50% of consumers decreased or entirely cut spending with a brand after a bad customer experience

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.

New research from Qualtrics (Nasdaq: XM) finds that globally, organizations risk 6.7% of their revenue, or $3.1 trillion, when they lose customers due to poor experiences.

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.

¹https://www.bls.gov/opub/ted/2022/consumer-prices-up-7-7-percent-over-year-ended-october-2022.htm

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“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.” -Bruce Temkin, Qualtrics XM Institute