A recent New York Times article highlighted a disturbing byproduct of the current inflation scare: CEOs across all industries are cutting back on customer service, hoping it will offset rising costs. A briefly cited mistake, this puts short-term interest ahead of customer experiences and, ultimately, long-term income.
The article notes that instead of increasing prices for consumers, many companies have instead chosen to reduce certain elements of their customer experience. Examples include hotel chains that no longer offer daily housekeeping services, a growing reliance on self-service options instead of human assistance, or the de-prioritization of service and support request times. According to the article, “According to JD Power, even at top-rated retailers, only 57% of customers were able to get customer service within five minutes this year, up from 68% in 2018.”
Why have some consumer-oriented companies chosen to take this particular route of cost reduction? The article notes that many business leaders might view customer service as a less immediately visible response to inflation than increasing product / service prices. While anyone can quickly see the price increase on a used car, it’s a little more difficult to know how a customer will react to less frequent cleaning of their hotel room. Additionally, some consumers might prefer a less convenient experience, according to the article. No one likes the higher prices, but whether someone has human assistance or self-service is a personal preference.
Reducing customer experience is a short-term solution
However, there are a number of reasons why businesses should consider other avenues to deal with inflation. First, the approach to reducing the customer experience is to favor short-term expense savings over longer-term revenue gains. Yes, your customer may be asking twice as much for the same product, but you also need to consider the impact of poor customer service. Data from Deloitte suggests that customers who have a positive experience with a brand end up spending 140% more than those with a negative experience. Additionally, Forrester says a superior customer experience can earn brands 5.7 times more revenue than their competitors. We live in the NOW CX era, where people expect a high level of support and service. For every dollar saved by cutting customer experience programs, many more dollars can be wasted on long-term customer retention and repeat purchases.
Second, there is the often nebulous but still important consideration of your brand and the kind of reputation loss you might experience by reducing elements of the customer experience. At the end of the day, you have to ask yourself, “Does my brand have intrinsic value beyond the prices of our products?” If so, the customer experience may be the last thing you want to cut back on.
Finally, the whole rationale for reducing customer experience in times of inflation – that it is less visible and measurable than price increases – rests on a flawed premise. In the age of social media and review sites, customer satisfaction (or lack thereof) is incredibly visible. Reputation X has found that 86% of consumers will be hesitant to buy from a company that has negative reviews. In addition, customer satisfaction is easily measurable and quantifiable. This site has covered the many valuable customer experience metrics that businesses should be tracking. Those ranging from CSAT to NPS have been proven to have a direct impact on income. Quite simply: changes in customer service have never been more measurable and visible than they are today.
Related article: The Future of Work is Here: How Will Customer Service Adapt?
Keep your focus on the customer
I’m not saying that in every occurrence companies should forgo decreasing investments in customer experience. If you are in a real commodity market and are just trying to sell on price then you should definitely cut everywhere else before looking at price. However, for the rest of us, our brand has intrinsic value. And a significant percentage of that value is derived from the customer experience.
This new era of inflation can be frightening and anxiety-provoking. But by focusing on the customer first – and striving to ensure the same level of satisfaction that they expect from you – you will gain more than you lose, especially as competitors cut back on customer service instead. to increase prices. .
Daniel Rodriguez is a seasoned marketing executive, entrepreneur, family member and musician who uses daily meditation to manage life’s intense moments. He is currently CMO of Simplr, where he leads a team that is redefining the way brands deliver customer service.