As we approach the end of 2024 and a new year looms, it’s a good time to stand back, reflect and reset for the future. It has been another challenging year for businesses in a low-growth economy with high levels of uncertainty and change – including a new government with its much-discussed Budget and emerging legislative programme.
Business reaction to the Budget may have been mixed, with significant concern about the increased tax burden that is set to fall on employers – but the task at hand now is to digest the implications and factor them into business planning going forward.
So what will 2025 hold, and what part can the service agenda play to support growth and business success? We ask ourselves such questions every year and publish our predictions of key trends, with our outlook for 2025 available here.
Planning, prudence, purpose
By way of introduction to this, let me first say that conditions have been tough and there is a danger of many businesses getting caught up in the short-term agenda – reacting to issues as and when they arise rather than taking a strategic and longer term view that will help them anticipate what’s ahead.
It is clearly critical to keep investors (and financial markets) onside, but this should not mean prioritising short-term shareholder returns at the expense of the very things that will build long term value in the business. Some businesses are over-leveraged, and given interest rates now look set to fall more slowly than previously expected, the cost of debt may force poorly managed businesses to react in ways that jar with the interests of their customers and wider stakeholders.
This leads me to reflect that the importance of planning for the future has never been more important. In volatile and unpredictable times such as now, the businesses that conduct thorough scenario planning and map out the variables as far as they are able will be the most resilient. Alongside this comes a second ‘p’ – prudence. Times are uncertain – so keeping a strong balance sheet should be a priority, whilst making strategic and targeted investments in key areas for business growth such as product/service enhancements, systems and service.
As so often, I bring this back to a third ‘p’ – purpose. High-performing businesses stay true to their purpose as a touchstone of consistency and integrity in an unstable environment. They set out the values and behaviours that underpin their success and devote time and energy to embedding these in a service-focused culture. They also concentrate on their core propositions – when external conditions are challenging, locking onto what you know and do well is one of the surest strategies for success.
In our forecast we highlight ten key trends, most of which come back to one or more of these three p’s. There isn’t space to cover all ten here, but I’ll give an overview and pick out some of the key trends.
Economy: Firstly, it is clear that there will be a long path to sustained economic growth. The UK economy is expected to grow in 2025 but this will be fragile and uncertain. Organisations will need clarity of purpose, a focus on values and culture, ongoing investment in the customer experience, skills and technology, and a ‘balanced scorecard’ approach to make sure they are appropriately considering the needs of customers, employees, stakeholders and investors. Planning and prudence will be crucial to navigate the environment.
Skills: A second critical area will be skills. The skills agenda will be key to productivity, with organisations often struggling to find employees with the right skills and capabilities. This isn’t only about technical qualifications – the skills needed to deliver customer service objectives have broadened: empathy, problem-solving, commercial awareness, and confidence in using technology have all become more important. A new government and the creation of Skills England creates the opportunity for a renewed focus. Businesses must continue to invest in the skills agenda – including raising perceptions of customer service as a valued career and profession – but there is also a need to review the way the Apprenticeship Levy works, with many employers suggesting that it is difficult to access, time-consuming and insufficiently flexible. We need planning and purpose here at both an organisational and governmental level.
Customer: The customer is king – but consumer behaviours are increasingly influenced by complex factors. I believe that many consumers will become more mindful and deliberate in their consumption, spending more on wellness and wellbeing and cutting back on their consumption of physical products. Expectations of the quality of the digital experience will continue to increase, as will the expectation of personalisation that is relevant to the individual, not just an opportunity to upsell. But another key factor will be an uncomfortable polarisation between customers who are financially thriving and those who are under real financial challenge. Truly understanding customers across all the varying segments, and offering flexible and supportive customer journeys to match, will be fundamental. Ultimately, success here is about aligning the organisation’s purpose with that of the customer.
AI: The prevalence and importance of AI will continue to grow, in direct dealings with customers, to assist employees, in operational workflows, predictive analytics, and analysis of customer interactions and feedback. However, while customer satisfaction will improve in general through this, the gains will only be marginal unless organisations manage to combine the right balance of people and technology in their service delivery. I predict that we will see a widening customer experience gap between the highest performing organisations and others – the high performers will focus relentlessly on the design and quality of customer journeys and will embed AI as a support and enabler of customer service, rather than a means of replacing people. Planning and purpose are needed more than ever here.
Leaning into the challenges
In summary, 2025 is likely to be another challenging year. And I haven’t even mentioned a new US president and the possibility of increased tariffs and trade wars! But we have a choice – admire the problem or lean into it and look for solutions. I encourage business leaders to do the latter. The UK has a proud history of enterprise and innovation – let’s harness those, combined with the right amount of prudence and planning, to get on the front foot. Critically, service needs to be at the heart of the approach as our analysis repeatedly shows that investing in service becomes a profit and prosperity generator.
Thank you for reading my blogs during 2024. I wish everyone a Happy Christmas and a peaceful New Year.
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