Published on November 16, 2023, 8:52 pm

Businesses in Hong Kong are facing a significant risk to their revenue due to poor customer experiences, with an estimated 6.5% at stake, according to a new study by Qualtrics XM Institute. The research indicates that this puts approximately HKD$117 billion in consumer spending in the region at risk.

The findings are based on an analysis of data from the Qualtrics 2023 Global Consumer Trends report, which includes responses from 693 individuals in Hong Kong. It reveals that consumers reported having very poor customer experiences with organizations 15% of the time. Furthermore, after experiencing such a negative encounter, 43% of respondents said they would reduce their spending with the brand or cease doing business with them altogether.

Bruce Temkin, head of Qualtrics XM Institute, emphasized that delivering on brand promises is vital for long-term business success. He noted that failing to meet customer expectations can have a tangible impact on the bottom line and may result in permanent loss of customers. Particularly in tighter economies, shoppers tend to be more cautious about their spending choices, meaning one negative experience could lead them to abandon a brand permanently.

The study also highlights the sectors that have the highest and lowest percentages of consumers reporting “very poor” customer experiences. Government agencies (30%), airlines (25%), and property insurers (21%) were identified as having the highest proportion of dissatisfied customers. In contrast, streaming services (6%), supermarkets (7%), and department stores (8%) were among those with the lowest percentage of dissatisfied customers.

Vicky Katsabaris, director of XM Solutions and Strategy at Qualtrics, pointed out that while there has been a slight reduction in revenue at risk compared to the previous year, there has been little change in how often consumers face poor service. As customer churn is not desirable for any organization, it is crucial for businesses to prioritize addressing this issue by thoroughly understanding customer needs if they wish to succeed and gain market advantages in 2023.

The report also identifies key customer experience (CX) trends that organizations should prioritize in the coming year to meet customer expectations. Firstly, it highlights that building personal connections with customers is more important than operational efficiency when it comes to winning loyalty. For instance, having an empathetic service agent has a greater impact on consumer satisfaction than short wait times during interactions. Understanding customer preferences in different scenarios is essential for creating positive experiences.

Additionally, the study reveals that brand switching among consumers is likely to increase unless organizations take action to exceed customer expectations. By actively listening, understanding, and responding effectively to customer needs, companies can foster long-term loyalty. The research shows that when consumers have a five-star experience, they are more likely to trust and recommend the company.

Lastly, the report emphasizes that unstructured feedback plays an increasingly crucial role in understanding and meeting consumer needs. Approximately 70% of consumers in Hong Kong believe that companies need to enhance their efforts in listening to feedback. Leveraging insights from conversations and qualitative responses can help businesses better understand specific situations and enable real-time appropriate responses.

In conclusion, poor customer experiences have the potential to significantly impact revenue for businesses in Hong Kong. To mitigate this risk, organizations must prioritize building personal connections with customers, exceeding their expectations, and gathering unstructured feedback to improve their services. By addressing these areas proactively, companies can safeguard their bottom line and establish long-term loyalty among customers.

Keywords: CIO, Generative AI

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