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Bad Experiences Put $3.1 Trillion in Annual Global Consumer Spending at Risk
Rhea-AI Impact
(Low)
Rhea-AI Sentiment
(Negative)
Tags
Rhea-AI Summary
New research from Qualtrics (NASDAQ: XM) reveals that organizations lose 6.7% of their revenue, equating to $3.1 trillion globally, due to poor customer experiences. Consumers have negative experiences with brands 16% of the time, with half reducing or ceasing spending post-interaction. This data reflects a slight improvement from last year, where 18% reported negative experiences. The report highlights that industries related to holiday shopping are particularly vulnerable, with over 56% of consumers likely to decrease spending after a bad experience.
Positive
A slight improvement in consumer experiences, reducing from 18% last year to 16% this year.
Qualtrics asserts the importance of maintaining customer loyalty in tighter economic conditions.
Negative
Organizations risk losing 6.7% of revenue, or $3.1 trillion, due to poor customer experiences.
Half of consumers reduce or stop spending after negative interactions.
50% of consumers decreased or entirely cut spending with a brand after a bad customer experience
PROVO, Utah & SEATTLE--(BUSINESS WIRE)--
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.
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% over the past year,1 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.
On average, consumers say they have very negative experiences with organizations 16% 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% of consumers reported such negative experiences, and 53% 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.”
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% of consumers decrease or cease spending after a bad experience.
About Qualtrics
Qualtrics, the leader and creator of the experience management category, is changing the way organizations manage and improve the four core experiences of business—customer, employee, product and brand. Over 16,750 organizations around the world use Qualtrics to listen, understand and take action on experience data (X-data™)—the beliefs, emotions and intentions that tell you why things are happening, and what to do about it. The Qualtrics XM Platform™ is a system of action that helps businesses attract customers who stay longer and buy more, engage employees who build a positive culture, develop breakthrough products people love and build a brand people are passionate about. To learn more, please visit qualtrics.com.
About XM Institute
Qualtrics XM Institute is the world’s premier resource for experience management professionals. Led by industry visionary Bruce Temkin, XM Institute’s faculty researches trends and emerging practices in how organizations interact with their key stakeholders, including suppliers, employees, customers and partners. XM Institute also leads XM Pros Network, a thriving global community of more than 6,000 XM leaders who participate in an ongoing calendar of monthly events. The Institute maintains the XM Professionals Certification, the gold standard credential in the field. To access the latest XM content or for more information about XM Institute, please visit xminstitute.com.
What percentage of revenue do organizations risk due to bad customer experiences according to Qualtrics?
Organizations risk 6.7% of their revenue, which amounts to $3.1 trillion globally.
How often do consumers report negative experiences with brands?
Consumers report very negative experiences with organizations 16% of the time.
What action do consumers typically take after a bad customer experience?
After a bad experience, half of consumers either reduce their spending or stop spending entirely.
Is there an improvement in consumer experiences compared to last year?
Yes, the percentage of consumers reporting negative experiences has decreased from 18% last year to 16% this year.
Which industries are most likely to lose customer dollars after failing to meet expectations?
Industries related to holiday shopping, such as online retailers, department stores, and parcel delivery companies, are most likely to lose customer spending.
