Difficult business choices amid inflationary pressure Simon Woods

Our Accenture Life Trends 2024 report provides a vital insight into the role of customers: how their behaviours and attitudes respond to the world around them - be it business, technology, or other societal shifts.

For years, the correlation between customer experience and revenue growth inspired organisations to hold the customer at the centre of every decision. Now, rising costs and inflationary pressures are forcing cuts.

Without profitability, organisations won’t survive. Companies trying to protect profits against a strained economic backdrop have had to make tough decisions, with one major consequence: the erosion of the customer experience.

Friction is being driven between customers and brands across channels in the form of price increases, reduced quality and poor customer service.

Quality or size reductions (Shrinkflation), declines in service (skimpflation), customer service shortcomings, and unwelcome subscriptions are adding up to a sense that brands are quietly reversing their promises. Unfortunately, for many, it is impacting their customer experience and having a negative impact.

Our research has highlighted that customers are feeling less valued thanks to poor customer service, ignored feedback, declining product quality and cheaper packaging. 60% of UK customers polled believe many companies are sacrificing customer experience in favour of greater profitability.

If brands continue to adopt this cost cutting approach, people will only get more frustrated, and long-term prospects will take a hit.

Loyalty suffers when finances are tight, leaving price and value as the most influential factors in buying decisions. There’s also a new risk lurking: the flip side of the concept of liquid expectations, “liquid suspicions” describes the idea that when customers are let down by one brand, they’ll be wary of others.

Customers will always try to create their desired lifestyle. When finances are squeezed, their brand loyalty will become weaker, so price and value become the most influential levers. A major brand challenge becomes how to keep their product in people’s baskets.

Ultimately, efficiencies aren’t efficient if they cause customers to walk. Companies need to identify and eradicate any issues that breed customer resentment – ultimately finding a way to balance cost and profit without passing the price increase onto the customer.

Effective and relevant customer engagement requires careful planning and execution. As today’s consumers are unpredictable and their desires constantly evolving, keeping pace is vital. Their preferences provide a valuable insight into the intricate relationship between people, their behaviours and their perspective on the ever-changing landscape, influenced by technology or societal shifts.

To thrive in today’s environment, organisations must carefully plan their interactions with customers and adapt swiftly to the evolving trends, to gain a deeper understanding of changing customer motivations.

To rekindle customer loyalty, the customer experience must rise back up the priority list. Ultimately companies need to find a way to balance cost and profit without impacting the customer.

Simon Woods, Accenture Scotland Song Co-Lead