Australian consumers cut spending with a brand more than half the time after receiving bad customer service (55% of negative experiences) – 18 percentage points higher than 12 months ago, according to new research from the Qualtrics XM Institute.

Consumers say one in 10 (11%) brand interactions result in a ‘very poor’ customer experience, although Australians are reporting fewer poor customer experiences than the global average of 14% and fewer than they did in 2022 when they said one in five (19%) brand interactions were negative.

A similar sentiment is echoed by separate Qualtrics research, where one-quarter (26%) of Australian consumers say customer service improved over the last 12 months, citing more helpful and knowledgeable customer service agents, higher product quality, and reduced wait times.

Streaming providers, department stores, supermarkets, online retailers and electronics makers deliver the least amount of poor experiences according to Australian consumers. In contrast, government agencies, internet service providers, mobile phone providers, utility companies and property insurers provide the poorest experiences.

“Customer service is in the spotlight like never before, and our research reveals how consumers in Australia are increasingly voting with their dollars. All it takes is one bad experience or wrong move for an organisation to be punished, which is why in 2024 companies need to be more careful than ever not to mistreat customers,” Qualtrics XM Institute principal XM catalyst, Moira Dorsey said.

Bad customer experiences are directly leading to lost revenue with consumers reducing spending after 41% of bad experiences, and cutting it entirely after another 14%. Analysis of the Qualtrics findings, alongside World Bank data, suggests organisations are risking more than $74 billion annually.

Two in five consumers (41%) believe AI will improve customer service levels through faster service times, resolving complaints/queries, and faster deliveries. To ensure the success of AI in customer experience, organisations must prioritise human connection in the engagement, with top concerns being a lack of human connection, misuse of personal data, the possibility people will lose their jobs, and service quality.

“Customers are placing a premium on human connection, and the most successful AI strategies are designing for this. By understanding how customers and their employees want to use AI, organisations can tailor their offerings and models for their preferences, and those that do will be rewarded with increased sales, more satisfied customers, and highly engaged and productive employees,” Dorsey added.