A recent article in the New York Times highlighted a concerning byproduct of the current inflation scare: CEOs across industries are cutting customer service, hoping that it will negate rising costs. A short-sighted mistake, this puts near-term interests ahead of customer experiences and ultimately long-term revenue.
The article notes that, instead of raising prices on consumers, many businesses have instead opted to cut elements of their customer experience. Examples include hotel chains no longer offering daily cleaning services, an increasing reliance on self-service options in lieu of human support, or de-prioritizing service and support inquiry times. Per the article, “According to J.D. Power, even at the highest-rated retailers, only 57% of customers were able to get customer service within five minutes this year, down from 68% in 2018.”
Why have some consumer-facing businesses opted to take this particular cost-savings route? The article notes that many business leaders might see customer service as being a less immediately visible response to inflation than raising product/service prices. Whereas anyone can quickly see the price tag hike on a used car, tracking how a customer will respond to their hotel room being cleaned less frequently is a little tougher. Additionally, some consumers might prefer a less hands-on experience, according to the article. No one likes raised prices, but whether someone enjoys human assistance or self-service is a personal preference.
Cutting Customer Experience Is a Short-Term Solution
However, there are a number of reasons why businesses should consider other routes to deal with inflation. First, the approach of cutting customer experience is one of favoring short-term expense savings over longer term revenue gains. Yes, your customer might look twice at a higher price point for the same product, but you also need to consider the impact of poor customer service. Data by Deloitte suggests that customers who have a positive experience with a brand end up spending 140% more than those who have a negative experience. Additionally, Forrester claims that a superior customer experience can bring brands 5.7 times more revenue than the competitors. We live in the era of NOW CX, where people expect a high level of support and service. For every dollar saved on cutting customer experience programs, many more dollars may be lost on long-term customer loyalty and repeat purchases.
Second, there is the often nebulous but always important consideration of your brand, and what type of loss in reputation you might incur by whittling away elements of customer experience. Ultimately, you need to ask yourself, ‘Does my brand have intrinsic value beyond just the prices of our products?’ If so, then customer experience may be the last thing you would want to decrease investments in.
Finally, the entire rationale for cutting customer experience in a time of inflation — that it is less visible and measurable than raising prices — is based on a faulty premise. In the era of social media and review sites, customer satisfaction (or lack thereof) is incredibly visible. Reputation X found that 86% of consumers will hesitate to purchase from a business that has negative reviews. Additionally, customer satisfaction is easily measurable and quantifiable. This site has covered the many valuable customer experience metrics that companies should be tracking. Those ranging from CSAT to NPS have been proven to have a direct impact on revenue. Quite simply: changes in customer service have never been more measurable, and more 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 do not mean to argue that, in every single occurrence, businesses should forgo decreasing investments in customer experience. If you're in a true commodities market and you’re just trying to sell on price, then by all means you should cut everywhere else before you look at price. However, for the rest of us, there is intrinsic value in our brand. And a significant percentage of that value is derived from customer experience.
This new era of inflation may be scary and anxiety-provoking. But by keeping the focus on the customer first and foremost — and working to ensure the same level of satisfaction that they have come to expect from you — you stand to gain more than you lose, especially as competitors cut customer service in lieu of raising prices.