Editorial
The Gist
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Focus on customer loyalty. Prioritize customer loyalty in CX strategies, as it drives sustainable growth over short-term satisfaction metrics.
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Metrics vs. action. Use CX metrics to guide decisions, but always align them with actionable strategies that enhance customer loyalty.
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CX and loyalty. Successful CX revolves around building emotional connections, as seen with brands like Chewy.com, which consistently has top CX rankings.
Walmart founder Sam Walton has been quoted as saying, “There is only one boss. The customer.” It’s an ideal that businesses have held for decades.
In this time, they’ve gathered data showing that higher levels of satisfaction typically lead to greater customer loyalty. That's important because the more loyal your customers are and the more loyal customers you have, the more they'll buy from you, the more they'll refer you to others and the less effort you'll have to exert to sell to them.
Over time, customer satisfaction has evolved into customer experience (CX). As a result, the focus shifted to delivering, measuring and improving the experience itself, often without considering the ultimate outcome of customer loyalty. If the field keeps going in this direction, it could suffer the same fate as customer relationship management (CRM), which was once a broad management philosophy and now is simply a piece of software.
Here’s what’s leading to the decline of CX and how to revitalize the field.
Table of Contents
- Aligning CX With Business Strategy for Lasting Impact
- How CX and CRM Strategies Intersect
- Why Businesses Are Losing Customer Loyalty
- Customer Loyalty as the North Star
- Effective Strategies to Revitalize CX
- CX as a Strategic Imperative
Aligning CX With Business Strategy for Lasting Impact
The field of CX is supposed to be a big-picture view of how your customers feel about their interactions with your organization, making it a key part of business strategy. However, if measuring CX doesn’t give you insight that will drive loyalty, does it really help you?
For example, if a customer went to a restaurant and had an amazing experience, chances are they’d probably want to go back. However, the key is not just that they enjoyed their experience, but that you understand what made it so memorable. Without knowing this, you can’t replicate it or improve upon it. Many organizations today overlook this connection, which renders CX measurement much less effective than it should be. And it shows.
In fact, according to Forrester's 2024 Customer Experience Index, CX scores among U.S. businesses have reached their lowest point ever. This marks the third consecutive year of decline. Moreover, while a Bain & Company report found that 80% of executives believed their company delivered a superior customer experience, only 8% of customers agreed. This indicates a significant disconnect.
While businesses can’t afford to lose customers, many are also facing pressure to reduce the cost of serving customers. As a result, customer service and other areas that contribute to a positive, differentiating customer experience are often seen as cost centers rather than opportunities for competitive advantage.
Related Article: Rethinking How You Approach Your Customer Experience Strategy
How CX and CRM Strategies Intersect
In its early days, CRM was seen as a business strategy focused on building strong, personalized relationships with customers. These relationships were nurtured by understanding needs, building loyalty and creating value over time.
In the 1980s, growing businesses turned to technology (at the time, databases) to store customer information and contact histories in order to make the management of individual relationships easier. The 1990s brought more advanced CRM tools with features that tracked customer interactions, managed sales leads and automated marketing campaigns. This phase of CRM marked the shift from purely relationship-driven management to a process-oriented approach that involved measurable tasks and steps.
However, the rise of cloud computing, automation and AI to streamline the process of managing customer relationships has made CRM more of a technology-driven, tactical tool than a strategic approach.
CX is following a similar path, and it’s devolving into routine, automated tasks that are detached from its core purpose of enhancing customer loyalty. This means it’s ultimately losing its strategic and customer-centric focus. For example, bots are a way to decrease the cost of customer service, but they rarely enhance the experience.
Why Businesses Are Losing Customer Loyalty
What’s happening in the field of CX that’s causing this shift? Businesses are losing sight of customer loyalty. A key reason for this is the overemphasis on CX metrics. Focusing solely on metrics like net promoter score (NPS) can cause businesses to neglect the deeper aspects of customer relationships and loyalty. The focus should remain on the customer and how they feel.
According to the Forrester research, CX performance has dropped across all three dimensions of CX (i.e., effectiveness, ease and emotion), and 39% of brands have declined in brand performance over the past year. This highlights the consequences of neglecting genuine customer engagement, as customers themselves are expecting increasingly more from their experiences.
Related Article: What Causes Customer Rage Today?
Customer Loyalty as the North Star
When businesses focus on customer loyalty and put customer needs, desires and satisfaction at the forefront of all their decisions and actions, they report 41% faster revenue growth, 49% faster profit growth and 51% better customer retention than those at non-customer-obsessed organizations, according to Forrester.
An example of this is Chewy.com, which is one of the few brands that have consistently topped Forrester’s CX rankings by focusing on customer loyalty. Specifically, the online pet food and supplies retailer has invested in building an emotional connection with customers to build that loyalty.
Effective Strategies to Revitalize CX
All is certainly not lost in CX. It can be revitalized through the following recommendations.
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Recenter CX on loyalty: Make sure to prioritize initiatives that support long-term customer relationships and loyalty over short-term satisfaction metrics.
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Foster cross-functional alignment: Support collaboration between your departments to provide a seamless, cohesive customer experience.
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Empower CX teams strategically: Invest in training and tools that allow CX teams to make impactful decisions aligned with customer needs.
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Keep the customer voice central: Make sure you implement robust feedback mechanisms to capture and act upon authentic customer insights.
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Balance metrics with action: Use metrics as guides but keep your focus on actionable strategies that directly enhance customer loyalty and experience.
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CX as a Strategic Imperative
While CX is not dying, it does risk becoming ineffective if it shifts away from its core focus on customer loyalty. Businesses must realign their CX strategies toward building and maintaining customer loyalty to drive sustainable growth.
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