XM Knowledge Base
Poor Customer Experiences Put $1.9 Trillion in Consumer Spending at Risk Annually, New Qualtrics XMI Study Finds
Last updated: November 8, 2021
More than half (53%) of consumers have cut spending after a bad experience with a company; Internet service providers, airlines most likely to frustrate customers with poor service
PROVO, Utah and SEATTLE, Oct. 19, 2021 — New research from Qualtrics (Nasdaq: XM) found that U.S. businesses risk losing $1.9 trillion in consumer spending due to poor service experiences. Approximately one in five consumers say they have a bad interaction with an organization every 90 days, with internet services and airlines among the most likely to deliver poor customer experiences, according to a new study by Qualtrics XM Institute.
These findings come at a time when businesses are facing COVID-related supply chain delays and staffing shortages as the holiday shopping season approaches. Consumers can switch loyalties with the click of a button, and they still expect businesses to deliver on promises, not just regarding their products but for quality customer service as well. Ahead of seasonal sales and large shopping events, like Black Friday, the results underscore the importance of customer service, as more than half (53%) of consumers have cut spending after a recent bad experience.
Ongoing health concerns may prompt customers to shop online this year, and the new global study shows that online retailers are more likely than department stores to deliver poor customer experiences, which could include late delivery, cumbersome return policies, representatives who lack the knowledge to solve customer problems or a confusing app or website. As a result, department stores have a higher customer trust and loyalty rating and less revenue at risk — 6.5% compared to online retailers’ 13%.
Overall, government agencies, internet service providers, mobile phone providers and airlines are the industries most likely to deliver poor customer experiences and are among the least trusted by consumers. On the other hand, consumers of the pandemic era are least likely to report a bad experience with supermarkets, streaming media services, department stores and fast food restaurants. Supermarkets have the lowest sales at risk due to poor experience at 4.7% of revenue.
“Consumer expectations are higher than ever this holiday season. With all the ways the pandemic is affecting retailers, we may see shoppers running into frustrating situations, including items being out of stock and fewer employees available to help them find what they need,” said Bruce Temkin, Head of Qualtrics XM Institute. “That’s why it’s critical for businesses to focus on what they can control: relentlessly improving their customer experience. Retailers need to tap into customer insights to build up digital channels that deliver personalized experiences that seamlessly connect with their in-store offerings.”
In the table provided below, the lowest and highest numbers are bolded.
| Industry | % of Revenue at Risk Due to Poor Customer Experiences
|
% of Customers Who Reported a Recent Bad Experience | % of Customers Who Recently Cut/Decreased Spending After a Bad Experience | Qualtrics Consumer Trust/Loyalty Index |
| Internet Service Providers | 14.7% | 27% | 54% | 67% |
| Government Agencies | 14.2% | 30% | 47% | 61% |
| Mobile Phone Provider | 14% | 23% | 60% | 67% |
| Airline | 13.7% | 27% | 50% | 75% |
| Online Retailer | 13% | 20% | 63% | 75% |
| Credit Card Provider | 11.5% | 20% | 56% | 69% |
| Parcel Delivery | 10.5% | 18% | 57% | 73% |
| College/ University | 9.2% | 20% | 45% | 71% |
| Health Insurance | 9% | 19% | 48% | 71% |
| Fast Food | 8.7% | 15% | 57% | 76% |
| Bank | 8.6% | 16% | 54% | 71% |
| Hospital/Medical Clinic | 8.2% | 16% | 51% | 73% |
| Department Store | 6.5% | 12% | 54% | 77% |
| Streaming | 4.8% | 11% | 42% | 77% |
| Supermarket | 4.7% | 10% | 47% | 78% |
Methodology
This data comes from Qualtrics XM Institute Global Consumer Study, which evaluated 17,509 consumers across 18 countries, including the United States, Australia, Brazil, Canada, France, Germany, Hong Kong, India, Indonesia, Japan, Malaysia, Mexico, Philippines, Singapore, South Korea, Spain, Thailand and the United Kingdom. To ensure the data is reflective of populations, quotas were set for responses to match the age, gender and income demographics of each country. The $1.9 trillion U.S. number is an estimate based on study findings and global household consumption numbers from the World Bank.
For more details on this report please visit: xminstitute.com/blog/bad-experiences-risk-sales/
About XM Institute
Qualtrics XM Institute is the world’s premier resource for experience management (XM) 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 the XM Professionals Network, a thriving global community of more than 4,500 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.
About Qualtrics
Qualtrics, the leader and creator of the Experience Management (XM) category, is changing the way organizations manage and improve the four core experiences of business—customer, employee, product and brand. Over 13,500 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.
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