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The role of customer service during an economic downturn

Preparing for change is an always-on job. Focus on where you can see the highest return on your service investments and enable tools and features that save both time and money.

By Scott Morris, SVP Global Marketing, Zendesk

Last updated February 23, 2024

Current headlines predict a global recession on almost a daily basis, leaving us to wonder whether and when it will finally arrive – and if it does, how deep the recession will be and how long it will last.

It’s unsettling but we’re no strangers to uncertainty. If anything, we’ve learned over the past few years that we should both expect and prepare for change. After all, many things are still in a state of flux.

Countries around the world are grappling with inflation and rising costs of living, and there are signs that the hot jobs market is now cooling off. And even though the pain isn’t felt evenly across industries and regions, global economies are collectively reeling from the combined toll of the pandemic, the war in Ukraine and ongoing supply chain issues.

We’re all feeling the price increases in food, fuel and consumer goods and services, but they’re especially serious in parts of the world already struggling with poverty and unrest. So as the World Bank continues to report economic slowdowns that we may experience globally or nationally, or within our communities and workplaces, there is uncertainty surrounding how best to proceed, to protect what we have and where to make investments.

Perception impacts our reality

In climates like this, it’s often tempting to maintain the status quo or even stand still – to halt investments and growth projects. Yet, as we learned at the start of the pandemic, the companies closest to a fully digital-first approach found it much easier to make the necessary changes.

Analyst firm IDC’s recession playbook for IT investments, ‘Navigating Through the Storms of Disruption’, found that 72% of IT executives believe a recession is coming and 40% of respondents from North America believe we’re already in one.

Naturally, if we think we’re in or headed for a recession, this guides our decision making. From the same research, as many as 50% of tech buyers believe that a recession will lead to overall or targeted reductions in IT budgets. But there’s also reason for some cautious optimism. According to IDC, the majority of respondents anticipate a “modest or shallow” recession, lasting less than a year. Company executives were even more positive on the impact of a recession, as nearly 40% still thought that IT budgets could be increased.*

IT leaders, much like customer service leaders, see investments in automation as the best way to reduce the cost of operations. IDC reports that “In 2025, 60% of infrastructure, security, data and network offerings will require cloud-based control platforms that enable extensive automation and promise major reductions in ongoing operations costs”.

Customer expectations won’t change

One thing we know with certainty is that customer expectations continue to rise and that how we meet our customers in difficult times is critical. Our 2022 CX Trends research found that more than 60% of customers say they now have higher customer service standards, and that customer engagement was up 14% compared to 2021. That translates not only to higher volume but also more opportunities to connect and build relationships with customers.

This matters. Our subsequent 2022 CX Accelerator report highlighted a support team’s ability to retain (and cross-sell or upsell to customers), and 64% of companies say that customer service has a direct impact on their bottom line.

We also know that there’s huge potential in how AI and automation can better serve customers across all service interactions and that finding the right balance between personalised human and automated service is crucial.

What service organisations can do now

Some leaders will face tough budgeting decisions in 2023 whilst others will have those decisions passed down. Either way, we’ll all need to make it work for our customers.

That’s why we’ve broken down some of the top challenges you may face in the coming year and will address them in this editorial series over the next few weeks. We’ll also suggest actions you can take now or in the near term to meet these challenges:

  • Cutting operational costs and finding efficiencies

  • Slowing spending and hiring

  • Growing your contribution to business revenue

  • Leveraging your service team for ‘inside’ sales

  • Keeping customers, whether by increasing lifetime value or decreasing churn

We’re inspired by the success stories shared by our customers and hope they not only inspire you too but also help illustrate what’s possible.

Adapting to change, building resilience within your team and managing uncertainty are no mean feat. We all have to use our resources – people, budget, time and tools – wisely without sacrificing the customer experience. Because constraint and creativity often go hand-in-hand, and their marriage can create exciting opportunities.

*IDC, Navigating Through the Storms of Disruption: A Recession Playbook for IT Investments, Doc # US49790822, October 2022