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Revealed: True cost of poor customer service

Inadequate customer service is costing UK companies billions of pounds a month in lost productivity, according to new research. Here, CEO & Founder of First Formations, Graeme Donnelly explains what this means for UK businesses and how they can turn this around.

Inadequate customer service is costing UK companies billions of pounds a month in lost productivity, according to new research. 

The UK Customer Satisfaction Index (UKCSI) found that employees are spending more than a day each week handling customer problems, equating to 20% of their total working time. It’s estimated that this accumulating backlog in productivity is costing the UK economy as much as £11.4bn every month. 

The UKCSI, which publishes an objective benchmark of customer satisfaction on a consistent set of measures on 281 organisations across 13 sectors each year, said that this backlog had fallen at the ‘worst possible time’, as businesses contend with the ongoing cost of living crisis and rising inflation. 

A downward trend 

Their latest findings show that almost 17% of consumers have reported facing issues with a business in the last 12 months, representing a downward trend year on year, and an increase of just under 3% compared to pre-Covid times. 

“These figures are undoubtedly indicative of the increased pressure and strain on UK firms as they battle with aspects like staff shortages, unpredictable disruptions and service delays, and changing customer demands” says 1st Formations CEO and founder, Graeme Donnelly. 

“While the decline in satisfaction with complaint handling is a major factor, the research also represented a growing dissatisfaction with company ethics, emotional connection, trust and reassurance.” 

The value of human connection

With rising staff shortages, many businesses have been forced to scale back their customer service efforts giving way to an unwelcome prevalence of automated phone lines and chatbots – leaving disgruntled customers unable to connect with a real person. 

But the human connection has become an even more vital part of the customer journey in recent years, and an essential component in effective complaint resolution. In fact, despite 28% of consumers tightening their purse strings and being more careful with how they spend their money, 35% of them admitted they would be willing to pay more for excellent customer service. 

This should send a clear signal to organisations that have reduced service impetus as a means of saving costs, that customer service is in fact a key driver in profitability. Findings elsewhere have reported that it is integral to brand loyalty, with 65% of customers saying they would switch to a competitor as a result of poor customer service. 

A time for growth 

“While the research indicates a troubling time for UK companies, it should also be interpreted as a prime opportunity to ramp up service efforts and re-evaluate the customer experience – listening to feedback and identifying potential areas for development”, Graeme adds.

“This could mean introducing more of a balance between digital and human communication channels, investing in skills to train staff on outstanding customer service, or even sourcing professional support from a call answering provider to ensure that no call goes unanswered and customers always feel listened to and valued.” 

Championing consistent customer service excellence will not only increase demand and profits for companies but also help facilitate vital economic growth. 


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