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UK businesses are facing potential losses of up to GBP £4.5 billion during the holiday season due to poor customer service, as reported in new research by Qualtrics.
The research also highlights a global scale of this challenge, with nearly GBP £3 trillion of sales at risk internationally because of customer service shortcomings. Compared to last year's figures, this is an increase of nearly GBP £94 billion based on World Bank data. Qualtrics reveals that 53% of consumers are likely to cut spending following a negative customer experience, with one in ten brand interactions failing to meet consumer expectations.
Particularly vulnerable to these potential spending cuts are industry sectors such as fast food brands (66% at risk), department stores (65%), online retailers (64%), automobile dealers (63%), mobile phone providers (59%), and parcel delivery services (56%). Common complaints among consumers include service delivery issues, which account for 46% of bad experiences, communication problems (45%), and negative interactions with employees (39%). These were seen as larger issues compared to pricing (37%), quality (35%), and after-sales support (21%).
Isabelle Zdatny, Customer Loyalty Expert at Qualtrics, commented on the significance of the holiday season for sales: "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. Customers want to be kept up to date on what's happening with their orders, know they can trust they're going to get the product and service they've been promised and see value from their purchase - and they're rewarding brands that do it well."
The study also suggests that frontline employees could be instrumental in affecting customer perceptions. However, despite their focus on customer service, these employees frequently experience lower engagement levels and less job satisfaction. Retail workers and restaurant servers, for instance, often feel their work expectations are unmet or that they are not fairly compensated.
Dr. Benjamin Granger, Chief Workplace Psychologist at Qualtrics, explained the impact of frontline workers on customer interactions: "Front-line, customer-facing employees have a dramatic effect on customer perceptions and unfortunately many of these employees are starting this holiday season on the backfoot. There is a well-known reciprocal relationship between employees and customers that can either become a virtuous or a vicious cycle. Kickstarting a virtuous cycle means supporting and meeting the needs of front-line employees, who in turn, will be more likely to create more satisfied, loyal customers who spend more this season."
Qualtrics offers five strategies for enhancing both customer and employee experiences during the busy holiday period. Firstly, easing pressure on frontline staff by refining processes and augmenting training can lead to better customer experiences. Additionally, maintaining clear communication is vital to reducing customer confusion and ensuring trust, especially during key commercial times. It is equally important for brands to uphold their promises, responding dynamically to evolving customer needs based on insights from multiple feedback channels. Finally, prioritising crucial interactions to consistently exceed expectations can bolster consumer trust and satisfaction.
