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.
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.
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