Why CX Does Not Always Drive Loyalty

We recently published the Temkin Loyalty Index (TLi), which examines five areas of loyalty for 293 companies. So I looked at how that data related to the Temkin Experience Ratings (TxR) for those same companies. To normalize the data across industries, we compared company scores to the averages for their industries. As you can see below, there’s a very high correlation between the two.

1512_LoyaltyIndexTxR2

For most companies, their CX is fairly predictive of their loyalty. But this connection is not equally strong for all companies. We took a look at the outliers, the companies that have loyalty levels that are much stronger or much weaker than their CX would suggest.

1512_CXLoyaltyOutliers

Why is it that some companies have a much higher or lower loyalty than their CX would suggest? Here are some reasons:

  • Brand halo: Sometimes consumers’ view of a brand is stronger or weaker than would be supported by their experiences with the company. For some reason, there are emotional drivers that make consumers love or hate the company.
  • Loyalty latency. When consumers have an experience that is not reflective of their expectations for a company, they often treat it as an exception. So it can take time for consumers to recognize that a company’s CX has improved or declined, and to adjust their loyalty accordingly.
  • Switching costs. The harder it is for a consumer to move from one provider to another, the less effect bad CX will have on loyalty.
  • Perceived alternatives. The fewer direct replacements that a consumer thinks he/she has for a company’s product or service, the less effect bad CX will have on loyalty.

The bottom line: CX has a strong, but not complete effect on loyalty

Written by 

I am an experience management transformist, helping organizations improve business results by engaging the hearts and minds of their customers, employees, and partners. My "job" is Head of the Qualtrics XM Institute. The Institute is still being established, but our goal is to help organizations around the world thrive by mastering Experience Management (XM). As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. And, as many people know, I love to speak about these topics in almost any forum. Prior to joining Qualtrics, I was managing partner of Temkin Group (leading CX research, advisory, and training firm), co-founder and chair of the Customer Experience Professionals Association (CXPA.org), and a VP at Forrester Research. I'm a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Check out my LinkedIn profile: www.linkedin.com/in/brucetemkin

3 thoughts on “Why CX Does Not Always Drive Loyalty”

  1. You have an R2 of 74. This a very predictive score and should not be discounted. Yes, there is not 100% predictability, but the article plays, probably inadvertently, to those that believe there is no predictive value.

  2. Nice read! This article provided a different perspective altogether. We often fail to understand why good customer experiences don’t sometimes lead to loyal customers. Now we might begin to understand why!

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