Bad CX put $325 bn in consumer spending at risk in India, says study

Businesses in India are risking 17.3% of their revenue due to poor customer experiences putting $325 billion in consumer spending at risk in the country, according to new research.    

The research conducted by customer experience firm Qualtrics which gathered insights from more than 1,100 respondents in India, revealed that consumers say they have very poor customer experiences 48% of the time, which is a 14-point increase from a year ago (34%), it said. Notably, after receiving a poor customer experience, more than a third (36%) say they reduce their spending with that brand or stop spending with them altogether.   

The study conducted in August and September 2022 further revealed that banks (60%), airlines (57%), and credit card providers (56%) have the highest percentage of consumers who recently had a “very poor” experience. In contrast, supermarkets (32%), public utilities (37%), and hospitals/medical providers (37%) have the lowest percentage of consumers who recently had a “very poor” customer experience.   

“There has been a significant increase in the revenue at risk in India due to poor customer experiences compared to last year, along with a rise in how often consumers say they receive poor service,” said Vicky Katsabaris, Director of XM Solutions and Strategy, Qualtrics. According to him, “no organisation can afford customer churn, which is why addressing this widening gap by deeply tuning into the needs of customers must be a top priority in the next one year and those that get it right stand to make market gains”.    

The study also noted that a personable service agent has a bigger impact on consumer satisfaction than a short wait time during customer interactions across Asia Pacific and Japan. For example, when a consumer from the region talks to an empathetic agent, they are 4.2 times more likely to be happy with the overall experience than consumers who are not satisfied with how empathetic the agent is. In contrast, consumers with a short wait time are 2.4 times more likely to be happy with the overall interaction than those dissatisfied with wait times.   

Furthermore, companies that exceed expectations with how they listen, understand, and act on customers’ needs, can build long-term loyalty. With a third (33%) of consumers in India saying they’ve had customer service issues go unresolved, and 16% not satisfied with the empathy they received from a customer service agent, there is a significant opportunity for organisations to exceed expectations and win loyalty. When consumers have a five-star experience, they are 1.6 times more likely to trust and recommend the company, compared to those receiving a poor experience.  

A majority (85%) of consumers in India say companies need to do a better job of listening to their feedback, which is a 13-point increase on last year (72%).   

“At a time when consumers are talking about brands on social media and in reviews, one way companies can improve their listening is by using insights from chats and other qualitative responses to understand a consumer’s specific situation and how to respond appropriately in real time,” the study showed.   

Qualtrics, however, is not the only organisation to highlight the impact of poor customer experience on brands. Adobe’s 2022 Digital Trends for Asia Pacific region published in March this year 77% of Asia Pacific (APAC) businesses experienced a surge in new customers through digital channels over the past 18 months, noting that in a bid to meet new customer expectations, the majority of APAC businesses are stepping up investment in customer experience management (59%), edging ahead of North America (57%) and Europe (53%). Most APAC businesses also expect to accelerate investment in customer data technology (60%).  

Not only that, another study published in April this year by Harvard Business Review Analytic Services, in association with IT firm Genesys showed that nine out of 10 organisations are using a wider range of metrics and technologies to measure customer experience today than a few years ago and that’s obvious in the age of omni-channel customer experience. That said, while company-centric approaches that focus primarily on traditional metrics like Net Promoter Scores (NPS) continue to exist, organisations that leverage technology-enabled, people-centric measurement approaches are not only better informed to take action to improve overall experiences but also drive customer loyalty.