Qualtrics XM Institute has found that poor customer service could collectively result in losses of $3.7 trillion annually.
This represents a 19 percent rise from the estimated cost to businesses of roughly $600 billion last year.
After analyzing World Bank data, Qualtrics’ Experience Management (XM) resource, XM Institute, concluded that more than half the time, consumers are reducing or stopping spending altogether following bad customer experiences (CX).
Bruce Temkin, Head of Qualtrics XM Institute, spoke about the potential impact of negative customer experiences: "The price tag on delivering a bad customer experience has surged, even as many industries managed to reduce the frequency of bad experiences in 2023.
"While many industries reduced the frequency of their bad customer experiences, the price tag associated with those mistakes has surged.
In 2024, companies need to be more careful than ever not to mistreat customers, or they will dig themselves a long-term hole as customers head to their competitors.
Subpar service experiences can reportedly lead to a loss in revenue from just a single negative interaction.
According to the report, consumers have negative experiences with brands 14 percent of the time across a range of industries, including airlines, auto dealers, parcel delivery services, and fast food.
Following these experiences, 51 percent of consumers reduce or stop paying the company in question, with the figure rising to 60 percent for fast food services and parcel delivery providers.
Unfortunately, the XM Institute believes that the high cost associated with low-quality customer service coincides with trust in US businesses being at its lowest point since 2016 for non-pandemic years.
Although negative experiences have only dropped by 2.2 percent compared to last year, the world’s total household expenditure has risen by $7.7 trillion over the same time, which means businesses stand to lose out more as well.