Rate hikes, inflation, pandemics, and high energy costs – all indicate financial volatility in the global market. The “doom and gloom” headlines reading of an imminent recession across continents leave everyone wondering if and when it will eventually show up – at what intensity and for how long.
During economic downturns, customers set stricter priorities and cut down on discretionary spending. Consequently, sales begin to decline, compelling organizations to cut costs, freeze recruitment, and reduce prices. Also, they postpone planned investments in customer-led growth, focusing on a wait-and-see approach.
But, that’s not how customer service in 2023 gonna work.
During a thriving economy, whatever business leaders touch turns into gold. They can experiment with new techniques and concepts. Even if things go south, they can escape unharmed.
However, when businesses slump and budgets get tighter, so do the options. Making the right call becomes even more crucial. While no corporate tactic is 100% leakproof, business leaders can bet on specific areas that nearly always bring returns. The safe zones. One of those is customer growth and retention.
Dipping revenues, lagging key performance indicators (KPI), and waning workforce morale – economic downturns ripple through several parts of the business economy. When consumer demand slumps, organizations generally downscale operations. These, in turn, lower the demand for raw materials and labor, the former of which later trims business-to-business (B2B) expenditures.
As such, the job crisis magnifies, further reducing consumer demand for products and services. Nevertheless, businesses and customers still spend during a recession, but at reduced levels and with shifted preferences.
Combining these factors with cross-border tensions and supply chain snags leaves C-suites scrambling to think intelligently to walk a shaky tightrope.
The real question is – will it be your business the customer will continue to do business with during the tough times?
For instance, the US hit its debt ceiling – US$ 31.4 Tn – in January 2023, forcing the Treasury Department to implement “extraordinary measures” to keep paying the government’s bills on time. Exceeding or even tickling the debt limit can spark a 2008-style financial turmoil.
Potential consequences include rising borrowing costs for organizations and homeowners alike, downgrade by credit-rating agencies, significant job cuts – about 7 million jobs in the US alone – and decreased consumer confidence. All these repercussions can not only shock the US economy but also tip emerging economies into recession.
Amid the uncertainty, most businesses slash their budgets in domains, from communications to research. While budget trims are a wise decision, putting customer service on the back burner can cripple corporate productivity over the long term.
Customers crave businesses that understand what they want and when they want. Today, several companies bombard customers with marketing messages to grab their attention. However, there is a disconnect between people’s expectations and brands’ offerings.
Those who pounce on the opportunity by delivering unique and personal customer services will enjoy better customer lifetime value and repeat business.
At the same time, digitization is increasingly becoming ingrained in customer experience in 2023. A survey reveals that quality-focused customer service (27%) and sustainable customer retention (18%) top the list of corporate agendas.
So, what better way to tick these boxes than with technology?
Devising customer retention models based on half-baked information and gut feeling might work in the short term, but founders need more substantial than that to stay afloat.
For example, artificial intelligence (AI) and advanced data analytics help businesses tailor customer service by providing smarter recommendations based on information such as product wish lists and recent purchases. Such data help create informed growth and retention strategies and enable support agents to send personalized messages to better engage customers.
Besides, 7 out of 10 customers engage more with organizations that provide personalized and seamless customer experiences.
This co-intelligence drives more efficient and genuine customer service in 2023 as agents are freed up to proactively address clients’ issues, auto-respond to low-risk problems, and offer real-time updates to customers. Hence, businesses maintain the human contact necessary in these uncertain times.
Customer service leaders who understand these trends and numbers and act upon them quickly are well-set for lucrative returns versus those lagging in tech adoption.
According to a report, about half of the companies view customer experience as the primary focus area over the coming five years. The remaining fraction will endure the following risks:
Earning new customers is even tougher during an economic downturn. People double down on businesses they trust instead of risk spending on anything new that turns out to be a disappointment.
As such, customer service can make or break loyalty. C-suites that still consider retention-based growth a nice-to-have will later find their customers moving on to their competitors. To cement the statement, 32% of consumers ditch brands after experiencing poor customer service on numerous occasions.
Customer lifetime value (CLV) helps brands target customers who spend the most at them and will remain their advocates for the longest period. Additionally, customer service leaders can identify loopholes in customer-facing interactions and build tactics to rectify them.
However, CXOs ignoring customer support in 2023 and beyond will witness reduced CLV. Not understanding customers’ needs and not making them feel important during conversations will shoo them away to market competitors.
People leave with a broad smile when brands understand and go to extreme lengths to solve their queries. Plus, they spread the positive word about the brands among their acquaintances.
However, dealing poorly with customer inquiries or problems is a significant risk – not only financially but also in terms of brand reputation. Dissatisfied clients will likely share their negative experiences wherever they go. In fact, customer service is a deciding factor for 9 out of 10 Americans when it comes to engaging with a brand.
So, founders not prioritizing customer growth and retention are staking their reputation, especially when 95% of people consult online reviews before making a purchase.
No company can afford to understate the importance of customer service in 2023. Poor service negatively affects brands’ client retention rates, driving would-be buyers away to look elsewhere.
Even if some businesses implement adequate strategies, they have already missed the boat. For instance, various American retail chains, including Bed Bath & Beyond, Party City, and Joann, are suffering liquidity crunches due to inflation and shaken consumer confidence.
As such, these retailers are resorting to aggressive discounting and promotions to revive sales. However, this dynamic is hurting profit margins and triggering earnings slowdowns.
Customers are just as worried about financial standstills as organizations are. So, how to increase returning customer rates? Below are six tips customer service leaders should know to ensure long-term stickiness with clients and stay immune to volatility.
Who said personalization is a thing of the past?
Many organizations are already staring at further evolution in consumer behaviors as they steer through 2023. Hence, customer service leaders must convince people why they should stick with them for a long.
Customers want to feel like they are getting out the most of every dime during a recession. So, adding a personal touch to customer-facing conversations is the best way to shine.
For instance, talking to customers about their unique preferences. Or simply addressing people by their names.
Tailoring a message to address people’s needs makes them feel seen and appreciated. Moreover, it makes them more receptive to the message. Indeed, 78% of customers will likely return to brands that offer tailored experiences. Personalized customer service indicates that CXOs do not just see dollar signs over their heads.
Requesting feedback via customer surveys provides crucial insights into client-facing interactions and helps better understand the needs of focused groups. In addition, these inputs enable founders to determine what customer service strategies work well and what needs further improvement.
Thanks to customers’ opinions, organizations can always keep their fingers on the pulse. So, each time an unhappy client expresses disappointment, customer service leaders can immediately respond and resolve the problem. This is an ideal moment to win customers back and even boost their loyalty.
Customers are also adversely affected when the market goes down. Hence, customer service leaders must contact them and discuss how the current economic condition is impacting them.
For instance, they can ask clients whether their corporate agendas have changed and offer additional or different features that can help achieve those objectives.
Further, emails can get lost, and data can get overlooked. Also, having constructive conversations with broken-up chains is more complicated. Hence, businesses must offer customers an option to schedule meetings to discuss their expectations or concerns with their current contracts.
As people are more connected than ever, they constantly share their experiences – positive or negative. As such, businesses must strengthen their customer service department with skilled, dedicated reps and arm them with the resources necessary to work efficiently.
For instance, customer service leaders should train support agents to listen to customers properly by allowing them to finish their sentences before responding. Clients look for someone who genuinely cares about their issues and is up to help them. This is particularly essential during economic downturns when stress levels go high.
Well-coached customer service reps create healthier customer relationships using communication skills and emotional intelligence. When customer service is excellent, people remember.
Customers are more demanding than ever, particularly when it comes to speed and service quality. One tech-led way to meet their needs is customer service software.
Customer support platforms enable companies to set up and send automated responses to submitted requests. That way, they can inform customers that they have received their requests and are working on fixing the problem 24/7 – without recruiting additional customer support reps.
Besides, agents can use pre-written email support templates to save time and respond to customer queries faster. As such, they no longer need to enter responses from scratch or repeat the explanations to multiple clients.
Furthermore, customer service software helps redirect incoming requests to the appropriate agents quickly and accurately. Business leaders can configure the platform to assign requests to those who can solve them immediately.
Looking to become a customer magnet? Sign up on Helpwise for a 14-day free trial.
On the one hand, market incumbents adjust their strategies to surf the violent waves of recession and emerge stronger. On the other hand, various entrepreneurs boast the courage to launch startups at troughs in the economy. However, both share a common aspect: customer service.
Here are case studies of three companies that survived and thrived during economic downturns by increasingly focusing on customer service-led growth:
Not many people were brave enough to launch new businesses during the Great Recession (2007-09). However, Warby Parker is a rare case of a successful brand that took birth just when the US was recovering from its economic downturn.
What made the eyewear company stand out was its innovative “Home-Try-On” program. Under the scheme, customers could pick five frames from the website starting at only US$ 95/piece, which will arrive at their doorsteps for a free 5-day trial. No strings attached. As such, customers could test-run various styles before buying the preferred one(s).
Within 48 hours of launching the program in early 2010, the stock sold out immediately, followed by a 20,000-person waiting list. The strategy was such a phenomenal hit that Warby Parker had to temporarily the program due to the overwhelming volume of orders.
The travel and hospitality industry was among the primary victims of the COVID-19 crisis. However, Airbnb emerged as an exception. The homestay service provider examined and walked the extra mile to address customers’ emotions.
The C-level execs understood that people would refrain from making new bookings, citing the travel restrictions and consistent caseload rises. Hence, they decided to kick-start a blanket refund policy enabling full refunds and last-minute cancellations.
Airbnb used over billion dollars of its funding to settle refunds. Moreover, it committed around $250 Mn for hosts worldwide to offset their losses due to cancellations.
Considering people’s concerns surrounding health and safety, Airbnb’s executives introduced “Enhanced Cleaning” procedures and recommended hosts increase the time between guest stays.
While Airbnb did not mandate the changes, it offered a badge on listings for hosts who embraced them, therefore, ensuring better transparency.
Deal-a-day marketplace Groupon accomplished the impossible – it took off in the middle of the financial crisis (November 2008), spanned 300 markets in 35 countries, and ultimately turned down a US$ 6 Bn buyout from Google.
How Groupon flourished instead of collapsing during the Great Recession? At times when people wanted to save money, Groupon rewarded consumers with regular deals and discounts on nearly everything. For instance, 50%-plus off on specific restaurants, museum admission, and clothing.
At the same time, companies with which Groupon tied up found a cost-effective method to incite new interest among customers.
The word “recession” has grown from a whisper to a rumble over the past several months. That said, like all slowdowns, economic recessions will eventually fade away. When they do, customer service managers who never quit will have their followers in their corners.
Anything the past financial downturns have taught is to identify the evolving trends in customer experience and refine their strategies accordingly.
As Bill Gates remarked, “Your most unhappy customers are your greatest source of learning,” businesses must put people under the microscope. Those who take a scalpel instead of a cleaver to sales and marketing budgets and smartly tweak customer retention strategies to keep up with changing preferences will flourish during and after a recession.
Furthermore, at-scale investments in service-led growth help organizations reallocate resources wherever necessary, boosting efficiency, promptness, and everyone’s bottom line. Customers will appreciate the efforts, and companies will enjoy phenomenal client retention rates.
During financial instabilities, organizations struggle with supply chain loopholes and rising fuel prices while consumers reduce their spending due to inflation. In these uncertain times, brands can navigate the recession-like environments by focusing on customer service in 2023 and ahead.
In a recession, businesses look for ways to stand out without hurting their bank balances. One of the most effective methods to achieve that is by putting people first and listening to them.
That way, they can comprehensively view customer-facing conversations to collect critical insights and tweak their strategies accordingly.
CXOs should implement these growth and retention strategies to negotiate recessionary times:
Customer service platforms facilitate businesses with the following benefits:
Brands that do not invest in customer retention models suffer:
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