This month, we have released our latest six-monthly UK Customer Satisfaction Index (UKCSI) – and unfortunately it doesn’t make great reading.
Customer satisfaction has fallen for the fourth period in a row and now stands at its lowest level since 2010. The score of 75.8 (out of 100) is now considerably below its highpoint of 78.4 in July 2022. Of the 13 sectors that we track, six of them have recorded a drop of more than one point in compared to a year ago. While looking at individual organisations, far more of them have seen a decline in their score than an increase.
Conditions aligning for a turnaround
And yet, despite all this, I still see reasons for optimism. Firstly, this period’s decline is smaller than previous waves, although still disappointing to see – down 0.2 points from January when it was 76.0.
Secondly, it feels like external conditions are, in the UK at least, coming together to give new impetus to a service reboot. A new government is in place and, regardless of your political persuasions or beliefs, this creates a sense of new purpose and ambition. The recent King’s Speech was an opportunity for the government to set out its key aims in the coming parliament and there was a clear focus on measures to drive growth, including housing and planning, transport, and energy. There is an opportunity now for UK plc to step into the growth agenda – and a key lever for this is service. Our research at The Institute has repeatedly shown the profitability and revenue dividend of delivering customer service excellence. In the food sector, for example, companies with a UKCSI score of at least one point above the sector average achieved average sales growth of 5.8% in the 12 weeks to 12 May 2024 compared to a market average of just 2.9%. Quite simply, satisfied customers spend more, return more often and cost less to service.
Thirdly, even though more organisations have recorded a drop in satisfaction than a rise, I am heartened by the consistently high performance of a number of leading lights who regularly feature at the top of the UKCSI table. Organisations like first direct, John Lewis, M&S and Nationwide – to name just a few – show us that it is possible to pursue a service excellence agenda simply as a way of doing business and that it delivers the commercial benefits. They should inspire others to emulate them. It is also great to see a new name in the number one position this time around – Timpson. Congratulations to them!
Adjusting the approach
So, what is behind the decline of recent years? I think there are several key reasons. In many cases, organisations have simply taken their eye off the ball due to the challenging economic conditions around them and service levels have slipped as they have focused on shoring their businesses up. In some cases, leadership teams have not driven the service agenda hard enough – the service culture starts at the top and you won’t have an ethos of service excellence on the frontline if that commitment isn’t felt from the leadership level.
It is also apparent that the approach to the service agenda is often too transactional. There is too much of a focus on systems and processes and not enough on the real outcome for the customer, understanding their individual needs and responding accordingly.
Linked to this, I also believe that in many organisations there has been an over-reliance on basic technology. Yes, technology can be a powerful conduit for delivering service – through self-service options for customers, AI-powered virtual assistants, and greater automation – but it is not a panacea on its own. We only need to look at last week’s global IT outage that brought many transport, banking, healthcare and other systems to a grinding halt to see that technology can introduce risks as well as benefits. Service remains a combination of tech and human activity. The technology is there to support and augment the service that people deliver, not replace it.
Reputation and trust
Looking at the latest UKCSI, a couple of other points also stand out. I wrote in last month’s blog about the importance of reputation and trust – and this has been underlined this time around by nearly half (45%) of customers saying that whether or not an organisation does the right thing, in its business practices or its impact on society, influences their satisfaction. Nearly two-thirds (62%) of customers also said that bad practices or behaviour by a company will damage its long-term reputation and that an entire sector can be tarnished by the actions of one or a small number of companies. Clearly, managing reputation and ensuring that actions live up to espoused principles and values is a critical determinant of achieving healthy and positive customer perceptions.
Handling complaints and problems
Another key element – that has been problematic for some time now – is complaint handling. This continues to be an issue, with by far the lowest score of the five dimensions that we measure (complaint handling, experience, customer ethos, emotional connection, ethics). With a score of just 58.1, it is now 8.1 points lower than in July 2022. To put that into context, the next highest drop benchmarked against two years ago is only 2.9 points (customer ethos). It’s a complex area to put right and depends on many factors – but perhaps the biggest clue to the solution is that when we asked customers what aspect of personal care and service most influences their satisfaction, the clear winner was “their availability when I need them”, cited by 42% of respondents. Making sure that customers can get through to a human team member at the point of need is perhaps the most important step in handling a complaint – even if, inevitably, not all complaints can be solved.
Renewing the service effort
We have spent too long on a downward trend – the time has come to turn the situation around. I genuinely believe that the conditions are right now to do just that. As a profession, let’s lean into the service agenda with renewed energy, motivation and purpose and play a crucial part in supporting national productivity and growth.
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