In December 2021, a pint of low fat milk was around 45% cheaper than it is today, the average household energy bill was up to 80% lower and the cost of kids footwear was 18% less. The list goes on. From heating their home to going on holiday, the morning commute to the weekly shop, almost everywhere people look, the pressure on their personal finances is mounting.
Fortunately, the spiralling inflation we saw towards the end of 2022 appears to be slowing. Yet even so, the economic and political uncertainty that fuelled it continues, meaning that high prices are here to stay – at least for the foreseeable future.
It is not just consumers who are feeling the pinch. From large companies like Ikea and Sainsbury's to the UK's many small high street brands, the vast majority of retailers are finding their profits squeezed by a combination of higher operating costs, reduced consumer spending and a rising wage bill.
Customer relationships are more important than ever
At a time when retailers have little choice but to increase the price of their products and services, how can they ensure that doing so does not come at the expense of attracting and retaining their customers?
The answer lies in supercharging their focus on customer experiences (CX). Whether in-store or online, by making every interaction as enjoyable, convenient and frictionless as possible, retailers can significantly strengthen their relationships with the people they serve. This, in turn, leads to greater trust, loyalty and advocacy.
The cost of falling short in CX has never been higher.
On the flipside, the cost of falling short in CX has never been higher. According to Zendesk's CX Trends report 2023, 61 per cent of people say they are willing to walk away from a company after a single bad experience and 58 per cent base purchasing decisions on the level of service they expect to receive. Worryingly, among customers who often interact with support services, nearly half say their frustration levels have grown over the last year.
The move towards immersive CX
The good news is that the majority of retail leaders recognise the importance of getting their CX on point. Seventy-seven per cent agree doing so is essential to achieving their goals and 81 per cent see it as key to competitiveness. Meanwhile, 79 per cent believe that providing excellent customer service during an economic downturn becomes even more vital, with 74 per cent expecting to increase their CX budget during the year ahead.
Given current economic challenges, it is crucial that this planned CX spending delivers the best possible return on investment. And as the Zendesk report reveals, that means embracing a new era of immersive CX. One where retailers step up and meet consumers' growing demand for natural, fluid interactions. Where conversations move effortlessly across channels. And where, most important of all, every experience leaves people feeling not like a transaction or ticket but as the highly valued customer they are.
Technology has a significant role to play in this new world order.
Technology has a significant role to play in this new world order. In the course of the last year, artificial intelligence has made huge strides, with 62 per cent of retail leaders acknowledging it is becoming more natural and human-like and 61 per cent reporting performance improvements. The key now is to continue – and accelerate – this transition, by introducing synthetic agents, chatbots and voice-based AI solutions that solve customers' issues and requests more quickly and effectively than ever.