As 2025 gets underway, businesses still face a challenging economic and wider operating environment – but there is at least some encouraging news in our latest UK Customer Satisfaction Index (UKCSI).
After four successive six-month periods of declining scores, the UKCSI for January 2025 turned the corner with a small rise in customer satisfaction levels. The improvement was only modest, with the score of 76.1 (out of 100) up 0.3 points from July 2024 and 0.1 points higher than in January 2024. But at least it did mark an improvement, with signs that satisfaction began to pick up more in the closing months of last year.
This improving trend gives organisations something to build on and perhaps we have seen a stabilisation. The task now must be to cement these small improvements and start driving a sustained upward trajectory in customer satisfaction.
The growth dividend of excellent service
After all, what every organisation is chasing these days is growth which is also core to the government’s strategic agenda. Our research at The Institute consistently shows that there is a link between high levels of customer service and business performance and growth. Our analysis of 125 companies between 2018 and 2023 showed that those organisations with customer satisfaction at least one point above their sector average experienced compound revenue growth on average of 7.4%; compare that to the average 0.1% revenue growth for those organisations with customer satisfaction of one point or more below their sector average. The numbers speak volumes.
Mixed performance picture
But while we are starting to see some tentative green shoots in customer service performance, there is still a long way to go. Of the 13 sectors we track, 12 of them have moved by less than one point compared to January 2024 – minimal movement really. We also find that, even though the number of complaints has fallen for the second period in a row, they are still above pre-Covid levels – with service failures and resulting complaints costing a UK organisations a staggering £7.3bn a month and taking around four working days a month to fix. This alone creates a huge drag on UK productivity and acts as a brake on growth. Getting it right first time should be a key priority within any organisation’s service strategy.
We also see some quite significant variations by sector. Overall, Utilities remains the sector with the lowest customer satisfaction levels with a score of 70.0. Within that there is quite a marked split, with the score for Energy businesses up by 2.6 points while for Water companies it fell by 2 points. Retail (non-food) takes the prize of the highest satisfaction at 80.6 – which is in fact quite an achievement when you consider that we have just come through the busy season leading up to Christmas. Looking at the top ten of individual organisations, it is dominated by Retail along with Banks & Building Societies. For the second period in a row, Timpson emerges as the number one. Congratulations to them!
Achieving a balanced service proposition
Leading organisations are setting an example in driving a customer-centric experience with service at its heart along with accessible channels and systems that balance the right degree of self-service and AI-led technology with people-based support. Certainly, getting that balance between human and machine right is not easy – but it’s a key area in the service proposition. Customers are more likely to feel that organisations’ use of technology in service has improved rather than got worse in the last year, but many are uncertain or cautious. It’s a subject that I have been increasingly thinking about recently and will return to in my blog soon – watch this space!
The UKCSI also demonstrates just how much potential there is for organisations to turn a brilliant customer experience into revenue gains. Over three in ten (31%) customers said they would be prepared to pay more for excellent service, while over a fifth (21%) said that they had increased their spend with an organisation due to the quality of the service received.
Opportunity to shine
As businesses continue to face into a tough range of challenges, I urge them to keep in mind the essential link between high levels of customer satisfaction and sustained business performance. Think about the end-to-end customer journey and what customers need at each point, use technology to support and enhance the customer experience rather than as a means of replacing people, and invest in your customer service teams to provide empathetic and professional support when it is required – and the returns will follow. Not only that, but the more we invest in the customer agenda and build the Service Nation, the more that the UK will be an attractive place to invest and do business, amplifying the benefits across the economy.
Having stopped the decline, there is now an opportunity to rebuild customer satisfaction levels across the piece and make service shine – let’s take that opportunity and help facilitate renewed business growth.