Bad customer service could lose businesses $3.8bn this holiday season

The current volatile economy is pushing consumers to be far more frugal with their spending, which puts even more pressure on businesses to incentivise them with great service.

New research from Qualtrics has shined a spotlight on the potential ramifications of bad customer service this holiday season. According to the research, businesses risk losing up to $3.8 billion in lost sales over the holiday season alone from bad customer service. Annually, this number rises to $71 billion in Australia and a staggering $5.8 trillion globally.

It adds even more pressure on businesses trying to win over a consumer far more inclined to be frugal with their spending in this economic climate. As the report stated, 54 per cent of consumers in Australia said they would cut spending after receiving a bad customer experience and admit that one in 10 of their brand interactions doesn’t live up to expectations.

Across the globe, the industry sectors most at risk of cuts in spending after a bad experience are fast-food brands (66 per cent), department stores (65 per cent), online retailers (64 per cent), and parcel delivery services (56 per cent).

Consumers pinpointed communication problems as one of the most frustrating subjects that can spoil a relationship between a business and a consumer (46 per cent). At the same time, service delivery issues (44 per cent), pricing concerns (39 per cent), product quality (35 per cent), and employee interactions (35 per cent) were key issues that can drive away consumers.

“The holidays are a critical sales period, and this year, the stakes are higher than ever with cost-of-living pressures expected to impact sales,” said Ivana Sekanic, customer experience strategist at Qualtrics.

“Customers want to be kept up to date on what’s happening with their orders, know brands recognise and understand what they need, and that they can trust they’re going to get the product and service they’ve been promised – and they’re rewarding brands that do it well.”

To avoid these sales losses, Qualtrics listed five ways to deliver a great customer and employee experience this holiday season:

1. Ease the pressure on frontline employees – making it easier for frontline employees to meet customer needs is a key factor in exceptional customer experiences. Whether on the shop floor, in call centres, or managing digital chats, they face significant challenges while working to create positive experiences. By streamlining processes, improving communication, and investing in training, organisations can empower these teams and enhance overall customer satisfaction.

2. Communicate clearly and often to reduce confusion – customers prefer brands that keep them informed at every stage, from product availability to purchase, delivery, and after-sales support. It’s crucial for organisations to provide the right information at the right time to ensure customer satisfaction and trust while simultaneously reducing call volumes.

3. Make it simple and easy for customers by keeping your promises – the holidays can be stressful, and customers want assurance they will receive the products and services as promised. For example, if next-day delivery is advertised, the brand must fulfil this expectation to maintain trust and prevent added stress and uncertainty for the customer. Carefully consider how your brand promise forms customer expectations.

4. Stay responsive to customer needs – customer needs, expectations, preferences and behaviours are constantly changing. Brands must stay ahead of these changes by using customer insights captured from surveys, online reviews, call centres, social media, and more. This enables organisations to identify trends and unmet needs, allowing them to seize opportunities swiftly.

5. Exceed expectations where it counts – leading brands focus on prioritising key moments to exceed expectations for customers and employees in the moments that matter to them, ensuring trust in the information provided, faster interaction completion, and for it to be a seamless experience. For instance, as more customer interactions are completed via digital channels, it’s likely to raise the stakes and importance of person-to-person engagements.

“Frontline employees have the most direct influence on customer experiences, yet these are the people who report the lowest levels of engagement and morale at work. If businesses are depending on strong holiday trading, they must start with employees,” said Dr Cecelia Herbert, workplace behavioural scientist at Qualtrics.

“Simple fixes that improve their experiences at work can have exponential benefits – cultivating an engaged, high-performing team translates to satisfied, loyal customers who spend more.”

Kace O'Neill

Kace O'Neill is a Graduate Journalist for HR Leader. Kace studied Media Communications and Maori studies at the University of Otago, he has a passion for sports and storytelling.