Research published by Qualtrics has underscored the financial risk incurred by businesses due to declining customer service performance, exposing an annual risk of AU$74 billion.

This report underscores the growing determination of Australian consumers to cut spending when they encounter subpar consumer services.


$74 billion loss risk for firms from poor customer service

The report, published following an analysis of several high-profile incidents involving poor customer service by well-known brands last year, seeks to underscore the importance of customer service on business outcomes in Australia.

The report further provides guidance on how enterprises can enhance customer interactions to boost profitability and increase customer loyalty.


The study reveals that the sectors leading in customer service are streaming providers, supermarkets, department stores, electronic manufacturers, and online retailers, which have delivered the least amount of poor experiences. In contrast, government agencies, property insurers, internet providers, utility companies, and mobile phone providers have recorded the highest range of poor experiences.


According to Qualtrics’ findings, Australian businesses stand to lose AU$74 billion because of poor customer service. A trend accentuated by the upsurge in the number of Australian consumers deciding to limit their spending following a bad customer experience, a trend that has shot up to 55% from the previous 37% recorded 12 months prior.

The research also suggests that customers are encountering fewer bad experiences. It notes that one in every ten interactions with brands currently results in a poor experience, down from last year’s one in every five interactions.


Moreover, a quarter of the respondents reported general improvements in customer service over the last year, attributing this to more knowledgeable customer service representatives, shorter wait times, and improved product quality.

Interestingly, the research points out that 41% of Australians expect artificial intelligence (AI) to bolster customer service levels.

This sentiment is linked to expectations that AI will provide faster service times, help resolve complaints and queries more quickly, and accelerate delivery times.

According to Moira Dorsey, Principal XM Catalyst at the Qualtrics XM Institute, “All it takes is one bad experience or wrong move for an organisation to be punished… that’s why in 2024 companies need to be more careful than ever not to mistreat customers.”

It is noteworthy that poor customer experiences significantly impact the bottom line, underscoring the importance of AI in mitigating such occurrences. The research demonstrates that bad customer experiences are directly correlated to revenue losses in Australia. Following 41% of all bad experiences, consumers tend to diminish their spending, and after an additional 14% of bad experiences, they may cut their spending entirely.

Dorsey added, “Customers are placing a premium on human connection, and the most successful AI strategies are designing for this… Those that do this will be rewarded with increased sales, more satisfied customers, and highly engaged and productive employees.”


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