In 2023 ‘happy new year’ comes with a bit of a caveat. Costs are rocketing on all fronts: food, fuel, staff, materials. Consumer confidence is extremely low and according to the IMF one-third of the world economy will be in recession. And there’s no let-up any time soon: in the UK we’re only half way through what will be a two-year cost of living crisis according to a recent report.
Both businesses and consumers are trying to balance their budgets and squeeze every drop out of their spending, whether it’s investment in new technologies or the weekly supermarket shop. For example, across Europe and the US consumers are cutting their food costs by switching brands and buying less. How do companies and organisations hold on to their customers when everything feels like it’s falling apart? Is it still worth investing in strategies to improve customer experience, or is it just a case of keeping the business static and hoping that things look better in 12 months’ time?
What we can learn from the Covid pandemic
During the pandemic some brands suffered lasting damage because of their inability to cope with spikes in demand, or pivot the business when consumer needs changed rapidly. But others won new customers as people moved their shopping and services online to deal with the practicalities of pandemic life.
Once again agility is key
The businesses that fared the best were those that could react quickly to the new normal. The same is true now, whether it’s being able to rapidly scale up customer service or create new product ranges and online journeys to suit lower budgets. As customers become more and more discerning about where they spend their money, companies need to align themselves with changing customer needs.
Being there for consumers in a time of trouble
Despite all the doom and gloom there are still opportunities to be had. In the UK and beyond at a time when many feel like governments aren’t really listening to ordinary people, brands and businesses can distinguish themselves by putting customers first.
This means making sure that the human touch shines through in all channels. Smart use of data allows high levels of personalisation and the result is that customers feel that their needs are better understood and anticipated. This is as true for customer service as it is for marketing; nothing is more likely to make someone switch to a competitor than finding that when technology fails it means hours on the phone, or even worse, no visible way of speaking to a human at all.
Investing in the customer experience
With businesses trying to reign in their own spending, many will be scaling back on investments in new tech and new experiences. Forrester have predicted that one in five CX programmes will disappear in 2023, with companies cutting back CX teams if they can’t see clear proof of their ROI. But this could prove damaging in the long-term. Loyalty suffers when people are under pressure and businesses are going to have to fight hard to stop them moving to a competitor perceived to offer better value.
Meanwhile a survey by IPSOS shows that people are more willing to accept price rises if they feel valued as a customer. But as prices rise, expectations rise too, with nearly 80% of people believing they should be having better experiences as a result. A UK survey in October 2022 found that only 18% of respondents were happy with the customer service from their providers across finance/banking, insurance, utilities, telecoms/mobile and retail. At a time when customer retention is key, businesses need to do better.
In the UK a report by the Institute of Customer Service found that 82% of respondents said they were more likely to trust an organisation that gives them better service. In addition, 64% are willing to spend more with a company they trust. But what creates trust? People said they want genuine customer reviews and testimonials (59%), transparent pricing from the very beginning (46%), and to ensure that products are as described (41%).
Improving ecommerce journeys
Ecommerce businesses need to scrutinise their digital experience and ensure that every element is optimised so that they are the first choice for a customer who could easily go elsewhere. This might mean improved search and filtering, greater transparency over delivery costs and dates, or offering free delivery on a product a customer has previously shown interest in.
Happy staff means happier customers
Employee experience is also high on the agenda and businesses will need to focus on the needs of their staff as well as their customers. With low unemployment and a skills shortage, people who don’t enjoy their work will simply move on. And it’s not just about pay; businesses would be wise to take a critical look at their staff benefits, training, career progression and HR, making sure that they are utilising all the digital tools available so that employees feel in control of their experience.
Understand that this is new territory for younger generations
Older consumers have experience of economic turmoil. Generation X faced high unemployment and a property crash in the early 1990s. Millennials were hit hardest by the 2008 crash. But for Generation Z, already reeling from the pandemic, this is a first. With reduced spending power and often little stability in terms of housing, no wonder so many of them embrace the sharing economy, renting high fashion items, pooling resources and sub-letting their rooms while they’re on holiday.
As digital natives they will be using every online tactic they can to save money while still having the experiences they enjoy, scanning all channels for special deals, free extras and rewards. They also, of course, want to self-serve and will value the ability to problem-solve themselves, whether it’s re-arranging a delivery or choosing a new flight when one is cancelled
Finding opportunities in difficult times
There’s no doubt the current economic situation is extremely challenging for businesses, but there are also opportunities. By showing empathy demonstrating practical responses to changing needs and serving customers well, businesses can both hold on to the customers they have and even find new ones. As ever, it might be the technology that does the heavy lifting, but it’s the showing the humanity behind it that will win the hearts and minds of customers.
The BIO Agency works with businesses to transform customer experiences. To talk to us about your challenges in 2023, contact us at firstname.lastname@example.org