The True Cost of Bad Customer Experiences

Imagine this: You’re doing everything you can to grow your business. You’ve redesigned your website, you’re sales team is working hard, and you are indeed getting new customers. But your customer churn is through the roof, and you don’t even know if your customers are satisfied. What’s worse, you’re running out of ideas and your investors are looking for a reason to keep the cash flowing. The issue is that you’re not thinking about the big picture because you’re too focused on individual systems and interactions. You’re not thinking about customer experience. What the concept of customer experience forces us to do is look at a customer’s entire perception of your brand as a fluid and evolving thing – shaped by each and every interaction they have with it. Let’s look at the true cost of bad customer experiences.

What is Customer Experience (CX)?

Customer experience is an abstract concept in the same sense as “design” or “innovation”. It refers to how your customers interact with your brand as a whole, and across the entire customer journey. Your customer experience is dictated by a series of interactions, any of which can make or break your business in the eyes of the customer. While there are many KPI’s used to measure customer experience, we often turn to customer satisfaction (% of customers who are ‘satisfied’ based on predetermined criteria), and NPS (Net Promoter Score).

A good way to benchmark your business’ customer experience is to first create a customer journey map. Your customer journey map will differ depending on your business model but a basic customer journey map may contain these stages:

  1. Awareness

  2. Consideration

  3. Purchase

  4. Service

  5. Loyalty

An example of a basic customer journey map with customer touch points overlayed

What customer experience strategies allow us to do is measure customer satisfaction at every stage of the customer journey. This not only ensures that we are maximizing the potential happiness of our customers, but it also tells us where exactly we need to improve. By breaking the customer journey into stages, we can see where our pain points lie. For example, if 80% of your customers are satisfied in the purchase stage but 49% are satisfied in the service stage, then you know that you need to seriously reconsider our customer service systems and protocols.

The Benefits of Good CX

There is a nearly endless amount of research done about the benefits of a good CX strategy, and some of the statistics are beyond shocking. Luckily, we’ve compiled some of the main benefits into one blog post with all of the relevant numbers so you can read for yourself.

If you don’t have time to read the full post, here are some key stats:

  1. CX leaders delivered compound annual revenue growth rates (CAGR) of 17% compared to just 3% for CX laggards in the period of 2010 to 2015.
  2. 86% of customers are likely to repurchase from a business after having a good experience compared to 13% of those who had a bad experience.
  3. 73% of companies with above average CX maturity are performing better financially than their competitors.

The Costs of Bad CX

Hindering Marketing Efforts

All it takes is one unsatisfied customer to permanently damage the reputation of your business. The last thing your business needs is for the marketing budget to be bloated in order to rebuild your lost reputation among potential and existing customers. If you are not evaluating your customer experience and using customer journey maps to put yourself in your customer’s shoes, you may be overlooking a critical system error or service bottleneck. These cannot happen if you want to maintain a consistent level of customer satisfaction.

Research by American Express suggests that Americans tell an average of 15 people about a poor service experience, versus the 11 people they’ll tell about a good experience. Both of these numbers are significant because it shows that people are more likely to spread the word about negative experiences than positive ones, at least in a commercial setting. This means that it is doubly important to prevent customer dissatisfaction.

Lost Customers

Your customers are under no obligation to re-purchase from your business, and this is especially apparent in a competitive environment. People are always looking for the best option, and if your business fails to meet their expectations even once, they may have all the incentive they need to switch to a competitor. In some cases, the switch is derived from frustration and the desire to ‘try something new’.

In the same study by American Express, 33% of Americans said they would consider switching companies after just a single instance of poor service. A figure that, to some, is not surprising. Customers have more power than ever. Everyone has the opportunity to compare multiple businesses in a matter a minutes with a quick Google search, and savvy consumers can pick out the best fit for them in no time at all. So it makes sense that one bad service failing will prompt them to switch – because it’s easier to switch than ever.

A good customer experience strategy is meant to ensure that your customers never feel as though they are missing a better opportunity by not exploring other options. They are happy with your business and will continue to be your customer so long as their expectations are being met or ideally exceeded.

Effects on Revenue

Bad CX is bad for your bottom line. This should come as no surprise of course, as we’ve already talked about the potential to lose customers. Every year, American companies lose more than $62 billion due to poor customer experiences, and more than half of Americans have scrapped a planned purchase or transaction because of bad service. When you lose customers, you sell less – it’s that simple. Few companies have a strong leadership team that is willing to invest in a comprehensive customer experience strategy for long-term success. This may be due to the culture of short-term, morale boosting, but often unsustainable management outlooks that some companies have. The reality is that customer experience strategies take time to implement and require support from all levels of employees. If the management team can get the whole company on board, the positive effects on revenue will follow suit.

Wasted Opportunity to Engage Customers

The difference between happy customers and engaged customers is huge. A customer can have a positive experience with your business, but may exhibit no allegiance to your brand whatsoever. They have no problem buying from you one day, and your competitor the next day. The goal of a customer experience strategy is not only to increase your overall customer satisfaction, but also to engage them. In other words, turn happy customers into loyal ones.

Feeling unappreciated is the #1 reason customers switch away from products and services (New Voice), so make them feel like they are important. Better yet, actually BELIEVE that they are important, because they are. The core of any good customer experience strategy should lie a rock solid customer feedback system. Collecting feedback from your customers is a good way to make them feel heard, as well as interacting with them to make them feel appreciated. A good customer experience software should have customer feedback capabilities built-in so you can create and publish surveys on the right sales and marketing channels. An excellent customer experience software will have sales and marketing tools built-in so you can communicate with your customers in real-time or send them promotions and upsell offers. This is the best way to create customer loyalty.

How to Avoid Having Bad CX

If you want to build a customer experience strategy, it needs to be built on strong foundations which are robust enough to evolve and change with your business without needing to be rebuilt from scratch. Your strategic planning, program governance structure, and change management efforts go a long way toward building your success.

But you also need a flexible CX software to support your work. Remember, even if your strategy is in its early stages now, it will grow and evolve, as will your company. To scale your CX strategy (and your success), choose the right system to support your long-term needs. Ensure that you choose a CX management software which fits with the needs of your company, and ticks off all of the major requirements for success in a modern market landscape.

We’ve done the research for you, and listed the key features that need to be include in your CX software in order to enable you to be a customer experience leader! Read our post here.


We built the world’s only feedback and customer journey software with built in marketing and sales tools.

Create highly customizable surveys and publish them anywhere. Use the Feedbackly iOS app to collect responses on your iPad, or publish your surveys with any one of our many software integrations. Our vision is to revolutionize customer experience management by making it easy and affordable to measure your customer’s emotions and turn that insight into actions. Above all, we enable companies to boost sales using their customer feedback.

Sign up