How Does Customer Experience Affect Loyalty Behaviors?

September 28, 2020

XMInst Impact CX Customer Loyalty Sept2020Just 1 in 8 customers would recommend a company after they experienced very poor customer experience according to recent data [download page] from XM institute. Here’s a look at what else the report uncovered on the ROI of customer experience when it comes to consumer loyalty.

Consumers are clearly attracted to loyalty programs, but what else can encourage loyalty behaviors? By examining feedback from 10,000 US consumers across 20 industries, XM Institute was able to identify a link between the quality of customers’ experiences and their propensity to engage in behaviors such as purchasing more from a company, recommending the company, forgiving a bad experience and trusting the company.

The vast majority of consumers surveyed who rated their experiences with 319 companies tracked as very good indicated that they would purchase more from the company (94%) or would recommend the company (94%). Some 9 in 10 (89%) would trust the company after very good CX performance, while more than three-quarters (77%) would forgive a bad experience after such an experience.

On the other hand, just 13% of those studied who reported a very bad experience with a company would recommend it. Of note, an earlier study by the XM Institute found that consumers are less likely to keep quiet about a bad experience with a company than a good one.

Additionally, only 15% of consumers who rated a company’s experience as very poor would forgive a bad experience, while 16% would trust the company and 1 in 5 would purchase more from the company. And, companies should feel motivated to aim for at least ‘okay’ CX performance, after which some 72% of respondents said they would still purchase more from the company, while two-thirds (66%) would recommend the company.

Some Industries Can Expect a Bigger Loyalty Difference

When taking a look at loyalty behaviors by industry, companies in each of the 20 industries tracked can expect to see an increase in customer loyalty activities if they provide a good CX. However, based on the percentage point difference between loyalty behaviors after customers experience poor or good CX, some industries are particularly impacted.

TV/Internet Service Providers stand out as the industry whose customers are far more likely to purchase more after a good customer experience: just 39% who would purchase more after a poor CX, while 79% who would do so after a good CX, representing at 40% point difference. Other industries with large gaps include Consumer Payments (72% for good CX, 34% for poor CX) and Utilities (83% vs. 46%). Areas where purchase impact is less impacted are the Airline industry (89% vs. 62%), Automotive (86% vs. 57%) and Grocery (90% vs 61%).

In terms of customers recommending a company, companies in the Consumer Payments industry can expect the most notable difference in this behavior after providing a good customer experience (74%) compared to a poor customer experience (31%). In fact, this represents the largest difference in behavior across all industries and loyalty metrics studied, with a 43% point difference.

If they want forgiveness from customers after a bad experience, Utility companies (63% vs. 31%), Software Firms (62% vs. 30%) and Electronics brands (64% vs. 33%) should feel particularly motivated to provide a good customer experience. This is less important for companies in the Hotel industry (61% vs. 39%) and in Car Rental (56% vs. 34%).

And finally, when it comes to trusting a company, consumer loyalty is most impacted by good customer experience for Investment Firms (80% vs. 42%), Parcel Delivery Services (73% vs. 36%) and Utilities (75% vs. 40%).

About the Data: Findings are based on a survey of 10,000 US consumers asked to describe “their experience with and loyalty to different companies across 20 industries.

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