Take the fourth consecutive year of declining CX Index scores reported by Forrester, a note of a significant decline in customer loyalty described by KPMG, add in a dash of slippage on the American Customer Satisfaction Index (ACSI), plus some cynicism from Gartner regarding performance on their Customer Effort Score (CES). Result: Some have concluded that CX is failing and that companies are placing too much emphasis on the customer experience.
This is like saying if your team is losing, it’s time to stop focusing on recruiting better players and give up on practicing.
If anything, slippage in industry CX benchmarks suggests that companies need to focus more on upping their performance, not abandoning the game.
What Does the Data REALLY tell us?
We can learn quite a bit from this data if we scratch below the simplicity of falling scores = failure.
CX Scores (like most things in life) are Relative, Not Absolutes.
These scores are not objective measures like weight, size, or time. When customers rate their experiences, they don’t evaluate them on some universal scale or in isolation — they compare them against their frame of reference. That could include every other interaction they’ve had across all industries or just what they expect from a firm. Experiences are judged “in the eyes of the beholder” relative to the customer’s expectations, not on some standard ruler.
Customer Expectations Tend to Rise, so the Bar for Excellence is Constantly Climbing.
In a world defined by the “convenience economy,” the customer’s threshold for acceptable service constantly escalates and any friction is a nuisance. What was a delightful experience five years ago (or even last year) is now simply a basic expectation. When a company fails to keep pace with these elevated expectations — even if its actual service quality is static or slightly improved — its relative score declines. This decline signals an intensified competitive landscape where CX is the primary battleground. This creates a constantly rising baseline of expectations, making year-over-year benchmark comparisons misleading.
A Decline Suggests CX is Becoming More Important
If CX were becoming less important, customers would be less motivated to penalize poor performance, and scores probably would stabilize or rise. The fact that scores are declining means customers are being more judgmental and demanding of the experience, which should push CX to the top of the C-suite agenda.
While more difficult to prove, let me offer two additional observations.
The flattening in the data suggests a “compression effect.” That is, there is more standardization across companies and less differentiation. As with every other aspect of corporate competition, best practices are emulated, products and services are commoditized, and differences narrow. This makes a differentiated customer experience even more important as a means to stand apart from the crowd.
Behavioral Economics tells us that when people are unhappy, they are more likely to be critical . . . and the world is not a happy place. Between the economy, job market, politics, gun violence, culture wars, you name it, it seems like everyone is mad. Like it or not, fair or not, companies are increasingly caught in the crosshairs of these issues, which also takes a toll on perceptions of the customer experience.
So How Important is Customer Experience?
We can answer this by trotting out some familiar data:
- A 1-point lift in CX drives a 3.2% increase in top-line revenue (Forrester)
- CX leaders earned their shareholders 5.4 times the rate of return compared to CX laggards over a 16-year period (Watermark Consulting)
- CX leaders saw their revenues grow at more than twice the rate of the laggards from 2016 through 2021 (McKinsey)
It has been demonstrated over and over (and over) again: customers with great customer experiences and high levels of loyalty give a company a larger share of their spend and are more likely to continue to be a customer and buy other products and services from the firm compared to customers who are less loyal and have poor experiences. This leads to the gains cited above. (And, oh, by the way, those loyal customers with great experiences are the ones giving companies 5-star reviews and recommending them to others, while the disaffected customers are trash-talking companies and scaring away would-be customers.)
While that should be sufficient, let me add previously unreported data from some proprietary studies conducted a few years back. The objective was to quantify the share of revenue that was attributable to customer loyalty. After adjusting for factors beyond the firm’s control, such as seasonality and general economic conditions, customer loyalty accounted for 13% to 26% of overall revenues.
Point to whatever deteriorating CX scores and failed CX programs, but that doesn’t change the bottom line: the quality of the customer experience influences future customer behavior. In other words, the experience you deliver today will either pay dividends or cost you dearly tomorrow.
Excellent reflection, Howard — you’re absolutely right that falling CX scores don’t signal a crisis, but a reality check. They reveal that expectations are outpacing delivery and that CX maturity has flattened, not failed. As you note, this is the moment for companies to raise their game, differentiate through experience, and rebuild loyalty with consistency and intent — not retreat from CX. A truly sharp and necessary wake-up call.
For certain, it’s a wake-up call. And definitely highly important, as pointed out.
Weekly on NBC TV news there’s a segment about customers talking about less value for price.
Nowhere on LinkedIn or CustomerThink am I seeing this talked about. Except my posts.
In Forrester’s CX Index, they ask just 6 questions:
— 3 about loyalty (likely to recommend, likely to stay, likely to buy additional),
— 3 about quality (interaction feeling, easy to work with, effectively meeting needs).
— It’s these last 2 that trip-up the score to yearly declining trend. You’ll notice Forrester pointing out declining quality all the time.
— Meeting Needs + Easy to Work With are affected by Legal, Finance, Procurement, HR, Facilities, and so on: policies, processes, coordination, timeliness, quality, and most importantly to customers these days the attitudes (culture) and value for price (cost structure/efficiency).
For these reasons, it’s imperative that CX professionals on both sides (practitioners and providers) rise up! Rise above the fray of what everyone’s doing, and how we’ve always done it, and even award-winning and awards judge, and author and keynoter to the bigger picture of CXM.
The bigger CXM role is influencing corporate strategy and all strategies across the business. It’s engaging the non-customer-facing roles in getting in-sync with customers. We can use AI to help with this. In every CX report to managers, we must light a fire under their seat for acting on the findings — no such thing as a “safe zone”. Change bonuses to what are you doing about chronic CX gaps instead of surveys (which we use to tell us which gaps). This is how we crack the ceiling of the CX Index and other State of CX reports to reverse the trend.
I agree, Lynn. I’m a strong advocate of solid, reliable measurement to support data-driven decision making. That said, the measurement by itself is inert — it’s the decisions and their implementation that make things happen. The lip service CX gets from so many in leadership just further sets things back; we need leaders who walk-the-talk and live CX as a practical day-to-day part of their business.
I was never a fan of “State of the Industry” reports. They usually are little better than advertorials. They make me think of vacuum cleaner salespeople who throw dust on your carpet and then clean it up.
As for Forrester, they play things from three sides: taking cash from the providers they supposedly impartially evaluate; then selling their services to companies in need of that impartial arbiter to help them select a provider; and rounding things off by selling their own research as the panacea after they toss bombs into the marketplace about the declining state of customer experience.
CX is beginning to drowsily wake from a 20+ year, Rip Van Winkle-esque sleep, in which big names and big consulting companies continually pushed a recommendation likelihood score as the customer experience measurement Messiah. Accepting researchers and executives, looking for a ‘magic bullet’ metric, bought into this – hook, line, and sinker – always seeking to rationalize, or excuse, why it was so damaged and misleading – – until the past year, or so, when reality came calling: https://customerthink.com/major-xi-industry-challenge-the-confusion-mistrust-and-disappointment-over-metrics/
I hear you, Michael. I have often written about the pros and cons of the “recommend likelihood score” that you don’t name — and, in all fairness, there are some pros. I tell my clients that the best metric is that which most accurately explains or predicts the outcomes they want to achieve. This can be empirically determined through measurement.
But it’s much easier to pull out your likelihood-to-recommend compass to point north than it is to map out the exact path to true north geographically. And, by the way, they do both generally point in the same direction anyway.
Perhaps I’m softening in my old age, but all of the serious CX metrics are very highly intercorrelated and none point you in the wrong direction. The scientist in me says you should strive for the most accurate, optimum metric. The pragmatist says this is like horseshoes and close enough still earns points.
We largely agree – there are so many proven analytical and application deficiencies in the recommendation likelihood score that it’s difficult to find justification for any enterprise using it as a behavioral and business goals North Star – that the key objective is real-world outcomes predictions and explanations: https://www.linkedin.com/pulse/why-oh-anybody-still-measuring-customer-satisfaction-michael/
Great discussion here. I think you nailed it, Howard – declining scores aren’t a sign of CX failure, they’re a sign that expectations keep climbing while many companies are standing still. Like Lynn said, the real issue isn’t the data but what leaders do with it. Too many still see CX as a side project instead of how the whole business operates. When every department owns a piece of the experience – not just marketing or support – the numbers start to move for the right reasons.
Great discussion here. I think you nailed it, Howard – declining scores aren’t a sign of CX failure, they’re a sign that expectations keep climbing while many companies are standing still. Like Lynn said, the real issue isn’t the data but what leaders do with it. Too many still see CX as a side project instead of how the whole business operates. targetreddcardlgin.com
When every department owns a piece of the experience – not just marketing or support – the numbers start to move for the right reasons.