The latest UK Customer Satisfaction Index (UKCSI) brings good news on the face of it: the July score of 78.3 (out of 100) marked a fourth successive six-month period of a rise in satisfaction. The score is up one point compared to a year ago and is very close to the highest level we have seen it (78.4 in 2022) since the UKCSI was launched 12 years ago.
However, I also see a number of warning signs that concern me. Compared to six months ago, the UKCSI shows only a negligible rise of 0.1 points – more suggestive of stagnation or flatlining in truth.
Shaky consumer confidence
This comes as customer confidence has fallen. When asked about their view on their own finances and on the economy, confidence in both has dropped: 39% of customers are confident about their personal outlook compared to 43% last time, and only 27% think the economy will improve compared to 31%. Additionally, the biggest drops in confidence come from the more affluent customers with good financial wellbeing. On their personal financial outlook, confidence has fallen by more than 5%. Even financially secure consumers are tending to spend more carefully.
This could put additional pressure on businesses who are already facing challenging economic circumstances. Cost rises through inflation, increased employers’ national insurance and jumps in fuel and energy prices – largely driven by the conflict with Iran, which continues to flare up– are biting, with limited room for manoeuvre in terms of passing increased costs on.
New government refresh?
At home, we have a new Prime Minister. I hope that Andy Burnham’s premiership will prove to be an opportunity for a refresh that will advance measures to stimulate economic growth. But there is a risk that businesses will sit on their hands while they wait to see the direction of travel, perhaps pausing in some of their investment plans.
If there is an easing up on the service agenda, this could tip us quite quickly into a decline in customer satisfaction. You can’t dip in and out of the service commitment – and those that do often take years to recover reputationally. Times of challenge call for bold and brave leadership.
Getting the AI balance right
People are complex and clearly have individual needs that invariably require different methods and channels, as well as a deep understanding. If AI isn’t deployed well, we could resort to a one-size-fits-all approach. The best organisations are using AI as part of their service suite – and constantly trying to find the right balance of AI and human service. I often get involved in the debate about whether AI can truly be empathetic. I am quite clear that it cannot be, and we shouldn’t deceive ourselves or believe it can! A letter that has empathy or the right words is a well-written letter, but that isn’t empathy. Empathy is a genuine and deep understanding, a response in the moment, and a personal and connected response – it’s putting yourself in the shoes of the other person.
This issue is so important that I have convened an AI Ethics Committee to establish the principles and practices of good, ethical and sustainable customer AI. I chair the group, which includes a number of AI and customer experts from multiple sectors. We are currently articulating the principles of our ethical AI framework, which we will publish in the coming months. One core tenet is that AI should be deployed in such a way that it produces an improved customer experience, not just increased operational efficiency. Watch this space!
Banks and Building Societies at the forefront
Turning back to this period’s UKCSI, some other themes stand out. First, Banks and Building Societies have recorded their highest ever score (82.0), making them the highest performing sector. In my view, the sector is an excellent example of integrating technology, including AI, into the service offering – this has become one of their strengths.
A new financial organisation tops the list individually this time, too: Nationwide Building Society with a score of 87.3. My congratulations to them, along with all the other top performers, including John Lewis in second place and first direct in third.
Embedding service in the boardroom
Another concern here, however, is that we continue to see a widening gap between the best-performing organisations and the rest. A two-tier customer service landscape is in nobody’s interests. I hope that all organisations will continue to drive up their standards across the board so that we arrive at a more unified Service Nation.
This is something that we are determined to help facilitate at The Institute – hence the forthcoming launch of Portis – the service innovation hub, which draws on our extensive research and the expertise of 18 leading organisations who have supported its foundation, to embed service at the highest levels and bring it firmly into the boardroom. More details will follow over the next few months.
In the meantime, I urge businesses to stay committed to service and keep recognising it for what it is: a driver of stronger financial results by putting customers at the heart of your values and how you operate. In challenging times, service can be the difference.
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