As executives, we all want to deliver the best experiences to our customers.
As executives, we all want to deliver the best experiences to our customers. While this is an intuitive response because we want customers to feel good about interacting with our firms, there’s a strong fiscal rationale for doing so as well.
Broadly written, customer experience includes every interaction a customer has with a company. The challenge is that the way your customers feel about their experience is the most important aspect of their experience.
And in a world where disruptive innovation is leading to perceptual commoditization in many industries, customer experience is one of the greatest opportunities for differentiation there is. So what happens when your customers “feel” an experience was poor?
Pretty simple – they turn and walk away and do so in ever-increasing numbers.
The research driven facts: Poor experiences drive defection
In 2006, Right Now Technologies published its first annual Customer Experience Impact Report, which showed that 68% of consumers will never go back to an organization after a negative experience. Fast forward 5 years to their 2011 report. In that report, research showed that basically 9 out of every 10 customers (89 percent) would walk away following a poor customer experience and began doing business with a competitor. And in 2024, research from Qualtrics confirmed the trend hasn’t slowed—more than 80% of consumers said they’ve switched brands after just one bad experience. If anyone still doubts the importance of customer experience, that statistic should serve as a wake-up call.
At McorpCX Consulting, our research shows that this increase in likelihood to walk away from a company after a single poor experience has trended closely alongside consumer adoption of smartphones. Put another way, the ‘smarter’ the average customer becomes, the greater their likelihood to leave after a poor experience. And why not? Almost everything about your competitors are in their pockets. It’s a click of the mobile browser to find an acceptable alternative.
The implications of bad customer service extend across industries
If you’re in a B2B industry, you might be thinking this doesn’t apply to you. You’d be wrong. Back in 2013, ZenDesk found that 66% of B2B customers stopped buying after a single bad service interaction. Fast forward to 2024, and the expectations haven’t eased. According to recent research, 83% of B2B buyers say the experience a company provides is just as important as its products or services—and nearly 70% say they’ve switched vendors after a poor experience. In a world where loyalty is earned through experience, not just product performance, B2B companies can no longer afford to ignore the CX imperative
The impact of poor customer service? Losing customers. And losing customers is expensive.
The cost of losing a customer is higher than you might think. Not only is there the obvious economic loss a customer represents, there’s also the cost associated with replacing them. Depending on your KPIs and which perspective you subscribe to, the cost of acquiring a new customer is 5 to 10 times greater than the cost of keeping an existing one.
Beyond the dollars, the consequences of poor customer care include reputational damage, reduced loyalty, and decreased employee morale. Another difficult-to-quantify—but very expensive—result of poor experience includes the effects of poor customer service and the resulting negative word-of-mouth. A generally accepted rule of thumb says a single unhappy customer tells about 10 others of their poor experience. That doesn't even account for the power and reach of social media.
You’ve heard the classic stories—like “Dell Hell” and “United Breaks Guitars”—where customer frustration went viral and forced corporate change. Those examples may seem like relics now—but customer outrage still makes headlines.
In late 2023, Southwest Airlines endured a massive backlash following the infamous December 2022 holiday travel meltdown, when outdated systems and inadequate staffing left over 2 million passengers stranded. The fallout triggered a U.S. Department of Transportation investigation and ultimately cost Southwest a record‑setting $140 million civil penalty, the largest in DOT history. Though the crisis began in December 2022, social media outrage—and the company’s struggles to regain customer trust—continued well into 2023, making it a defining viral customer service failure.
More recently, in 2024, TUI (the UK/Ireland tour operator) sparked social media outrage when a family posted a viral TikTok detailing a hotel downgrade and extreme dissatisfaction with TUI’s customer service. The clip garnered millions of views and triggered a wave of similar complaints.
And let’s not overlook Delta Air Lines, which experienced a major IT disruption in July 2024, resulting in over 7,000 flight cancellations and affecting more than 1.3 million passengers. This incident generated widespread public scrutiny and prompted a federal investigation into Delta’s consumer practices.
The effects of poor customer care in the digital age blow that 10 person rule of thumb and blows it right out the window. How many prospective customers might you lose as the result of a negative story about your company?
The solution? Find where your customer experience is broken – and fix it.
My point is, you don’t want to lose your customers. (Thanks Captain Obvious.) Looking at this through the lens of customer experience, the solution is actually pretty straightforward, even though it’s not always simple.
About this time last year, I wrote an article titled Six Steps To Customer Experience Improvement. And while each of these steps has multiple components, all of which we’ve proven out over the last decade, it comes down to one pretty straightforward piece of advice.
Look at your company through the eyes of your customers. By understanding what they need to go through to accomplish their goals–whether product purchase or customer service–you’ll see where problems occur and have the ability to fix them.
The bottom line?The effects of bad customer service are costly. The consequences of poor customer care include lost revenue, reduced retention, and long-term brand erosion. So take the steps needed to find out where you’re losing them and why, and plug the gaps. It’s nowhere near as costly as continuing to lose customers. And if you do the job well enough, you just might be the place customers turn to, when they have a poor experience somewhere else.
This blog originally ran on CMO.com, where Michael Hinshaw writes the weekly “Get Customer-Centric” blog.