Poor CX puts up to 14% of revenue at risk for SEA and HK firms
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Companies in Southeast Asia are risking up to 14% of their revenue as a result of poor customer experience, while those in Hong Kong risk up to 6.5% of their revenue. This puts US$165 billion and US$15 billion in consumer spending at risk in Southeast Asia and Hong Kong respectively, according to research from Qualtrics XM Institute.
More than 5,000 Southeast Asian consumers surveyed indicated that they have poor customer experiences with organisations around 18% of the time. After receiving a poor customer experience, up to 60% of those surveyed say they reduce their spending time with the particular brand or stop spending with them altogether.
Similarly, 693 respondents in Hong Kong said they have very poor customer experiences with organisations 15% of the time. After receiving a poor customer experience, 43% reduce their spending with that brand or stop spending with them altogether.
The study also revealed industries leading the way with customer experience and those lagging behind across Southeast Asia.
Industries with the highest percentage of consumers reporting "very poor" customer experiences recently:
1. Singapore: Auto dealer (50%), property insurer (38%), and electronics maker (36%).
2. Malaysia: Government agency (41%), Internet service provider (25%), and electronics maker (25%).
3. Indonesia: Government agency (45%), property insurer (44%), and auto dealer (37%).
4. Philippines: Internet service provider (45%), government agency (39%), and public utility (20%).
5. Thailand: Government agency (32%), hospital/medical provider (23%), and bank (16%).
Industries with the lowest percentage of consumers reporting “very poor” customer experiences recently:
1. Singapore: Supermarket (7%), department store (7%), and bank (8%).
2. Malaysia: Supermarket (8%), department store (10%), hotel (13%), and fast food restaurant (13%).
3. Indonesia: Supermarket (7%), streaming service (10%), and bank (11%).
4. Philippines: Department store (5%), streaming service (7%), hotel (7%), and fast food restaurant (8%).
5. Thailand: Streaming service (3%), public utility (8%), and department store (8%).
In Hong Kong, government agencies (30%), airlines (25%), and property insurers (21%) have the highest percentage of consumers who recently had a “very poor” customer experience. In contrast, streaming services (6%), supermarkets (7%), and department stores (8%) have the lowest percentage of consumers who recently had a “very poor” customer experience.
Bruce Temkin, head of Qualtrics XM Institute, said delivering on brand promises to keep customers coming back is essential for the long-term success of a business, and this research shows that actual impact on the bottom line when customer experience misses the mark.
"In tighter economies, shoppers will be more careful about their spending, and a single negative experience could be enough to lose them as a customer forever," Temkin added.
At the same time, Vicky Katsabaris, director of XM solutions and strategy at Qualtrics, said while there has been a slight reduction in the revenue at risk in Southeast Asia due to poor customer experiences compared to last year, there has been little change in how often consumers say they receive poor service.
"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 2023 - and those that get it right stand to make market gains," Katsabaris said.
Three CX trends to prioritise in the new year
1. Customer loyalty will be won through personal connections more so than through operational efficiency
A personable service agent has a bigger impact on consumer satisfaction than a short wait time during customer interactions in Asia Pacific and Japan. Qualtrics said that when a consumer talks to an empathetic agent, they are 4.5 times more likely to be happy with the overall experience than consumers who are not satisfied with how empathetic the agent is.
On the other hand, 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.
Efficiency is still crucial in customer experience and there are tasks where people would rather self-serve than speak to a representative. Companies need to understand what their customers want in a given situation to leave them with a positive experience.
2. Brand switching is likely to increase in 2023 unless organisations take action to exceed customer expectations
Companies can build long-term loyalty when they exceed expectations and act on customers' needs. With around half of consumers in the region saying they’ve had customer service issues go unresolved, and up to 42% not satisfied with the empathy they received from a customer service agent. According to Qualtrics, there is a significant opportunity for organisations to exceed expectations and win loyalty.
When consumers have a five-star experience in Asia Pacific and Japan, for example, they are often more than three times more likely to trust and recommend the company, compared to those receiving a poor experience.
3. Unstructured feedback will be increasingly essential to understanding and meeting consumer needs
Approximately three quarters of Southeast Asian consumers say businesses need to do a better job of listening to them. This number remains unchanged from 2021 which is proof that there is still room for improvement.
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.
Using an online survey, Qualtrics collected data from 33,093 consumers across 29 countries: Argentina, Australia, Belgium, Brazil, Canada, China, Colombia, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, the Philippines, Singapore, South Africa, South Korea, Spain, Taiwan, Thailand, the United Arab Emirates, the United Kingdom, the United States, and Vietnam.
To calculate the cost of bad customer experiences, the Qualtrics XM Institute analysed data from the 2023 Global Consumer Study to find the share of sales at risk due to bad customer experiences, from customers either lowering their spending or cutting it out entirely. These percentages were multiplied by household consumption numbers from The World Bank to translate them into monetary figures.
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