Is inflation causing customer service standards to slide?

The perceived standard of customer service in the UK is slipping in the wake of record inflation, according to new research. 

A survey of over 2,000 working age adults has revealed that close to half (41%) of the respondents questioned by People 1st International believe that the standard of customer service they had received in the last 12-18 months had worsened.

This potentially indicates that ‘skimpflation’ - a phenomenon whereby inflationary pressures and squeezed profit margins force firms to cut corners – is beginning to creep in.

Disinterested staff and chatbots replacing human interactions were amongst the most commonly cited complaints of respondents who thought that the standard of customer service offered by firms is in decline.

On the flipside, when quizzed about what they value most when it comes to customer service, well-trained, knowledgeable and happy staff ranked head and shoulders above the rest, with 68% of respondents singling out high-quality staff interactions as their number 1 must have.

In light of the forecast that UK inflation will soar to a 50-year high by the end of January next year, cost savings will no doubt be weighing heavily on many businesses’ minds. However, according to Jane Rexworthy, executive director at People 1st International, businesses need to consider their customer’s preferences first before making cutbacks. 

“Entering the autumn/winter trading period, consumer-facing businesses are confronted with various economic headwinds, the likes of which we haven’t seen for decades. For that reason, businesses may well be forced to make stark decisions about where to rein in spending and what needs to be ringfenced," explains Rexworthy. 

“In times of recession, training and development budgets are often the target of cost-cutting, but failing to invest in your people can be damaging to business finances in the long-run.” 

“Our survey is clear what UK consumers value the most: well-trained, knowledgeable and happy staff. With that in mind, I urge consumer-facing businesses to continue to invest in their people and carefully consider the impact of any potential cutbacks on the customer experience.”

The finding that 40% of respondents expect higher prices to be reflected in the level of service they receive underlines the importance of maintaining customer service standards adds Jane.

“With real household incomes falling, consumers look set to become more and more discerning, and the businesses best placed to thrive will be those that offer customers the greatest bang for their buck.”

“Businesses’ will therefore need to offer best in class customer service before convincing consumers to part with their hard-earned cash.”

Incentives to maintain or enhance service standards

Despite the squeeze on disposable incomes, 43% of respondents agreed that they were willing to pay more for goods and services if they received a high level of customer service, compared to 22% that would not.

Further responding to the results of the survey Jane Rexworthy said that there is a clear incentive for businesses to maintain and even enhance customer service standards despite challenging macro-economic circumstances.

“As consumers cut back, competition hots up, meaning that businesses will need work harder to attract customers. Offering high quality customer service sets businesses apart, meaning that well-trained staff remains a key tool in a business’ arsenal.

“Consequently, those that continue invest in their people will fare better than their rivals in the coming months, as confirmed by this survey.”

In addition to quality of customer interactions, speedy responses to questions and queries (54%) ranked similarly highly among respondents as a hallmark of winning customer experiences. Free gifts and the opportunity to provide feedback were viewed as comparatively less important by consumers, favoured by 37% and 16% of respondents respectively.

Beyond providing an acid test for customer expectations against the backdrop of inflationary pressures, the survey is a clarion call for businesses to pay more attention to how they cater for and interact with diverse groups, such as the LGBTQ community and those with disabilities.

42% of respondents said they would spend more with a business if it provided an accessible and inclusive service. A further 48% stated that they would not return to a business if it didn't provide an accessible and inclusive service, whilst 58% of respondents said they would recommend a business to family and friends if their customer service accessible and inclusive.