Satisfaction drops as AI chatbots take control of customer service

FRUSTRATION with dysfunctional chatbots and poor technology has caused consumer satisfaction with customer service to plunge to an eight-year low, data show.

Customer satisfaction fell to 76 in January, down from 76.6 in July and the lowest level since January 2015, when companies were still recovering from the financial crisis, according to the Institute of Customer Service.

Jo Causon, chief executive of the Institute of Customer Service, said: “The issue is that where the tech goes wrong, it really frustrates us. Banking apps can be brilliant when they run smoothly. The issue can be if you get into that cycle of doom with a chatbot when you’re not getting your issue resolved and you’re repeating yourself several times.”

Teething issues should be smoothed out as technology improves, but companies also need to offer more options, Ms Causon said. “However good the tech will be in the future, you still have to offer contact with a human being.”

Utilities were the worst-performing sector in the country, driven by the poor performance of water companies which struggled with staff shortages and technology, Ms Causon said.

The sector has been hit by a series of scandals over sewage leaks and water pollution, just as they have raised prices for customers and handed out £25m in bonuses for their executives.

Utilities were followed by local public services and transport, a sector which has been wracked by successive rail strikes. Companies are still reeling from the “great resignation” during the pandemic, when hundreds of thousands of workers left employment, Ms Causon said. Although the labour market is turning, and more people are returning to the workforce, numbers are still significantly lower than precovid levels.

Consumers are voting with their feet in protest at poor levels of service. More than 40pc of customers said they avoided using businesses again if they were dissatisfied with the customer service. Nearly a third said they prioritised customer service even if it cost more.

Ms Causon said: “Customers are demanding better service, especially in times of rising costs and uncertainty.

“They will not hesitate to switch to organisations that they can trust to deliver on their expectations.”

The online grocery business Ocado scored the highest satisfaction rating, followed by First Direct, John Lewis and Nationwide. The UK Customer Satisfaction Index is a twice-yearly report based on responses from more than 15,000 individual customers.

Each of the 13 sectors tracked by the index, which also includes retail, leisure, telecoms and tourism, performed worse than a year earlier. The services sector recorded the biggest decline compared to January 2023. Its index fell by 2.9 percentage points to 73.4.

The biggest differences between the best and worst ranking companies were how they handled customer complaints, the businesses’ reputations and how quickly they dealt with problems.

Nearly 17pc of those surveyed say they had had a bad experience with a company in the last three months. This was nearly on par with the high recorded in July 2022 and was far above the 13.6pc share in January 2020, before the pandemic began.

Blows to customer satisfaction mean extra costs for businesses. Full-time employees lose 2.8 days per month dealing with complaints and service failures. This is worth a total of £7.1bn a month in lost working hours.