What do the six most alarming customer service trends mean to you?by
At the recent Institute of Customer Service conference, experts including John Cridland, director general at the Confederation of British Industry, delivered their verdict on the state of play in service.
The conclusion was that the British marketplace is entering an era of unprecedented complexity, with growing customer expectations, falling employee engagement and lower customer satisfaction levels.
And Jo Causon, CEO of the ICS, warned that this “new world” represented nothing less than a fundamental shift in the business world - from a “transactional economy to a relationship economy”.
But while there are turbulent times ahead, the good news is that those businesses that put service at the centre of their brand proposition can come out the other side much stronger, and with more market share.
“There was a massive diversity of organisations and people that attended and spoke at the Conference, and that goes to show that actually as organisations we have all got similar challenges,” says Causon. “It doesn’t matter what industry sector we are in, we are all serving customers. Therefore, we are all grappling with this change in the economy and business environment.”
Here, Jo Causon tells MyCustomer about the disruptive trends that are characterising the business world, and how service must adapt.
1. Customers are more demanding
“I do believe that the balance of power has shifted in favour of the consumer. The consumer is far more savvy, far more informed, has much greater choice, and has access through social media to making their voice easily heard and understood. It is immediate and impactful.
“We have less money in our pockets, so we’re thinking more about what we’re purchasing and why, and what that actually means for me. And because we’re more informed we feel more empowered to know what good service looks like, and therefore we expect more. We have become more demanding. And when there is more choice we can shop around a bit more.”
2. Customer satisfaction levels are falling
“After five years of steady growth, customer satisfaction has fallen. And although it is a marginal fall, it is still worth pinpointing, and we should be concerned,” says Causon. “The UK Customer Satisfaction Index (UKCSI) surveys over 12,000 customers across 13 sectors, and all bar one have fallen. That, for me, is a wake-up call for organisations, because as the economy grows there will be winners and losers.
“Within the results there are some organisations that have really improved their customer satisfaction scores, and some that have significantly dropped. Those organisations that are really focusing on customer service are going to start to pull away, and as we grow it is a fantastic opportunity for organisations that really put a sustainable focus on service to benefit from the upturn and increasing consumer confidence. Businesses will be burnt if they don’t respond.”
3. Employee engagement is falling
“Our research, ‘Are you being engaged?’, was quite clear that where we have higher levels of employee engagement, we drive better customer satisfaction. And where we have better customer satisfaction, we are more likely to purchase, are more likely to recommend, and are more likely to stay.
“While money is a factor when it comes to employee engagement, it tends to be a hygiene factor – you just want to know that you’re being paid sufficiently to do your job; it is not always the key motivator. When you think what motivates us to work for an organisation, we want to work where we feel valued, where we feel we’re doing a job that is of value to the organisation, where our opinion matters and we feel like we can make a difference.
“Therefore, we shouldn't just think about financial recognition. We need to make sure that our people are engaged and consulted and have a view, and make sure that we celebrate the wins. And I as part of that the leadership must be very clear about the direction of the organisation and the part that we play in delivering that.”
4. Improving customer experience requires big investment
“If we continue to think of service as a cost, or a bolt-on to an organisation, then we’re not really thinking the right way about it. So we need to convince the board of its value. Some of the findings in the UKCSI are pretty strong in terms of demonstrating that there is a correlation between higher levels of customer satisfaction and sales growth and market share.
“We took 13 organisations across retail, leisure, services and tourism and where we found like-for-like sales data for the past two financial years for those 13 companies, we were able to demonstrate that those with higher levels of customer satisfaction, above the average, experienced better sales growth than those which were below average.
“I’m always encouraging directors and people who put proposals to the board, to look at that type of data. There is a commercial imperative of proving the importance of customer service to the overall performance of an organisation. And I think we’re starting to demonstrate that.”
5. More consumer-focused regulation is creeping in
“Regulation certainly has a role to play in terms of protection for the customer, and I can see very good value in it and that has to continue. But what I would also argue, particularly in highly competitive sectors, is that the customer also regulates business in a way – because if they don’t get what they want, they will move elsewhere. So I think we will probably see an increase in regulation, but what I’d also like to see is an increase in people in organisations really focusing on the customer – regulation is there to protect customers, but organisations should recognise why this is important in the first place.
“In some cases there is absolutely a need for regulation because the product or service might be very complex. But in other cases, if we’re doing the right thing and putting the customer at the heart of our business, then actually maybe in time we would need less regulation. So I would always encourage organisations, from the board all the way down, to consider what all of the decisions they make will ultimately mean for the customer.”
6. We are moving from a “transactional economy to a relationship economy”
“Those organisations that are going to be successful are those that are prioritising collaboration over competition – they are very open to working very collaboratively not only within their own businesses but across different types of organisations. As customers, we don’t differentiate between points of an organisation - it doesn't matter whether I’m dealing with the ops department, the customer service department, or the marketing department, I'm dealing with your business. I don’t live in silos. And this end-to-end customer experience may even stretch outside of your own organisation, to partners. That means we need to collaborate more, within organisations and outside. And we also need to collaborate with the customers themselves.
“Those organisations that are authentic, inclusive and responsible, are going to be the ones that are going to get better trust and involvement of their customers, which leads to co-creation. And those businesses are then going to have a better understanding of their customers and therefore, hopefully, the ability to develop products and services that are more appropriate for customers. Customers will be regarded as part of, and not separate to, the organisation. That means that they are not viewed as numbers or groups or classifications but much more as part of a dialogue. In the past, marketing would push out messages, but now we’ll need to move to a world where we have a dialogue with the customers.
“So the world has moved on and we need to respond, which will entail much more collaboration, co-creation and dialogue, where once the relationship with customers was more closed and more transactional.”
Neil Davey was previously the editor of MyCustomer from 2007 until May 2023. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management.
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