hence, the conclusion is: “The smarter, the better!”, whereby the relationship between smartness and well-being (here, self-efficacy and technological anxiety) is significantly influenced by customer heterogeneity. These findings help business practitioners in boosting customer well-being by increasing customer engagement through higher levels of smartness of their service system. •Higher levels of smartness improve customer well-being through customer engagement.•Customers perceive more personalization than intrusiveness when smartness increases.•Personalization and intrusiveness affect engagement with smart service system actors.•Customer engagement with smart products boosts customer well-being.•Smartness–well-being relationship is subject to customer heterogeneity.