The Financial Conduct Authority’s Consumer Duty, which comes into force on July 31, aims to sharpen customer experience practices for financial services operators. However, those in other industries would be wise to take action, as the direction of travel is clear.
The Consumer Duty stipulates that customers should “receive communications they can understand, products and services that meet their needs and offer fair value, and that they get the customer support they need, when they need it”.
The FCA is rather vague about its recommendations, but regarding customer support and being contactable, financial services operators, and many others outside of the industry for which this is designed, have much room for improvement.
Alarmingly, some companies still use the pandemic as an excuse for poor customer service. Given the coronavirus crisis began over three years go, people see right through this reasoning. And yet, many businesses are failing to pick up on this – or, indeed, pick up the phone at all.
Cross-industry findings from Microsoft, published in early July, revealed that Brits are being left on hold for up to one hour and 25 minutes waiting to speak to a customer service representative. The research found that the energy sector performed worst, with caller wait times averaging almost 36 minutes – 133 times slower than the industry standard of 20 seconds.
“Calling your energy provider and waiting over one hour and 25 minutes is equivalent to reading 255 emails, watering 85 plants or listening to Bohemian Rhapsody 14 times”, said Rob Smithson, Business Applications Lead at Microsoft UK.
Even the best-performing sector, telecommunications – ironically – had a wait time of 122 seconds, six times slower than the industry standard. In addition, almost half (47%) of the businesses researched offered an alternative means of communication or call-back service.
More worryingly, the latest version of the UK Customer Satisfaction Index (UKCSI) showed UK consumers have never been more frustrated. Customer satisfaction fell at its fastest rate on record in July, slumping year-on-year from 78.4 to 76.6 in July – the lowest level since January 2015 – costing the economy an estimated £9.8 billion a year in lost time and productivity, calculated Joanna Causon, Chief Executive of the UKCSI.
“In some respects the current environment shares a number of characteristics similar to those experienced in the 1970s – a difficult economic situation with high interest rates, high inflation, and a wide range of labour disputes across a range of industry sectors,” said Causon.
Smithson urged organisations to improve their lines of communication. “The findings underscore the challenges facing consumers and companies alike in the current economic climate, and the need for innovative solutions to ensure a better customer experience,” he added. “Firms must endeavour to value their customers’ time by using tools that simplify operations.”
But how do people want to contact companies in 2023 in the UK? Proprietary Moneypenny research shows that email is the number-one preferred method, with 34%. The old-fashioned but still-relevant telephone call is next on the list, with over a quarter of responses (26%). That’s followed by WhatsApp (11%), live chat (9%), social media (8%), and, bottom of the list, is the website form with a mere 3%.
Notably, there are sizeable generational differences between the channels. For instance, younger age groups would opt for WhatsApp and social media, while older cohorts prefer phone chat and email. Indeed, 20% of Gen Zers and 15% of millennials prefer WhatsApp, and only 3% of baby boomers feel the same draw.
What, though, makes people want to pick up the phone and dial a company? Moneypenny found that in the UK, almost half (42%) call because of urgency – they want a solution quickly. And next on the list, with 34%, is because it’s a complicated issue. Clearly, customers want to find an answer quickly rather than wasting time with the to and fro of a digital exchange – whether with a human or a bot.
And the quality of the communication matters, too. In fact, it’s business-critical, according to Moneypenny research. After a “bad call experience”, some 38% of respondents in the UK said they would take their business elsewhere. Additionally, almost a quarter (24%) would write a negative review.
Customer feedback is always vital, and financial services operators must listen and learn even more with the FCA’s incoming rules. “While Consumer Duty offers an opportunity to develop better client communication, it also offers a basis for aggrieved customers to complain,” said Chris Croft, Consultant at Bellevue Law, a London-headquartered law firm. “It will be too late to review compliance when the claims come in and the true impact of what firms do today may not be seen for years.”
And non-financial services firms must heed the momentum, argued Tom Darnell COO & Co-founder at IRIS Audio Technologies. “The new Consumer Duty has set an upgraded standard for best practice that should be applied across all industries, regardless of regulation,” he said. “Particularly in sales-orientated environments, this new regulation represents a culture shift, where the needs of customers are put ahead of other metrics such as profits or upsell targets.”
Ironically, new technologies enable customer service operators to be more human in an increasingly digital world. There is a desire for that human touch, despite – or perhaps because of – recent advancements in artificial intelligence.
“When people think of AI in customer service, they think of chatbots and automatic speech recognition, which at best filter straightforward issues that are simple to resolve, and at worst provide a barrier between the customer and a real person,” said Titcomb. “In mission-critical instances, for example, if your boiler is broken or you have an issue with your mortgage payment, most people understandably prefer to speak to an agent.”
This insight chimes with Martin Hartley, Group Chief Commercial Officer of emagine Consulting. “While AI-powered technologies, such as chatbots and virtual assistants, have become a prevalent part of customer service and communication, many people still want to speak to another human being when things go wrong, especially for complex or emotionally sensitive issues,” he said. “In certain situations, the empathy, understanding, and problem-solving abilities of a person cannot be replaced.”
Ultimately, intentional and considered engagement with customers is a win-win – it helps understand pain points, improves a personalised experience, and boosts loyalty as those on the other end of the communication will feel heard. Only time will tell if non-financial services businesses listen to the warning offered by Consumer Duty.
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