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2023 has been a challenging year for businesses and customers alike. Economic conditions have been tough, unpredictability has been a watchword – and customer satisfaction has taken a sharp decline.

But what will 2024 hold? On one level, I fear it will be a case of more of the same: whilst prevailing headwinds such as inflation and rising costs may ease off somewhat, we can expect the operating environment to remain difficult. There may also be a general election taking place, increasing political and business uncertainty. For organisations, cost pressures will continue to be a real concern; for customers, the impacts of the cost of living will still be present, and many households will carry on battling against an economic squeeze.

This means that service will be as important as ever. If there’s one thing that 2023 has shown us, it is that trying to win in the market by driving down costs is not the answer. The danger is that this simply drives customers away as they become exasperated by poor service, and worse still, less reassured and more mistrustful of the brand. As a result, we saw the biggest year-on-year fall we’ve ever recorded in our July UK Customer Satisfaction Index (UKCSI).

Key service trends in 2024

At The Institute, we have reviewed the key learnings of 2023 and produced our predictions of ten key trends in service for 2024, which you can see here.

So what’s on the list? There isn’t space here to go through all ten predictions in detail, but suffice to say that the winners will be those organisations who put excellence in service at the heart of their approach in a sustainable and holistic way – across the whole customer proposition, their company mission and purpose, their internal culture and support for staff, and their engagement with the marketplace around them.

One of the most prominent trends will be the continuing importance of AI and automation. Without doubt, AI holds huge potential to drive up responsiveness, efficiency and speed – but it mustn’t be at the expense of human service and assistance where that is needed and adds value. Too many organisations are viewing AI as a route to save costs instead of a means to do that and improve and understand the customer journey. Customer feedback suggests that organisations too often fail to spot cues signalling the need for human intervention. Chatbots, for example, continue to be a cause of frustration to many. The AI revolution will continue apace in 2024 – but it must be about customer experience outcomes, not just stripping back workflows and processes or selling more stuff.

One of the great potentials for AI is to help deliver better personalisation based on an understanding of a customer’s profile and habits – and another big theme for 2024 will be customer segmentation to serve different customer groups in ways that are relevant and timely. It’s about recognising the diversity of the customer base and going beyond stereotypes (not all older customers shun digital channels, and not all of the younger generation don’t want to talk to people!) to get to the person behind the customer tag.

In the same way, another big area for next year will be equality, diversity and inclusion – genuinely achieving outcomes that meet a wide spectrum of needs, including those of vulnerable customers, as well as embracing diversity and inclusivity within the organisation and the service team itself. As our world becomes more nuanced, achieving these goals becomes harder – predicting customer behaviour based on traditional segmentation techniques is less assured. It will be a time to challenge assumptions about customer segments and be open and adaptable in responding to individual needs that will flex and change depending on personal situations and environments – remaining agile and responsive is key.

Another area of growing importance will be cybersecurity. The cyber threat is ever-present and the ubiquity of digital services, cloud and AI increases the range, scale and attack vectors open to cyber criminals. Cybersecurity is also a customer experience challenge – our recent research found that 40% of customers do not believe organisations are doing enough to protect data and prevent cyber attacks, while 68% have felt frustrated by the complexity of an organisation’s security protocols. Ensuring robust security in a way that is straightforward, user-friendly and gives reassurance will be key. This could be a game changer for many organisations who genuinely keep the needs of the customer in mind whilst demonstrating a level of real care and understanding – walking in the shoes of the customer and being on my side are key to this.

Across these all of these issues and priorities, another dimension is that of regulation and brand reputation. Customer service needs to be viewed as a reputational asset – and getting it wrong causes significant damage to the brand. We have seen many giant brands fall from grace by simply forgetting this. Regulators are increasing their focus on organisational culture in underpinning the customer’s interests, such as the Consumer Duty in financial services where firms must be able to show they are focused on sound customer outcomes. In other regulated sectors such as energy, water, telecommunications and rail, the focus is also sharpening. Transparency, accountability and ownership at the top all need to feed into an organisational shift.

An opportunity to shine

I am under no illusions that 2024 will be another challenging year. But equally it is when conditions are tough that organisations have the opportunity to differentiate themselves and shine. Enshrining a service culture in the operating model is one of the most powerful ways that organisations can do this – driving up loyalty and growing customer share.

I wish everyone a Happy Christmas and a prosperous New Year.

Jo Causon

Jo joined The Institute as its CEO in 2009. She has driven membership growth by 150 percent and established the UK Customer Satisfaction Index as the country’s premier indicator of consumer satisfaction, providing organisations with an indicator of the return on their service strategy investment.

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