According to Bloomberg Economists Anna Wang and Eliza Winger, the chances of a recession hitting the US is “effectively certain,” over the next year.
Inundated with news on increasing inflation throughout the Midterm election cycle, consumers have already begun to pull back spending, says the University of Michigan’s Nov. 18, 2022, Survey of Consumers.
Recessionary Impact on CX Efforts
What does the prospect of a recession mean for Customer Experience teams?
Blake Morgan, a noted Customer Experience Futurist, asked that very question in a recent survey on LinkedIn. In total, 163 CX professionals weighed
- 52% said CX is not recession proof
- 27% said CX is recession proof
- 21% said it is too early to tell
Survive or Thrive, Brands Value CX Differently
In my view, the answer depends largely on how brand leaders value Customer Experience. During a recession, cautious brands hunker down for lean times and make aggressive cuts. In those cases, CFOs often mandate that Customer Care budgets shrink to align with revenue. With consumers spending less, teams must reduce headcount even though actual interaction volume may be steady or on the rise. The unintended consequences of that approach can be dire. Loyal customers, many of whom promote the brand to friends and family, face long wait times, become frustrated and start coveting rival brands.
Many brands, however, take a more targeted approach to budget cuts. CFOs cut spending on ancillary projects that can wait and review cost centers for efficiencies. Real estate, sustainability initiatives and planned growth are examples of projects that CFOs delay to preserve funding for core business functions. At most companies, CX is considered a cost center and as such, faces scrutiny during an economic downturn. CX executives who can justify the ROI of their department escape unscathed, while those who can’t face departmental cuts.
In a third scenario, companies see opportunity and directly target growth by investing in improving Customer Experience. These brands embrace spending on brand loyalty because they know that it is 5 times cheaper to retain a customer than earn a new one. Furthermore, American Express found that 9 in 10 people tell others about their CX experiences and 33% consider switching brands after just one bad customer experience. The findings of a consumer survey by Forrester Consulting really drive home the point that brands should remain committed to issue resolution. According to the survey, Eighty-three percent of customers are more loyal to brands that respond to and resolve their complaints.
Help your CX Team Thrive During a Recession
So, how can a CX pro improve performance during a recession?
With recruiting and retention problematic in the US and a recession looming, now is the time for CX professionals to consider Outsourcing. In the next installment of this series, we will explore how working with the right BPO will benefit your customers and improve outcomes for your brand.