When asked what made the job of prime minister difficult, Harold Macmillan is reported to have once replied, “Events, dear boy, events”. I wouldn’t be surprised if the current PM, along with the Chancellor, were feeling something similar at the moment.
Recent official figures have revealed that the economy grew faster than expected in both January and February. Unfortunately, the conflict in the Middle East and the ensuing energy (and broader supply chain) crisis have almost certainly blown a better-than-expected economic recovery off course.
What we are seeing at the national level will, of course, be replicated for individual businesses, as their energy and staff costs rise, along with business rates, in many cases. This risks leaving businesses in stasis – holding off the very investments that will deliver the growth we all need. Some consumers, too (facing their own higher bills), may be more cautious over big purchases.
And consumer confidence, in certain sectors, typically has a knock-on effect on business confidence – particularly when purchasing high-frequency lower value items, where it’s quick and easy to switch suppliers, and price becomes more of an immediate issue.
What the UKCSI tells us about business performance – and growth
In reflecting on this, there are perhaps some learnings from our UK Customer Satisfaction Index. The data over the last 18 months has seen steady improvements in customer satisfaction.
Many factors contribute to economic growth, and our wider research has long demonstrated the ROI of service for businesses and the wider economy. So it perhaps makes sense that a sustained improvement in service has been followed by higher-than-expected (if extremely modest) recent growth.
There are a host of reasons for this, from the money and time savings of dealing with fewer customer complaints – freeing up labour and capital to be deployed more productively, to the increase in consumer spending that good service can prompt. Our research shows far more consumers are happy to pay more for good service than ever before, and that perceived value is the key driver, not cost alone.
Organisations must focus on what they can control – starting with the service they can provide
What then should organisations do? We can focus on what we can control. We can’t impact peace negotiations in the Middle East, or quickly find new sources of energy, but we can focus on the operational and service elements of our business that help build resilience to weather the disruption.
Delivering for customers at times like this is remembered and pays dividends for long-term brand loyalty. On the other hand, those organisations seen as taking advantage of the current situation to deploy dynamic pricing inappropriately (for example, within food retail), reduce quality, or lower service standards will be remembered.
Rising input costs will make changes to the business proposition unavoidable, and organisations can mitigate reputational damage by communicating well with customers – making it clear how seriously they view their customer commitments and explaining why they have had to increase pricing or adjust their offer.
No customer wants to feel they are being ripped off, or that they are no longer able to afford the things they want. The answer to this is to demonstrate value to customers through transparent practices and good value, underpinned by excellent service.
We all need to find more ways to be efficient – through better deployment of technology, control over our cost base, and quicker adaptation to changes in the external world.
While we all hope for a return to calmer geopolitical waters, what we do in the meantime matters. It is clear the modern world isn’t returning to a steady state anytime soon, so rather than treading water, we need to move forward with confidence, offering clarity to the customers, suppliers, and stakeholders we rely on, and who, in turn, rely on us.
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