Australian businesses are losing an estimated AU$74 billion annually due to poor customer service, according to new research by Qualtrics. The study reveals that local consumers are increasingly reducing their spending after experiencing subpar service.

Industries identified as delivering the best satisfactory experiences include streaming providers, department stores, supermarkets, online retailers, and electronics makers. Meanwhile, government agencies, internet providers, mobile phone providers, utility companies, and property insurers are reportedly providing the most unsatisfactory experiences in Australia.

The study shows that 55% of bad experiences result in a reduction in spending, an increase from 37% 12 months ago. One in 10 interactions with brands resulted in a poor experience, down from one in five last year.

However, it's not all doom and gloom. A quarter of consumers reported that customer service has improved over the last 12 months, citing more helpful and knowledgeable customer service representatives, improved product quality, and shorter wait times.

"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," says Moira Dorsey, Principal XM Catalyst at Qualtrics XM Institute.

Interestingly, the study also found that 41% of Australians believe AI will improve customer service levels through faster service times, helping solve complaints/queries, and faster delivery.

"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 adds.

The research, conducted in late 2023, is based on 1,200 responses and provides a stark reminder of the financial implications of poor customer service. As businesses navigate the challenges of 2024, the findings underscore the importance of prioritising customer experience to avoid significant financial losses.