The Cost of Getting Customer Experiences Wrong is Skyrocketing in 2024

The economy is off to a blazing start in 2024, but customer loyalty is more transient than ever.  Companies have a staggering $3.7 trillion at risk from inadequate customer experiences.

The latest research from the Qualtrics XM Institute highlights a concerning trend – consumers are spending more than ever, but they are also punishing brands that fail to deliver. That translates to a devastating 19% increase in lost spending compared to last year’s forecasts or put another way, an additional $600 billion of consumer spending that is ready to switch to other brands.

The report revealed that 14% of consumers cited negative experiences across sectors like fast-food, parcel delivery, auto dealers, and airlines. Those dissatisfied customers decided to cut down or entirely stop spending with the brand following a negative interaction more than half of the time.

Online platforms, global commerce, and increased market competition have given customers an array of choices. That has an even greater impact on industries like fast food and parcel delivery services, where prices have risen with inflation but the cost of switching providers is exceptionally low. In those industries, more than 60% of the time, customers will reduce or stop spending with a business after a bad experience.

More from Qualtrics: Qualtrics Launches Three New AI-Powered Suites for CX, EX, and Research

Consumer Trust Languishes Below Pre-pandemic Levels

Making matters worse, consumer trust in corporate America is approaching its lowest level since 2016. Since hitting its ultimate low point mid-pandemic in 2020, trust has not recovered to pre-pandemic levels, and has even lost ground since 2021. What’s more, trust in businesses among Gen Z consumers is notably lower than in older generations. A mere 28% of this demographic expresses confidence in the organizations they do business with, half of the 57% trust level observed among Baby Boomers. The purchasing power of Gen Z will only increase and it’s clear that their expectations diverge from those of older generations.

Balancing AI Automation With Human Service On The Customer Frontlines

While the importance of frontline employees such as cashiers, bank tellers or restaurant servers to a business’s customer experience is obvious, Qualtrics research found a troubling decline in morale among these workers.

They feel unsupported in their roles and express a lack of commitment to the organization – only 1/3 of frontline employees who have been with a company for less than 6 months intend to stay more than three years. Not only does hiring and training new employees cost businesses money, but constant churn puts the customer experience at risk.

The greatest gift AI will give us is time.  AI will free up human intelligence to focus on the things humans can uniquely do rather than rote, repetitive tasks.

That’s why many businesses are turning to AI to enhance productivity by redirecting employees from mundane tasks to more strategic ones. Managing the human-AI equilibrium is important. While 73% of consumers are comfortable with AI chatbots for simple tasks, a vast majority of them, 81%, still crave human interactions when dealing with complex issues.

Customers Are Tired Of Telling Businesses What To Do – They Want Businesses To Listen

Businesses wrestle with another challenge in 2025. They may have trouble even identifying broken customer experiences due to a growing reluctance from consumers to provide direct feedback to the companies they do business with. Qualtrics research found that since 2021, the share of consumers providing feedback directly to the companies they buy from following a very bad experience has fallen by 7.2 percentage points.

Leaders in 2024 must have a plan in place to listen to indirect feedback, things like call center conversations, online chats, and social media posts. The smart harnessing of AI can enable companies to capture and analyze this indirect feedback and construct a rich insight into customer expectations, even capturing data points that might never appear in a customer satisfaction survey.

With so much spending at stake in 2024, companies need to prioritize delivering superior customer experiences that fuel loyalty and drive sustained growth. Businesses that fail to recognize the current market dynamics risk losing long-term customers to their competitors.

The future is about Human Intelligence accelerated and scaled with Artificial Intelligence. Invest wisely in your frontline employees and harness technology judiciously to strike the right balance between AI and human interaction.