The 2012 Budget needs to focus on growth, with tangible outputs by supporting businesses and individuals in gaining the skills and competencies required to drive productivity and enable the UK to compete in a challenging global economy.
The service sector is crucial to this growth and employment in the UK; it accounts for 73% of GDP, and Institute research indicates that almost 600,000 people will be employed directly in customer service roles by 2014.
UK businesses face challenges on 2 fronts: maintaining customers and profits in a fragile domestic and European market through building consumer confidence; and taking advantage of opportunities in growing and emerging markets.
In the UK it’s vital that companies retain customers. There is a wide body of evidence which shows the link between customer satisfaction, loyalty and financial performance. Loyal customers are typically much more profitable. They are more likely to buy additional products and services; they are more cost effective to service because they are familiar with how to do business with a company; and they are more likely to recommend a company to friends or associates.
In times of economic challenge and uncertainty, the behaviour of customers is often the leading factor in determining a company’s financial performance. Recent research from the Institute of Customer Service shows that UK companies face a £2.3 billion threat from customer churn, either from customers switching to a competitor, or lost business.
There are 4 key measures the government should take to support companies in developing strategies to increase their competitiveness through customer engagement:
Invest in customer service skills
The Commission for Employment and Skills has identified customer handling skills as one of the leading skills gaps in the UK economy. 41% of companies in England and 51% in Scotland have identified it as a major skills gap. The government should therefore support businesses in all sectors to equip their people with appropriate customer service skills.
In particular, the government should support young people in gaining vital customer service skills which can help them enter the labour market and develop sustainable careers, in any sector, with companies who recognise the long-term value of customer engagement
Ensure that training is of the right quality
The government should support businesses that ensure that customer service training is fit for purpose and benchmarked against world class standards to ensure that companies and individuals are gaining the level of skills to compete in the global economy, and customer service is seen as an important profession and genuine career option.
Promote best practice in employee engagement
Engaged and motivated people who understand a company’s strategy and their role in delivering it are much more likely to have a positive impact on customer loyalty. Our research shows that 85% of private sector employers believe that the linkage between business strategy, process and engaged employees will be very important for their organisation in the next 5 years.
The government should therefore continue to build on the progress made by the Employee Engagement Taskforce and encourage employers to become actively involved and publicising best practice
Corporate governance
Encourage companies and investors to place a greater focus on customer satisfaction reporting and measuring against best practice as an indicator of future sustainable financial performance.