Bad customer experiences lead directly to lost revenue, as a negative interaction can mean losing customer loyalty and the potential for additional spending in the future, according to new research from Provo-based customer experience platform Qualtrics. The study found that globally, organizations risk 6.7 percent of their revenue, or $3.1 trillion, when they lose customers due to poor experiences.{mprestriction ids="1,3"}
The Qualtrics XM Institute analyzed data from the 2023 Global Consumer Study to find the share of sales at risk due to bad customer experiences, from customers either lowering their spending or cutting it out entirely. These percentages were multiplied by household consumption numbers from The World Bank to translate them into monetary figures.
Consumers are feeling the pinch of inflation and looking for ways to bolster their financial standing, even looking for a second job or moving to a cheaper city. Prices are up nearly 8 percent over the past year and considering how easy it is for consumers to switch to a different brand, companies must focus on the overall experience they’re creating to maintain loyal customers, study authors said.
On average, consumers say they have very negative experiences with organizations 16 percent of the time. And after such a negative interaction, half either reduce their spending with that brand or stop spending with them altogether.
These numbers are a slight improvement over last year, when customers returned to pre-pandemic expectations, but industries faced supply chain disruptions and staffing shortages. A year ago, 18 percent of consumers reported such negative experiences, and 53 percent of consumers stopped or lowered their spending after a poor interaction.
“Delivering on brand promises to keep customers coming back is essential for the long-term success of a business, and this research shows the actual impact on the bottom line when customer experience misses the mark,” said Bruce Temkin, head of Qualtrics XM Institute. “In tighter economies, shoppers will be more careful about their spending, and a single negative experience could be enough to lose them as a customer forever.”
The researchers concluded that holiday season stress amplifies the impact of experiences. Emotions are often heightened during the holidays, which can solidify loyalty with organizations that get it right but bring extra risk to those that leave customers unhappy.
Three of the top five industries most likely to lose customer dollars after failing to meet expectations are directly connected with holiday shopping. Online retailers, department stores and parcel delivery companies have had at least 56 percent of consumers decrease or cease spending after a bad experience.{/mprestriction}
