• June 7, 2022
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

CX Index Shows a Decline, Creating a Huge Opportunity, Forrester Reports

As Forrester Research returned to an in-person CX North America event this year after more than two years of COVID-19 induced social distancing, Chief Research Officer Sharyn Leaver was hoping she'd be able to tell the live audience that customer experiences were better now than they were when the pandemic began.

"Unfortunately, I can't say that," she said during the opening keynote this morning from Nashville, Tenn., pointing to the fact that the Forrester Customer Experience (CX) Index this year produced some "very sobering" results.

After hitting an all-time high in 2021, this year's Forrester CX Index dropped from 72 to 71.3, Leaver reported. And while a drop of less than one point might not seem like much, "it's a huge deal," Leaver said. It represents the largest single-year decline in the seven years that Forrester has been compiling the index.

Additional insight from the 2022 CX Index showed that CX quality fell for 19 percent of companies in 2022— the highest proportion to drop in one year since the inception of the survey. In addition, CX quality has fallen back to early 2020 levels, reversing gains made in 2021. The drop stems from companies' waning focus on customers even though customers expect more from digital and hybrid experiences.

"After a spike in 2021, there is a widening gap between what customers expect and want from us and the actual experiences we are giving them," Leaver said.

The report also showed that only 3 percent of U.S. companies are customer obsessed—putting customers at the center of their leadership, strategy, and operations. That's a decrease of 7 percentage points from the prior year. Industries such as airlines, auto manufacturers, and hotels suffered losses in their average CX Index scores, brought on, in part, by environmental factors like rising costs, supply issues, and staffing shortages. The investment industry was the only one to see CX improvement in 2022.

Still, Leaver said there is an upside to the grim news: It creates a huge opportunity for companies.

Forrester's CX Index research also found that emotion is still a key driver for delivering high levels of CX performance. Fifty-four percent of customers who report positive emotions like feeling happy, valued, and appreciated are willing to forgive companies that make mistakes;

Trust is also key, and this year saw a bright spot: 59 percent of consumers trust the the companies with which they interact, 2 percentage points higher than the 57percent who trusted companies in 2020

"Don't be afraid to be bold when it really counts," Leaver told the audience. It was a theme carried by other speakers during the event.

"The long-term, deleterious effects of the pandemic are just now starting to be seen," said Anjali Lai, a senior analyst at Forrester, noting that consumers are anxious, uneasy, and depressed today, but businesses can help.

Businesses, she said, are increasingly being seen as a inextricably linked to the social changes happening outside their four walls.

To that end, Lai outlined four themes that will shape how companies serve their customers going forward:

  1. Climate change. Forty-nine percent of consumers believe companies have an imperative to offer sustainable products and delivery options, and marketing has a huge role to play in setting and carrying out that agenda.
  2. A stakeholder strategy that includes consumers, employees, shareholders, suppliers, and the community at large. Forty-three percent of consumers, for example, are attracted to companies that treat their employees well, outpacing fast delivery times and price as reasons for doing business with companies.
  3. Digital fluidity. While consumers were heavily online during the pandemic, now they want to get back out in the world, with 37 percent saying they are tired of looking at screens and 38 percent want to disconnect altogether. "Digital fluidity will redefine what it means to offer seamless, personalized, contextual customer experience,"Lai said.
  4. Post-pandemic preference. Consumers are more willing to pay extra for good service, and companies need to adjust.

"Companies need to double down on insights and creativity," Lai said, urging companies to improve their understanding of consumer needs, invest in technologies to meet them, and create innovation. "Think about how you approach your business and its relationship with the consumer."

Mike Proulx, a Forrester vice president and research director, took that a step further. He said companies need to start thinking of consumers as constituents, urging them to nurture "a base of devotees" who are willing to spend 50 percent more with your companies than average consumers.

Proulx urged companies to segment their customers to identify those constituents that could be classified as devotees, scrutinize the customer journeys they provide to identify the potholes, and open a multidirectional way to address them.

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