Hoping for a smooth transition into 2024, yet it might entail some turbulence before reaching the gate of 2025. As we strive for a seamless journey, preparing for potential bumps along the way becomes crucial. Here are trends that factor into planning:
Trend 1: Consumers will grow more discerning in 2024
There is no doubt consumers are being more cautious. Holiday sales in 2023 indicate households are spending more but getting less. Average household spending was estimated at nearly $1,000 more per month for the same goods and services they were buying in 2019. Cost fatigue, rising debt, and tighter credit will weigh on spending in 2024, especially as employment and income growth moderate. Consumer spending is projected to grew 2.2% in 2023, but are expected to grow at a modest 1.3% in 2024.
Economic conditions in 2024 will stay tight for most consumers with price, value, and budgetary savings being the three most significant factors driving their behavior. However, businesses should not ignore sustainability, which is a growing factor in the consumer's decision-making process.
Inflation has created a cost of living crisis and continues to pressuree the way consumers spend their money. There are no signs of abating. The battle for customers will remain fierce and retailers of all sectors will be fighting hard to keep their market share. Loyalty-Retention programs can help, but ultimately all eyes will be on finding new ways to keep customers spending during a time of increased financial pressure.
"In 2023, 32% of US shoppers switched brands because of their sustainability practices, according to the 2023 Customer Loyalty Index from SAP Emarsys. As businesses look to meet green-minded consumers’ demands, achieve their sustainability goals, and align with regulations, we will see greater investments in technology to drive green customer experience in 2024.
Sven Denecken, Chief Marketing and Solutions Officer, SAP Industries & CX SAP
“In 2024, successful retailers will continue to redefine the shopping experience by seamlessly blending online and in-store interactions. Embracing the mindset of ‘digitize, optimize, monetize’ is critical – not only for unlocking new revenue streams but also enabling them to reinvest in their business to drive greater affordability for customers. Now is the time to embrace technologies that will connect the dots between channels and empower grocers to fully understand their customer base no matter how they choose to shop.”
Ryan Hamburger, Vice President of Retail Partnerships at Instacart
Takeaway: Businesses need to meet the consumer where they are, not where the business is.
Address consumer budget concerns for home services by providing financing options, even for smaller repairs. This approach grants affordability without impacting credit lines and reduces the need for discounts to make sales.
Blend the online and offline consumer experience. For residential customers this can mean having online and mobile scheduling/rescheduling as well as mobile notifications of arrivals and billings or even pre approval of financing in the convenience of their home before a technician arrives.
Learn more here about how ServiceTitan can help you increase your revenue with integrated financing options and multiple partners.
Trend 2: (Generative) AI will become a non-negotiable
In 2023, the world got hit by the ChatGPT storm and what it meant to those working in customer support. We saw opportunities for operational efficiencies, automation of redundant tasks and improvements on the overall customer experience. In 2024, companies will continue their exploration of how this technology will be implemented in support organizations across multiple use cases.
As the dust settles in 2024, more companies will start to think practically about how they'll start implementing AI. Businesses need to look at their essential channels like interactive voice response, voice, chat, and email and think about paths to update them. Relatively simple AI applications and natural language voice assistants can be implemented quite easily these days, and they’re a quick way to add efficiency. In 2024, we’ll see more AI applications automating and handling simple-to-resolve queries, offering deeply personalized interactives that surpass consumers’ expectations, and helping agents better understand each customer’s history and previous interactions with their company. It will truly become a tailored 1-to-1 experience that will further strengthen customer retention by remembering things “for and about them” to continuously improve the experience.
“Generative AI-powered solutions for CX aren’t merely “nice-to-haves” anymore—they are now fundamental for success. Businesses that haven’t invested in AI will fall behind on productivity and customer satisfaction in 2024. Generative AI capabilities with unified communications and omnichannel contact centers are helping CX workers get more done, while deeper analytics on customer sentiment and engagement are enabling CX workers to strengthen customer relationships.”
Graeme Geddes, Chief Growth Officer at Zoom
“AI offers tremendous opportunities to organizations that implement it thoughtfully, but if customers detect a pure cost-saving attempt they will leave in droves. So AI interactions must build confidence — trust from customers comes with consistency, accuracy and convenience.”
Leonie Brown, Qualtrics Principal XM Scientist, CX
Generative AI in Call Center and Marketing will unlock new opportunities in other areas of the business
Generative AI is revolutionizing contact centers, unlocking untapped data and ushering in a potential renaissance for this undervalued resource. The knowledge gained from the establishment of contact center generative AI will help solve challenges in other areas of business and synergize success opportunities: 1+1=100
“Technologies developed for the contact center will be used to solve challenges in other lines of business. Agent assist functionality will quickly become sales assist and supervisor assist. Back office task management will seamlessly meld with contact center work, giving much deeper insights into customer outcomes and costs. Customer profile data and identity resolution will drive Marketing workloads as well as contact centers experiences.”
Pasquale DeMaio, Vice President, Amazon Connect at Amazon Web Services
There will be a transition from fear of AI to AI FOMO (Fear of Missing Out), with Marketing embracing AI’s ability to augment marketers’ skills and connect with consumers in a hyper-personalized way. Marketers will no longer fear AI but will quickly realize that if they aren’t using AI, they will be far behind their competition.
“Companies that implement AI into their marketing strategy will drive a 30% increase in pipeline because of their ability to interact with customers with more personalized, targeted marketing materials.”
Einat Weiss, CMO at NICE
“2024 will mark a significant shift in digital marketing and customer engagement, driven by the rapid scaling of generative AI in content creation and the evolution of AI-powered chatbots. The year will see businesses harnessing AI to produce volumes of content, from text to images, reshaping content marketing and SEO strategies. I expect this content explosion to challenge classic search engine optimization, compelling search giants, like Google, to adapt their algorithms more dynamically than ever before. I believe as content creation scales exponentially, the nature of brand-customer interactions will also undergo a radical transformation. AI-driven chatbots will evolve to engage in meaningful, personalized dialogues, especially as consumers near their decision-making phase.”
Christian Ward, Executive Vice President and Chief Data Officer at Yext
Takeaway: Marketing teams will undergo a revolution with AI-driven advancements, speeding up processes, nurturing creativity, and offering tailor-made content (right time-right place-right messages) that elevate the customer-business relationship by increasing retention, referrals and positive reviews.
Learn more here about how Titan Intelligence is bringing AI to the Trades.
Trend 3: Economic Outlook - Balancing Hopeful Tailwinds with Challenging Headwinds
Overall, analysts are seeing three significant headwinds for the US economy in 2024:
Cost fatigue whereby the cost of goods, services, inventories and labor remain much higher than pre-pandemic
Eroding spending power; elevated interest rates leading to higher debt servicing costs and rising delinquencies
Slowing job growth dampening consumers’ and businesses’ ability and desire to spend and invest.
At the same time, three major tailwinds will support positive economic activity:
Avoidance of a labor market retrenchment still supporting moderate income growth
Easing inflation and labor costs compression providing much-needed relief for business leaders and consumers
The Fed cutting interest rates for the first time since 2020. In this context, analysts foresee real GDP growing a modest 1.6% in 2024 following expected growth of 2.5% in 2023.
Labor market cooling: The November jobs report painted a strong labor market picture with payroll employment advancing at a solid 199,000 jobs pace, the unemployment rate falling back to 3.7%, hours worked rebounding and wage growth steady at 4%. With business leaders confronted by cost fatigue and prospects of slower final demand growth, analysts foresee strategic resizing decisions along with wage growth compression and efforts to drive stronger productivity growth, but they don’t anticipate a severe employment pullback. They see the unemployment rate rising toward 4.3% by the end of 2024.
Disinflation: Many believe that the final mile of disinflation will be the most challenging. Contrary to this believe, five key elements have already materialized and will form the perfect mix for disinflation going into 2024:
Diminished consumer demand growth
Declining housing rent inflation
Narrower profit margins
Moderating wage growth
Tight monetary policy
Analysts foresee headline and core Consumer Price Index (CPI) inflation around 2.2% year over year (y/y) in Q4 2024 barring any unforeseen commodity price shock or recessionary environment. The Fed’s favored inflation gauge — the deflator for core personal consumption expenditures — will likely reach the critical 2.5% y/y threshold in early 2024 — within striking distance of the 2% target.
Note: Disinflation is the temporary slowing of the pace of price inflation. The term is used to describe occasions when the inflation rate has reduced marginally over the short term. Unlike inflation and deflation, which refer to the direction of prices, disinflation refers to the rate of change in the rate of inflation.
Rates coming down: The Fed kept the federal funds rate unchanged at 5.25%–5.50% at the December Federal Open Market Committee meeting and signaled peak rates. As Fed Chair Jerome Powell candidly admitted, there is no denying that the disinflationary process has been faster and less painful than what Fed officials had been anticipating in early 2023. If progress is sustained, lower inflation will favor policy recalibration in 2024. The Fed’s median rate expectations now show 75 basis points (bps) of rate cuts, up from 50bps previously. Analysts anticipate 100bps of rates cuts next year, coming at the May, June, September and December meetings, but a less inflationary or recessionary environment could favor the Fed front-loading and speeding-up rate cuts.
Takeaway: Businesses should anticipate potential interest rate cuts in 2024 and stay agile in adjusting their marketing strategies to leverage the evolving economic landscape. Home sale increases typically follow interest rate cuts and can be a two sided coin for residential businesses:
Homeowners requesting repairs, tune ups, or servicing of HVAC equipment
Identifying new movers for welcome services
Ensuring every customer inquiry gets a response from your business whether by phone, website, or 3rd party contact
For ServiceTitan customers, you can stay engaged on trends that may impact your business and download your Benchmark Report under your Titan Score within Titan Advisor here
Trend 4: Plan for the 2024 Election Noise
As the battle for the White House heats up, Americans will have a lot on their minds. From inflation to high-interest rates, a slew of economic factors next year could tip the scales for one candidate or another when voters head to the polls in November. Candidates and Parties will want to make sure everyone is aware of the issues. There will be information overload.
Consumers’ mindsets will be affected by the barrage of political advertising that will be coming from every direction next year. As U.S. households are bombarded with campaign marketing materials, as well as ongoing TV commercials and online messages from politicians and political hopefuls, data shows a clear decline in consumer spending (retail goods) — especially during the week leading up to the presidential elections.
Epsilon, a data marketing firm, released a report three months ahead of the 2020 election that showed sales growth saw more than 50% reduction during the week leading up to the election compared to the prior month. Moreover, the analysis showed that average transaction values also declined by about 5% just prior to Election Day. However, sales and average transaction values quickly recovered.
“Marketers should expect a lull in sales leading directly into the election, but they should continue marketing efforts throughout this time because the turnaround in sales comes pretty quickly as the election ends - as the election comes to a close, consumers turn their focus back to their holiday shopping and spending resumes to ‘normal.”
Takeaway: Anticipate an increase in advertising costs due to heightened competition for ad space with political campaigns. Campaigns with substantial budgets should factor this increase into their advertising planning. According to a new forecast, the advertising dollars spent on U.S. elections and advocacy issues will grow to roughly $16 billion next year, up 31.2% compared to the last presidential election in 2020. In fact, new projections from GroupM, one of the world’s largest paid advertising agencies, suggests that political ad revenue will reach $15.9 billion in 2024, or $17.1 billion with direct mail included.
Trend 5: Great Service Will Displace Low Prices as Consumer Driver
In 2024, despite predictions to the contrary, it’s not low price points driving consumer
purchase decisions — a recent research from Qualtrics found businesses with a great reputation for customer experience are best positioned to win share of wallet, even in a down economy.
Post-purchase experience is one of the biggest drivers of consumer purchase decisions — in a recent Qualtrics’ study, ‘customer service support’ ranked second only to ‘product quality’ – even above ‘low prices’.
“The customer journey starts as you’re returning from your last trip. I want you to be thinking about what your next trip is going to be before you’ve left your last journey. The
evidence shows, the better job we do on the current trip, the higher the likelihood that the customer is going to choose us again for the next trip.”
Ed Bastian, CEO Delta Airlines
Despite its importance, only 38% of Customer Experience professionals said they were prioritizing training their customer service agents and frontline teams. As leaders face pressure to cut costs, it’s critical to protect customer service, otherwise you risk leaving revenue on the table.
Takeaway: In the current market landscape, each customer is indispensable. Proactively managing your business's reputation becomes a linchpin in retaining market share, particularly during economic hurdles. Moreover, actively evaluating precise CSR actions impacting customer satisfaction, reputation, and repeat business, actively targeting improvement areas through tailored training, and consistently tracking CSR performance against set benchmarks become vital pillars for boosting service quality and guaranteeing accelerated revenue growth.
Find out how ServiceTitan can help you retain more customers with a better experience here.
ServiceTitan is a comprehensive software solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, and chimney sweep shops across the country—and has increased their revenue by an average of 25% in just their first year with us.