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Why a Downturn Is a Critical Time to Invest in Customer Service

Alice Wong
September 18, 2022
Business owners may view customer service as a place to scale back spending - research shows that customer service is critical in recession-like environments.

In an economic downturn, business owners may be tempted to view customer service as a place to scale back your spending. But research has found that strong customer service becomes more important in recession-like environments, not less. 

“The majority of long lasting E-commerce businesses receive most of their revenue from an existing, loyal customer base. You don’t want to de-prioritize their needs. And usually great customer service and aligned values are the defining differences between why customers choose you versus your competitor or a large retailer,” says Chatdesk CEO Aneto Okonkwo.

According to the firm Watermark Consulting, the public companies that score the highest on customer feedback surveys also see the best stock performance during recession years. Companies with top-rated customer service teams witness stock increases of +6.1% during recession years, while the low-ranked companies witness stock dips of -57.0%.

(via Watermark Consulting)

During the 2020 pandemic, for instance, another study found that brands with good customer service saw their stock value double compared to brands with poor customer service scores.

Many businesses understand this intuitively. In a recession, your shoppers aren’t just price sensitive—they’re also CX-sensitive. 

In fact, it doubled the amount of time that it asked its call center supervisors to spend on training agents. As a result, the number of repeat customer service calls decreased, ultimately saving the company money.

Why does customer service become so critical in times of economic uncertainty? 

Because great customer service more than pays for itself, no matter what the economy ends up doing.

“Growing and retaining your current customer base is a great way to neutralize the cost of acquiring new customers. People don't need customer service less during times of economic distress. On the contrary, most brands need customer service even more.

Customer service is more than solving support issues.” says Sam Chandler Director, Startup Success at  Zendesk

The reason: It’s usually at least 5x more expensive to acquire a new customer than to convince an existing one to buy more products from your brand. When you land a new customer, you want them to stick around. 

If customers have a bad experience with your service offerings, such as with the return or refund process, then they will likely jump ship to another brand. You’ll have to spend far more finding the next shopper. 

Loyal customers also make more money for your brand: 57% of customers say they spend more on a brand that they feel loyal to than on one that is new to them.

“The most successful companies see customer service as a way to build deeper customer relationships and distinguish themselves as partners, not just vendors. Especially since, in times of economic distress, customers need you more,” says Sam Chandler, Head of Startup Success at Zendesk.

You don’t have to choose between budget or customer experience.

Get personalized, customer service support starting at $99/month on social, chat, and email with Chatdesk. We help you recruit, train, and manage CX Experts so you don't need to. All responses are guaranteed personalized and on-brand. 

Schedule a free demo with us today.

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