The latest UK Customer Satisfaction Index (UKCSI) reports that customer satisfaction is collapsing at the fastest pace on record, hitting the lowest level in eight years – with stubborn inflation and staff shortages triggering the sharpest year-on-year drop since 2008.

The UKCSI is the national barometer of customer satisfaction published twice a year by The Institute of Customer Service since 2008. It is an independent, objective benchmark of customer satisfaction on a consistent set of measures on 281 organisations and organisation types in 13 sectors.

The UKCSI provides a unique way of tracking and comparing customer satisfaction performance across the UK economy and is designed to give an objective view of the state of customer satisfaction in the UK.

Back to the future?

Joanna Causon, Chief Executive at the Institute, outlined that, in some respects, the ‘current environment shares a number of characteristics similar to those experienced in the 1970s’. Ms Causon cited factors including ‘a difficult economic situation with high interest rates, high inflation, and a wide range of labour disputes across a wide range of industry sectors’, as primary drivers.

Ms Causon also noted that there is a ‘perfect storm going on with labour shortages, skills shortages, short-termism and companies not being where they need to be in terms of technology’ – all happening against a ‘backdrop of consumers being under more financial pressure than they ever have been’.

Key areas impacting customer satisfaction

The Index suggests that ‘18% of customers feel their financial well-being is poor or very poor, up from 12% in July 2022, with the impact of bad customer experiences often being most acute for customers with low levels of financial well-being’.

In parallel, the Index reports that companies are also taking longer to handle and resolve complaints – rising 37% since July 2022. It is also hitting the economy hard, with the Index suggesting that it is costing in the region of £9.8bn a year in lost time – a ‘major blow to productivity’, the institute noted.

Ms Causon warned of a ‘vicious cycle’, as companies contend with delays, prices are also rising, and organisations have been unable to hire enough staff to meet demand. Ms Causon also specifically cited that organisations are ‘failing to invest in staff training and technology effectively’, with the knock-on effect meaning that customers are often ‘sent in circles’ between different departments, resulting in poor customer experinece.

Ms Causon also noted that the ‘length of time that it takes to resolve an issue’ – and customers being passed from ‘pillar to post’ – are having an adverse impact on customer satisfaction.

Consistent and persistent problems

When compared to July 2022, the sharpest decline in customer satisfaction is reported to be in the Transport and Utilities sectors. In February 2023, an Ofgem review stated that customer service standards of energy suppliers must improve. The regulator noted that the February 2023 review ‘looked at customer service and complaints performance from information submitted by 17 of the biggest domestic energy suppliers’.

The regulator also stated that it had launched an urgent investigation into practices of one of the largest UK energy suppliers and its treatment of vulnerable customers, which – it noted – was outside the scope of the February review.

The Ofgem February 2023 review reported consistent customer service issues in relation to the UKCSI findings, noting areas of weakness including:

  • Weak policies and pathways for customer service journey, including incomplete communications to customers in relation to complaints. 
  • Inconsistent scripts for staff handling complex calls. 
  • Customers left waiting for hours on the phone on several occasions.  
  • Phone calls simply not picked up and slow responses on written customer contacts. 
  • Up to 50% of customers giving up and hanging up calls as not answered.  
  • High rates of customer complaints upheld by the Energy Ombudsman. 
  • Incomplete management information being used to monitor performance. 
  • Weaknesses in customer service agents’ training and/or quality control mechanisms. 

From the perspective of customers, the UKCSI July 2023 key findings concluded that there were three key areas that organisations needed to improve:

  • Make it easy to contact the right person to help and resolve queries and issues.
  • Focus on employee behaviours and competence.
  • Improve website navigation.

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