Singapore – Tolerance for bad customer service dwindles across Southeast Asia as consumers cut spending with a brand more than half the time after receiving poor service, research from Qualtrics XM reported.
According to the report, consumers in SEA slash their spending with a brand after 53% of negative customer experiences, a number that is 2% higher than 12 months previously and slightly higher than the global average (51%).
This increasing and worrying cut in consumer spending threatens a US$144 billion annual loss for Southeast Asia.
The report revealed that nearly one-fifth, or 15%, of consumers’ engagements with brands in the region result in a very poor customer experience. The data is similar to the volume of reported poor experiences globally (14%), but is down from the previous 2022 data, when 18% of brand interactions resulted in poor engagements.
Qualtrics XM’s research showed that Thailand is second globally in terms of reported poor customer experiences, with 19% of interactions falling short. The country also recorded the largest increase in negative experiences among the 23 countries surveyed, with a rise of 6%-points.
Furthermore, organisations in Thailand also have the highest sales at risk index (11%), a number that is almost three times higher than Singapore (4%) and twice as high as Australia (6%), the US, and the UK (both 5%).
The research also showed that, on a global scale, Filipinos are most likely to reduce their spending with an organisation (47%) after a bad customer experience.
Meanwhile, countries in SEA like Indonesia and Singapore have seen some of the biggest reductions in reported poor experiences, with a 10%-point and 8%-point decrease, respectively.
Government, hospitals, parcel deliveries, auto dealers, and credit card and insurance providers are among the industries that have recorded the highest volume of bad customer service in Indonesia, Philippines, and Thailand. Meanwhile, in Singapore, government and hospital services rank the lowest in providing bad customer experiences.
The continuous bad customer service is leading to a loss of revenue, putting 8% of sales at risk in the region as consumers across all markets are reducing or cutting spending entirely after a poor experience.
The report also emphasised that organisations must address consumers’ fear of losing the human connection as more AI is being incorporated into customer interactions.
Southeast Asian consumers are some of the most comfortable with AI when engaging with brands, with more than two-thirds, or 69%, in Singapore believing it will improve customer service levels through faster service times, resolving complaints and queries, and faster deliveries.
With this, organisations must ensure that AI positively impacts the customer experience in the region, prioritising human connection in the engagement, with consumers’ biggest concerns with the technology being a lack of human connection, misuse of personal data, the possibility people will lose their jobs, and service quality.
Moira Dorsey, head of Qualtrics XM Institute, said, “Customer service is in the spotlight like never before, and our research reveals how consumers across Southeast Asia 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.”
“Customers are placing a premium on human connection, and the most successful AI strategies are designed 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,” she added.
