Report: Consumers Accept Higher Prices But Demand Better Customer Service

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Prices are rising, and so is demand for greater customer service. 

According to a new report from the conversation intelligence platform Invoca, rising inflation has consumers rethinking high-value purchases, like cars and home improvement projects. However, the majority of consumers say they’re willing to pay those higher prices if it means getting better customer service from their favorite brands.

Surveying 500 consumers across the country, Invoca’s data science team found that 72% of shoppers say inflation has affected their purchasing decisions, and 58% are slightly less or much less likely to make a purchase at all due to inflation. However, 63% of consumers still say they will pay more in exchange for better customer service, and 37% of shoppers are actually doing research to find better customer experiences.

That sort of mixed reaction to rising prices means brand marketers will have to be strategic in how they work to connect with customers in the second half of the year. A one-size-fits-all approach will no longer work if a brand’s customers are divided in what they choose to prioritize.

“The varied reactions to inflation were pretty surprising,” says Jennifer Lovette, senior vice president of customer success at Invoca. “Despite high prices, close to two-thirds of consumers say that they will pay more for a product or service to get better customer service. At the same time, more than half are slightly less likely or much less likely to make a purchase at all due to inflation. This serves as a reminder that we deal with a diverse customer base with different priorities and limitations, and that personalizing the customer experience is critical.”

The pressures of inflation are clearly giving consumers pause. Slightly more consumers reported making a high-stakes purchase in 2022 than in Invoca’s 2021 survey. But Lovette notes that rising prices have not significantly slowed consumer demand for products and services. What they have done is increased expectations for superior customer service.

“Inflation is putting pressure on consumers who have to pay more for most everything, so they rightfully expect more for their money and will not tolerate poorly executed buying experiences,” Lovette says. “A positive customer experience can be a make-or-break moment for a business.” 

Over three-quarters of respondents in Invoca’s survey said they are likely to stop doing business with a company after just one negative experience. The findings show that customer service — both in-person, in online chats, and via telephone — should be a priority for brands. When consumers ranked the possible reasons why they would stop doing business with a company, a bad telephone experience was second only to high prices. A bad telephone experience includes rude agents, long hold times, and too many transfers. 

“I think the primary takeaway is that service and experience matter most for today’s consumers,” Lovette says. “Even if you have loyal customers who have one bad experience, it takes a lot of time and effort to rebuild trust.”

Having a great product isn’t enough to compete in today’s tight market. Invoca’s findings show that it’s easy for consumers to change allegiances when they perceive a brand doesn’t care about them or isn’t in tune with their needs. Lovette says it also takes a lot more for companies to meet the high expectations of consumers in 2022, and earn legitimate brand loyalty, than it used to.

“Businesses that successfully adapt to and stay in lockstep with changing consumer expectations will be the ones that can use data to provide a seamless omnichannel customer experience,” Lovette says. “You have to be prepared to meet your customers where they are and to do that you need visibility into the entire buying journey.”

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.