INSIGHT REPORTROI of Customer
Experience, 2020
CX HIGHLY CORRELATES TO CONSUMER LOYALTY ACROSS
20 U.S. INDUSTRIES
By Moira Dorsey
XM Catalyst
David Segall
Research Associate
Bruce Temkin, CCXP
Head of the Qualtrics XM Institute

August 2020

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EXECUTIVE SUMMARY
To understand the connection between customer experience (CX) and loyalty, we
examined feedback from 10,000 U.S. consumers describing their experiences with andloyalty to different companies across 20 industries. We found a strong, positive
relationship between CX quality and loyalty behavior. When examining the data byindustry, we found the effect of CX on loyalty varies and is most prominent for the Airline
and Software industries. We also found that improvements in CX have the largest
potential effects for Utility companies and TV/Internet Service Providers.

THE CONNECTION BETWEEN CUSTOMER EXPERIENCE AND LOYALTY
Previous XM Institute Research has found that organizations plan to improve their customer
experience (CX) delivery – executives understand the intrinsic link between customers’
experiences and loyalty.1 To determine how CX affects customer loyalty, we asked 10,000
U.S. consumers about both their experiences with and loyalty to 319 U.S. companies across
20 industries.2 We analyzed their responses, and the results show that improved CX
correlates to:3§

Additional purchases. We compared the likelihood of consumers to purchase moreproducts or services from each of the 319 U.S. companies to each firm’s Customer
Ratings Score. We found that there is a strong, positive relationship between likelihood
to purchase more and the Customer Ratings Score with a correlation coefficient of .91(see Figure 1).4§

More recommendations. We found a strong, positive relationship between CX andNet Promoter Score (NPSÒ) with a correlation coefficient of .88 (see Figure 2).5 The
average NPS of companies in the highest quintile of the Customer Ratings is nearly 16
points above industry average and more than 32 points higher than the average NPSof companies in the bottom quintile.

Specifically, 60% of large organizations plan to increase the effort they put into improving their customer experience
compared with the previous year. See the XM Institute Report, “The Global State of XM, 2020,” (April 2020).
2
Data come from the Qualtrics XM Institute Q2 2020 Consumer Benchmark study which was conducted in May 2020,
so response collection occurred in the middle of the global COVID-19 pandemic.
3
For the Customer Ratings, we used the “2020 XMI Customer Ratings – Overall,” which evaluate the three areas ofan experience: success, effort, and emotion. To normalize scores across the industries, the analysis compares thedata for each company with their industry average. See the XM Institute Report, “2020 XMI Customer Ratings –Overall,” (July 2020).
4
For data on future purchase intentions, we looked at consumers’ responses to the question: “How likely are you to
consider purchasing more products or services from these companies in the future?” We included the percentage ofconsumers who selected a 7 on a scale from 1 (“extremely unlikely”) to 7 (“extremely likely”).
5
Net Promoter Score, Net Promoter, and NPS are registered trademarks of Bain & Company, Satmetrix, and Fred
Reichheld.
1

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Loyalty and the Three Elements of Customer Experience
In addition to comparing overall CX to different loyalty behaviors, we also investigated theeffects that each of the three elements of a customer’s experience – success, effort, andemotion – have on four loyalty behaviors: purchasing more, recommending, forgiving, andtrusting (see Figure 3). The analysis examines consumer attitudes across all companies andindustries and is based on whether consumers gave the organization a low, medium, or high
CX rating. While our analysis shows that all three CX elements correlate to loyalty, we foundthat:§

Emotion has the largest impact. While improving any one component of CX

increases all four measures of loyalty, an improvement in emotion provides thebiggest benefit. Consumers with a high rating in emotion are more likely to exhibit all
four loyalty behaviors than consumers with a high rating in either success or effort.
§

Effort and Success have similar, positive effects. The effort and successcomponents have similar impact across all four loyalty behaviors, and both moststrongly correlate with a consumer’s likelihood to purchase more from a company inthe future. Eighty-four percent of consumers who gave a high effort rating are likely tomake additional purchases; this number drops to 58% for consumers with only aneutral effort rating. For success, these values are 83% and 56% respectively.

CX AND LOYALTY ACROSS 20 INDUSTRIESAs part of our analysis, we examined consumer loyalty to companies across 20 industries
based on how consumers rated their experiences with those companies (see Figure 4). When
we considered the cross-industry averages, we discovered that CX influences how likely thecustomer is to:§Purchase more from a company. Ninety-four percent of consumers who give acompany a “very good” CX rating are likely to purchase more products or services
from that company in the future. In comparison, only one in five of those who gave acompany a “very poor” CX rating say the same (see Figure 5). This ranges from a highof 96% for “very good” CX in the Airline and Grocery industries to a low of 14% for“very poor” CX in the TV/Internet Service Provider industry.

§

Recommend a company. Ninety-four percent of consumers who give a company a“very good” CX rating are likely to recommend the company while only 13% of those
who gave a company a “very poor” CX rating say the same (see Figure 6). This ranges
from a high of 96% for “very good” CX in the Software Firms industry to a low of 9%
for “very poor” CX in the Car Rental industry.

§

Forgive a company. About three-quarters of consumers who give a company a “verygood” CX rating are likely to forgive a company for a bad experience, but only 15% of
those who gave a company a “very poor” CX rating say the same (see Figure 7). This
ranges from a high of 82% for “very good” CX in the Airline industry to a low of 9% for“very poor” CX in the Retail industry.

§

Trust a company. Nearly 90% of consumers who give a company a “very good” CX
rating are likely to trust a company to take care of their needs. In comparison, 16% of

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consumers who gave a company a “very poor” CX rating say the same (see Figure 8).
This ranges from a high of 93% for “very good” CX in the Airline, Automotive,
Insurance, and Investment Firms industries to a low of 12% for “very poor” CX in the
TV/Internet Service Providers industry.
Potential Improvements in Customer Loyalty
Aside from providing a more detailed understanding of the relationship between CX andconsumer loyalty, these data can also provide insight into the way CX improvements
translate into improvements in loyalty. To quantify the potential ROI of investing in CX, weconsidered how a modest improvement in CX ratings corresponds to an increase in loyalty
behavior. We calculated the difference between customers who rate a company as delivering“good” CX and those who rate a company as delivering “poor” CX (see Figure 9). We foundthat:§

CX impacts recommendations the most... Modest changes in CX quality have thelargest payoffs on consumer likelihood to recommend. On average across 20
industries, there is a 38-percentage-point difference in likelihood to recommend
between consumers rating a company’s CX as “good” versus those rating acompany’s CX as “poor.” This gap is most pronounced for the TV/Internet Service
Providers industry with a 40-percentage point difference.

§…But it is weakest on forgiveness. On average across 20 industries, there is only a26-percentage-point difference in likelihood to forgive a company for a badexperience between consumers rating a company’s CX as “good” versus those rating
a company’s CX as “poor.” This was the smallest difference across the four loyalty
behaviors we measured, and this gap was smallest for the Hotel industry with a 21percentage point difference.
§

The Utilities industry has the highest potential. While all industries see
improvements in customer loyalty by improving CX, utilities see the largest differencein loyalty when examining modest changes in CX. Across the four loyalty metrics,
companies in the utilities industry have, on average, a 36 percentage point differencein loyalty between consumers giving “good” and “poor” CX ratings.

BUILD YOUR OWN CX ROI MODEL
As with all industry-wide research, any single company’s results may vary considerably fromthese aggregated results. That’s why we recommend companies build their own models fortying loyalty (and revenues) to customer experience measures (see Figure 11). Here’s someadvice to consider as you undertake this effort:§

Enlist your CFO. Even if you have the brightest business analysts in the world on yourteam, if you do not involve the CFO’s team, the finance leader will always question
your financial models and assumptions.

§Use existing metrics. Try to make your case based on the business metrics that yourcompany already uses – it will make it easier for people to understand and will help
you earn their buy-in.

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Be conservative. Resist the temptation to use the high end of estimates for potential
benefits. While the results may seem more compelling, they will also be harder todefend.

§Create a simple story. People tend to remember very simple story lines, so makesure that you organize your results in a way that is easy for people to understand.

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Customer Experience Correlates To
Future Purchase Intentions
319 Organizations Across 20 Industries
30

Consumers who are very
likely to purchase more
minus industry average(%-points)

20

10

Pearson correlation
coefficient (R) = .91
0
-40

-30

-20

-10

0

-10

10

20

30

2020 XMI Customer
Rating - Overall minus
industry average(%-points)

-20

-30

-40

-50
Base: 10,000 U.S. Consumers, 319 organizations, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
Copyright © 2020 Qualtrics®. All rights reserved.

Figure 1

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Customer Experience Correlates To
Net Promoter® Score (NPS®)
319 Organizations Across 20 Industries
40

Company NPS minus
industry average NPS(%-points)

30
20

Pearson correlation
coefficient (R) = .88

10
0

-40

-30

-20

-10

0

10

20

30

-10
-20

2019 XMI Customer
Ratings - Overallminus industry
average (%-points)

-30
-40
-50

NPS Versus Industry Average Based on XMI Customer Ratings - Overall+15.7

Company NPS comparedwith their industry averages
Bottom Quintile

4th Quintile

+ 6.4

0.1
3rd Quintile

2nd Quintile

Top Quintile-5.2

XMI Customer Ratings - Overall

company scores compared with theirindustry averages-16.8

Base: 10,000 U.S. Consumers, 319 organizations, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Figure 2

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Impact of Success, Effort, and Emotion on Loyalty(Average Across 20 Industries)
Loyalty of Consumers Based on How They Rate Customer Experience in Three
Areas of XMI Customer Ratings – Overall: Success, Effort, and Emotion
Low Rating

Neutral Rating

Success

Effort83%

Purchase
More*

23%

29%

22%

90%

83%

51%

62%

52%

18%

22%

16%

74%

64%

40%

44%

39%

18%

19%

17%

85%

78%

76%

Trust
Company*

90%
66%

58%

56%

62%

Forgive
Company*

Emotion84%

81%

Recommend
Company**High Rating

49%

57%

49%

20%

18%

24%

*These numbers represent the percentage of consumers who selected 7 on a scale between 1 (“extremely unlikely”)
and 7 (“extremely likely”).
**These numbers represent the percentage of consumers who selected 8, 9, or 10 on a scale between 0 (“not at at
all likely”) and 10 (“extremely likely”).

Base: 10,000 U.S. Consumers, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Figure 3

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Loyalty Differences Across CX Performance Levels
Consumers Who Are Very Likely to Demonstrate These Loyalty Activities,
Segmented by Their Customer Experience Ratings

94%
84%
Purchase More From Company

72%
50%
20%

94%
82%
Recommend Company

66%
44%

Very Good CX

13%Good CX
Okay CX
Poor CX

77%

Very Poor CX

58%
Forgive A Bad Experience

47%
32%
15%

89%
73%
Trust Company

61%
40%
16%

Base: 10,000 U.S. Consumers, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Figure 4

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Likelihood to Purchase More Based on
Customer Experience
Consumers Who Are Very Likely to Purchase More Products or Services
from a Company, Segmented by Their Customer Experience Ratings
Very Poor
CX

Poor
CX

Okay
CX

Good
CX

Very GoodCX

Airline

19%

62%

81%

89%

96%

Automotive

20%

57%

77%

86%

94%

Banking

19%

46%

67%

79%

93%

Car Rental

17%

50%

76%

83%

93%

Computer Makers

23%

54%

75%

88%

93%

Consumer Payments

16%

34%

39%

72%

87%

Electronics

22%

51%

71%

83%

92%

Fast Food

22%

52%

72%

87%

96%

Grocery

25%

61%

79%

90%

96%

Health Insurance

21%

51%

74%

84%

94%

Hotel

20%

52%

76%

82%

95%

Insurance

18%

49%

72%

84%

94%

Investment Firms

21%

49%

76%

84%

95%

Parcel Delivery Services

19%

52%

71%

86%

94%

Retail

25%

58%

78%

90%

95%

Software Firms

20%

49%

73%

84%

94%

Streaming Media

21%

45%

70%

81%

92%

TV/Internet Service
Providers

14%

39%

64%

79%

90%

Utilities

18%

46%

68%

83%

94%

Wireless

16%

48%

74%

84%

93%

20%

50%

72%

84%

94%

Industries

Average

Base: 10,000 U.S. Consumers, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Figure 5

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Likelihood to Recommend Based on
Customer Experience
Consumers Who Are Very Likely to Recommend a Company to a Friend
or Relative, Segmented by Their Customer Experience Ratings
Very Poor
CX

Poor
CX

Okay
CX

Good
CX

Very GoodCX

Airline

12%

46%

71%

84%

95%

Automotive

15%

49%

77%

85%

95%

Banking

12%

44%

63%

82%

94%

Car Rental

9%

44%

70%

83%

94%

Computer Makers

15%

50%

74%

86%

94%

Consumer Payments

13%

31%

38%

74%

90%

Electronics

15%

49%

71%

83%

95%

Fast Food

14%

37%

64%

77%

94%

Grocery

14%

47%

63%

81%

94%

Health Insurance

13%

45%

66%

85%

94%

Hotel

13%

46%

68%

82%

95%

Insurance

14%

43%

69%

83%

95%

Investment Firms

13%

44%

76%

85%

95%

Parcel Delivery Services

14%

44%

62%

81%

93%

Retail

16%

46%

67%

83%

94%

Software Firms

16%

45%

74%

85%

96%

Streaming Media

16%

44%

71%

84%

94%

TV/Internet Service
Providers

11%

36%

59%

76%

92%

Utilities

12%

40%

60%

79%

92%

Wireless

14%

42%

66%

83%

94%

13%

44%

66%

82%

94%

Industries

Average

Base: 10,000 U.S. Consumers, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Figure 6

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Likelihood to Forgive Based on
Customer Experience
Consumers Who Are Very Likely to Forgive a Company for Delivering a
Bad Experience, Segmented by Their Customer Experience Ratings
Very Poor
CX

Poor
CX

Okay
CX

Good
CX

Very GoodCX

Airline

13%

38%

53%

64%

82%

Automotive

16%

39%

56%

64%

80%

Banking

15%

28%

42%

55%

75%

Car Rental

13%

34%

54%

56%

75%

Computer Makers

18%

37%

54%

61%

79%

Consumer Payments

15%

30%

45%

57%

73%

Electronics

18%

33%

55%

64%

78%

Fast Food

17%

28%

41%

51%

72%

Grocery

16%

34%

47%

60%

78%

Health Insurance

16%

33%

46%

61%

77%

Hotel

16%

39%

55%

61%

80%

Insurance

16%

32%

44%

61%

78%

Investment Firms

16%

36%

50%

60%

80%

Parcel Delivery Services

14%

29%

43%

56%

72%

Retail

9%

17%

21%

40%

74%

Software Firms

19%

32%

52%

62%

79%

Streaming Media

15%

29%

45%

54%

74%

TV/Internet Service
Providers

11%

24%

40%

52%

76%

Utilities

15%

31%

47%

63%

78%

Wireless

13%

28%

43%

57%

77%

15%

32%

47%

58%

77%

Industries

Average

Base: 10,000 U.S. Consumers, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Figure 7

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Likelihood to Trust
Based on Customer Experience
Consumers Who Are Very Likely to Trust a Company to Take Care of
Their Needs, Segmented by Their Customer Experience Ratings
Very Poor
CX

Poor
CX

Okay
CX

Good
CX

Very GoodCX

Airline

16%

46%

65%

77%

93%

Automotive

18%

52%

74%

81%

93%

Banking

16%

44%

63%

79%

92%

Car Rental

15%

37%

60%

70%

88%

Computer Makers

20%

43%

68%

77%

89%

Consumer Payments

17%

44%

66%

78%

89%

Electronics

19%

47%

67%

75%

89%

Fast Food

14%

33%

58%

65%

86%

Grocery

18%

40%

63%

76%

90%

Health Insurance

18%

43%

66%

79%

90%

Hotel

17%

44%

63%

73%

90%

Insurance

18%

43%

65%

78%

93%

Investment Firms

18%

42%

70%

80%

93%

Parcel Delivery Services

17%

36%

55%

73%

87%

Retail

10%

21%

28%

52%

88%

Software Firms

17%

40%

63%

71%

90%

Streaming Media

17%

35%

58%

66%

86%

TV/Internet Service
Providers

12%

31%

50%

63%

86%

Utilities

16%

40%

61%

75%

88%

Wireless

14%

37%

59%

74%

89%

16%

40%

61%

73%

89%

Industries

Average

Base: 10,000 U.S. Consumers, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Figure 8

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Improvements in Customer Loyalty from Modest
Improvements in Customer Experience
Difference in loyalty between customers who rate a company as
delivering “good” customer experience and those who rate a company
as delivering “poor” customer experience (%-points)
Industries

Purchase More Recommend Forgive

Airline28%

Automotive
Banking
Car Rental

Trust

37%

26%

31%

29%

37%

24%

28%

32%

38%

27%

35%

33%

38%

22%

32%

Computer Makers

35%

36%

24%

34%

Consumer Payments

37%

43%

27%

34%

Electronics

32%

33%

30%

28%

Fast Food

34%

40%

23%

33%

Grocery

29%

35%

25%

35%

Health Insurance

33%

40%

28%

36%

Hotel

30%

36%

21%

29%

Insurance

35%

41%

29%

35%

Investment Firms

36%

42%

24%

38%

Parcel Delivery Services

33%

37%

27%

37%

Retail

31%

38%

23%

31%

Software Firms

35%

40%

30%

32%

Streaming Media

36%

40%

25%

31%

TV/Internet Service Providers

40%

39%

28%

32%

Utilities

37%

39%

32%

35%

Wireless
Average

36%

41%

29%

37%

34%

38%

26%

33%

Three industries with the Highest loyalty difference§ Purchase More: Customers who are likely to purchase more products or services fromthe company in the future.
§ Recommend: Customers who are likely to recommend the company to a friend or relative.
§ Forgive: Customers who are likely to forgive the company if they deliver a bad experience.
§ Trust: Customers who are likely to trust that the company will take care of their needs.
Base: 10,000 U.S. Consumers, 20 industries
Source: Qualtrics XM Institute Q2 2020 Consumer Benchmark Study
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Steps for Calculating the Value of
Customer ExperienceYou should be able to communicate something like this: “A “W%” change in<CX Metric> for this customer group will result in a “X%” change in <Loyalty
Metric>, which will drive an increase of “$Y” in revenues and/or a reductionof “$Z” in costs.”1

Establish Core
CustomerExperience(CX) Metric(s)§ Agree on one or more metrics (which can be single metrics
like Net Promoter Score, satisfaction, or a blended index)
that is representative of customer experience.
§ Make sure you can measure it by customer.

2

Establish
loyaltyobjectives§ Agree on the things that represent loyal behavior and have afinancial impact on your business. For example: Additionalpurchases, churn rate, share of wallet, making
recommendations to friends, etc.
§ Make sure you can measure it by customer.

3

Group
customers
based on their
CX metrics§ Establish groupings, from low to high, of customers based on
their CX scores.
§ Separate results for key customer segments.

4aAnalyze
relationshipbetween CX
and loyalty(option 1)§ Calculate average loyalty levels for each CX level.
§ This will show how much increased loyalty you can get fromeach group if you move their CX ratings.

4b

Analyze
relationshipbetween CX
and loyalty(option 2)§ Run regression analysis to see how the CX metric correlates
to the loyalty metrics.
§ Use results to decide on the CX metric you want to use andto see the impact that the CX metrics has on loyalty metrics.

5

Calculatevalue ofloyalty change§ For each customer segment, translate a 1% increase in CX
metric to some resulting change in the loyalty metric(s).
§ Calculate the dollar value for a 1% change in CX metrics bytranslating the change in loyalty metrics into a dollar value.

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