Which Industries Are Suffering Most from Poor CX?

January 8, 2020

Qualtrics Bad CX by Industry Jan2020The growing emphasis that companies put on optimizing customer experiences may be paying off for many industries, with only 7% of customers across 20 industries reporting they had a bad customer experience with a company in the previous six months. Nonetheless, those companies that deliver a poor customer experience are likely to pay with decreased sales: research [download page] from Qualtrics finds that companies could lose an average of 3% of their revenue from bad customer experiences.

Well above the average, TV/Internet Service Providers have the highest percentage (17%) of customers who have had a bad experience in the previous six months. The American Customer Satisfaction Index (ACSI) reported similar findings last year when it found that Subscription TV and Internet Providers had the lowest customer satisfaction ratings of all the industries measured.

Qualtrics data indicates that the Health Insurance and Car Rental industries each had 10% of consumers reporting having had a bad experience within the 6-month time period. Also above average for bad customer experiences were Auto Dealers (9%), Airlines (9%), Wireless (8%) and Utilities (8%). Conversely, the Streaming Media and Retail industries each only had 3% of consumers report having had a bad experience.

Across all the industries examined, reports of bad customer experiences improved by just 1% point between 2017 and 2019. The largest improvements came in the Insurance, Streaming Media, Credit Card and Investment Firms industries. Despite the TV/Internet Service Provider industry having the highest percentage of bad customer experiences reported, it has improved since 2017 when closer to 20% of customers reported having had a poor customer experience.

Auto Dealers, Fast Food and Software Firms, by contrast, saw the largest increases in the proportion of bad experiences within the two year period.

Bad Experience Leads to Cut In Spending

A poor customer experience has its consequences. Across all industries, an average of 45% of consumers cut their spending with companies after having a bad experience. The Fast Food industry is more likely than average to either see consumers decrease spending (42%) or completely stop spending (25%).

Retail also suffers from bad customer experiences, with 42% of consumers saying they decreased spending following such an incident. For retailers, the damage caused by a bad experience can extend beyond the affected customer. Research from Boston Retail Partners found that aside from a majority of adult shoppers saying that they stopped shopping with a retailer after a bad experience, more than half (56%) of 18-37-year-olds also said they shared their bad experience on social media.

On the flip side, only 21% of customers negatively changed their spending habits with Utilities and Health Insurance companies after a bad experience, perhaps due to the lack of available alternatives for consumers in these industries.

The Industries Most At Risk of Reduced Customer Spending

Qualtrics reveals that TV/Internet Service Providers have the most at risk from providing poor experiences: in fact, they appear to be at risk of 6.2% of their customers cutting spending due to bad customer experiences. That’s based on a calculation that multiplies the percentage of consumers who have had a bad experience by the percentage of consumers who decreased spending after a bad experience.

The analysis also found that Car Rental companies stand to have 5.3% of their customers cut spending due to bad customer experiences, while Fast Food companies could have 4.8% of their customers do so.

Also using this calculation, Utilities (1.7%) and Streaming Media (1.2%) companies have the smallest percentage of customers likely to cut spending as a result of a poor customer experience.

[Note] This article was updated on 1/9/2020 to reflect the fact that the above-mentioned calculation does not equate to revenue at risk by industry, but rather the percentage of customers who could conceivably cut their spending with an industry as a result of a poor customer experience. The associated chart was also removed and replaced with this new chart displaying the percentage of customers who report having had a negative experience, by industry.

For a closer look, the report can be downloaded here.

About the Data: Results are based on a survey of 10,000 US consumers about their recent interactions with 294 companies across 20 industries.

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