Service complaints hit an all-time high - so why is customer satisfaction the highest on record?

The Institute of Customer Service (ICS) has published its latest UK Customer Satisfaction Index (UKCSI), revealing that the number of customers experiencing a problem has risen to 17.3%, up 2.4% from July 2021 - making it the highest level since the survey’s inception in 2008. 

However, it's not all bad news for customer service, with the research also reporting that customer satisfaction is actually rising as a result of dramatic improvements in complaint handling. 

The new research found that shortages and supply chain issues were instrumental in the increased number of customer complaints, with those surveyed citing the quality or reliability of goods/services, and the suitability and availability of goods/services as the main causes of customer problems.

The rising number of complaints are not just damaging organisations’ customer experience reputations and potentially driving away customers, they are also causing serious fiscal damage.

Due to the sheer number of complaints, the ICS has calculated that UK businesses are having to splurge a staggering £9.24bn a month in additional worker hours.

The UKCSI paradox

Despite the record level of customer complaints, the UKCSI number is actually up 1 point from July 2021, with it currently sitting at 78.4 – the same as it was in January 2022.

This increase in customer satisfaction levels is largely due to complaint handling – with complaint outcomes, speed of resolving complaints, the attitude of staff, and the handling of complaints all seeing significant improvements over the last 12 months.

As a result, the UKCSI number is currently the highest it has been since CSI records began.

Why are customer complaints on the rise?

The data is based on the experiences of 10,000 customers, across 279 organisations, with two data sets taken between the 13th of September and the 8th of October 2021, and the 21st of March and the 14th of April 2022.

It is important to contextualise the dates of these data sets within the pandemic/lockdown situation of the country at that given time.

The report notes that the first data set was recorded after the relaxation of most covid-19 restrictions in England but before the emergence of the Omicron variant, with the second being after the removal of the legal requirement in England to self-isolate following a positive COVID-19 test.

This is highly relevant, as although the data was not obtained during the height of the pandemic, it was still clearly a very prevalent issue at the time. The impact that the pandemic and lockdown has had on customer service channels has been both severe and varied – with issues ranging from increased customer frustration, to agent burnout.

Considering the above, it is not unreasonable to suggest that the pandemic played a part in the increased number of customer complaints.

As previously discussed, the biggest factor in increased customer complaints was supply chain issues, and whilst this issue did see a +7.1% year-on-year change, it was not unsuspected, and has been an area of concern for quite some time.

When the January 2022 UKCSI was published – which at the time, showed the highest level of customer complaints on record – MyCustomer explored what was causing the increase in complaints, with supply chain issues again being listed as a key factor.

This was also echoed by the report, which references supply chain blockages, geopolitical upheaval, and potential future COVID-19 issues.

The report also discusses the pronounced shift in customer expectations and preferences in the past two years, with the quality of experience, service, or product that organisations offer being the leading consideration for customers across five key sectors (utilities, retail (Food), retail (Non-food), insurance and telecommunications).

These findings were supported by Paul Louden, the Regional Director for UK & Ireland at Sinch: “The real reason why customer complaints have hit such record highs is because many brands and businesses are still struggling to balance customer experience with customer expectation.

"Customers now expect to be able to talk to their bank, retailer or energy provider using the channels they use to talk to friends and family. Mastering conversational customer engagement can help businesses to reduce churn, grow revenues, improve efficiencies, and build brand loyalty.”

How can businesses buck the trend

In its assessment of what actions businesses can take to help address the issue of rising customer complaints, the UKCSI discusses 10 areas that firms should focus on:

Given the current climate, arguably the most pertinent of these areas is the impact of the cost-of-living crisis.

The report discusses the need to assess the physical, mental, and financial wellbeing of employees during this difficult period, as well as highlighting the importance of trying to understand the vulnerability of customers.

Moreover, it also revealed that 35% of customers indicated that they would be prepared to pay more to guarantee excellent service, whereas just 12% would be willing to sacrifice the quality of their customer service to receive the lowest possible price.

However, this is slightly at odds with other data collected, which revealed that the lowest price will be the most important thing for customers when buying things or choosing an organisation in the next two years.

‘During times of uncertainty, putting customer service on the backburner is a recipe for disaster.’

It is this balancing act that may well be the major sticking point for customer service complaints moving forward.

With the cost-of-living crisis forcing people to tighten their belts, businesses might forgo taking other measures that could improve their customer service in favour of keeping prices low and attracting more customers. But, as the UKCSI has revealed, the cost of fielding rising customer complaints may well overshadow any advantages gained from a larger customer base.

As the vice president and general manager of EMEA, Brian Atkinson puts it: “During times of uncertainty, putting customer service on the backburner is a recipe for disaster.

Investment in customer service is often the first thing to go when prices start to spiral as businesses look to cut costs. But here lies the danger. Without great customer experiences, there is potential for missed revenue, strained customer relationships and a lack of ability to respond to customers' needs before it’s too late.”