Will customers really pay more for better customer service?

One of the things that caught my eye in the Institute of Customer Services UK’s (UKSCI) most recent report on customer satisfaction was the suggestion that a growing number of customers are prepared to pay more for improved service. 

The UKCSI’s report, the analysis from which the Institute uses to make up its Customer Service Index,  indicates that the number of customers saying this has increased from 26% in January 2020 to 34% in the latest January 2022 report. 
 
This sentiment is backed up by Capgemini’s Digital Transformation Institute, which suggests that 8 out of 10 customers are willing to hand over more cash if they receive a superior experience; similarly, Shep Hyken, writing for Forbes, has suggested that 52% of customers feel this way. 
 
In a good deal of research into this matter, the customer is asked about how they would behave but their actual behaviour is not measured. To try and resolve this, the UKCSI has measured actual behaviour in banking and retail – and has found a positive correlation between an organisation's growth and profitability and its relative ranking on the UKCSI’s Customer Service Index. So we can safely conclude that customers are willing to move to a new organisation if it offers them better service. 

But is the opposite also true?

I can’t help wondering, however, that if 34% of customers are prepared to pay more for a different class of service, does that also mean that 56% are prepared to accept a poorer one for a lower price? Or does it mean that 56% expect excellent service but are not prepared to accept it costing more? 

Although it surely depends on the industry, the level of competition and a host of other things, it's certainly more likely to be the latter.
 

What impact will inflation have?

Most commentators are suggesting that inflation will rise to 7% or higher in 2022. Whatever the economic factors, customers will notice that while prices have gone up, their income has not or at least hasn’t at the same rate – meaning they are spending a higher proportion of their money on the same goods and services. So if they are, in fact, paying more for the same return, then surely they will expect something to have improved? 

Therefore when organisations increase their prices in line with inflation, they would be well advised to also consider upping their customer service game in tandem.

How can organisations improve the customer experience?

As my old boss used to say: “Improving customer experience is not difficult, it's just hard work.”

Intuitively, we all know what needs to be done to make things more pleasant for our customers –
we're all customers too, after all. The difficulty lies in making it happen. 

We have to understand exactly who is having a poor experience and at what point this is happening, and the answers won’t be the same for every customer group. Then we must identify the root causes of the problems and design solutions that address them at their core. 

Those solutions are likely to involve a combination of:

• staff training and behaviours
• policies
• processes and procedures
• systems and communications
• knowledge and information.

Obviously, designing, developing and implementing ways to address all these areas is a complex task.

So, if you’re wondering how to implement a step-change in how happy you make your customers or, indeed, if you’ve already improved their experience, I’d love to hear from you. Please feel free to drop me an email or message me on LinkedIn.