New research suggests organizations worldwide are putting $3.7 trillion annually at risk due to bad customer experiences, an increase of nearly $600 billion (19 percent) compared to projections from last year, according to research by Qualtrics XM Institute.

The study, conducted late last year, surveyed 28,400 consumers about their recent bad experiences with organizations across 20 industries and 26 countries.

“Bad customer experiences lead directly to lost revenue, and just one negative interaction can result in losing a customer and their potential spending in the future,” the new report stated.

Very negative experiences with organizations were reported 14 percent of the time across 20 different industries including fast food, parcel delivery services, auto dealers and airlines.

Consumers reduce or stop spending with that brand more than half the time (51 percent) following a negative experience, the report found.

For parcel delivery providers and fast food restaurants, that figure jumps to over 60 percent.

In the U.S., consumer trust in businesses is at its lowest point since 2016.

Though consumers report slightly fewer negative experiences (-2.2 percent points) compared to a year ago, increases in consumer spending mean more revenue is at risk due to bad experiences, the report said.

The world’s total household consumption expenditure jumped by more than $7.7 trillion compared to last year, while data shows a greater share of poor interactions led to reduced spending — an increase of 1.6 points over last year.

“The price tag on delivering a bad customer experience has surged, even as many industries managed to reduce the frequency of bad experiences in 2023,” said Bruce Temkin, head of Qualtrics XM Institute. “While many industries reduced the frequency of their bad customer experiences, the price tag associated with those mistakes has surged. In 2024, companies need to be more careful than ever not to mistreat customers, or they will dig themselves a long-term hole as customers head to their competitors.”

Investing in frontline employees pays off with an improved customer experience, research showed.

Certain frontline workers, such as cashiers, bank tellers and restaurant servers have the worst morale compared to other types of employees and they feel a lack of support to effectively do their job.

Just one-third of frontline employees who have been with a company for less than six months intend to stay more than three years.

Businesses with frontline workforces are exploring the use of AI to assist in reducing the burden on workers and increase productivity.

The most common way for AI to help is by automating routine tasks so they can focus on more complex work.

“As organizations incorporate AI into customer interactions, they must address consumers’ fear of losing the human connection,” the report stated.

Nearly three-quarters (73 percent) of consumers said they are comfortable using a chatbot for simple, transactional activities like checking the status of an order. However, 81 percent of consumers want the option to speak with a human for advice on a complex issue, such as a medical issue.

“Done well, AI can make frontline workers more effective and give customers faster access to the things they need,” said Temkin. “However, with consumer trust hitting record low levels and fears of job loss among employees, organizations must take measured steps in incorporating AI into their business.”

The growing reluctance among consumers to give direct feedback on customer service is an issue for companies struggling to understand where they can improve the process.

Just a third of consumers give direct feedback every time they have a bad experience with a company and when they do so, it’s in less direct ways, such as through call center conversations, online chat, product reviews, or social media posts.

Qualtrics XM believes AI can aid companies by analyzing unstructured forms of feedback to provide a better understanding of what customers want and expect by tuning into both direct and indirect sources of feedback.