Customer Experience Leaders Had Stronger Stock Returns In 2020 Recession

Rhea-AI Summary

According to a new analysis from the Qualtrics XM Institute, companies with superior customer experience ratings saw their stock performance outperform industry peers from 2019 to 2022. This trend reflects a significant shift towards customer capitalism, with 73% of executives anticipating more demanding customers. The study found that organizations with high customer experience ratings increased their stock performance by 45%, whereas those with poor ratings experienced a 21% decline. The gap in stock performance between these groups doubled between 2019 and 2021.

Positive

• Companies with top-rated customer experiences saw a 45% stock performance increase from 2019 to 2022.
• Stock prices of companies with high customer experience ratings doubled their lead over industry peers from 2019 to 2021.

Negative

• Companies with low customer experience ratings faced a 21% decline in stock performance during the same period.
• The stock performance of poorly-rated organizations lagged behind their industry by 21 percentage points by the end of 2021.

Companies with best customer service doubled their lead over laggards as the impact of customer service grew, according to a new analysis from the Qualtrics XM Institute

PROVO, Utah & SEATTLE--(BUSINESS WIRE)-- Companies with the best customer experience ratings outperformed their industry peers’ stock performance between 2019 and 2022 and doubled their lead over companies that provide poor customer experiences, according to new research from the XM Institute at Qualtrics (Nasdaq: XM).

Customer experience leaders saw stronger stock performance than customer experience laggards (Graphic: Business Wire)

So-called customer capitalism is only growing in its impact on stock performance as more commerce is done digitally and customers are able to ask more of the companies they do business with. A Qualtrics study found that 73% of executives expect customers to become more demanding, up from 67% of executives a year ago. Today, leading organizations like Ford and FedEx are making a strong customer experience an essential part of their strategy, and an Executive Order from President Biden calls for federal services to improve customer experiences.

In order to understand how customer experiences may impact business performance, XM Institute identified the large, publicly traded companies with the highest and lowest-rated customer experiences using data from the Qualtrics XM Institute Q2 2019 Consumer Benchmark Survey, a representative study of 10,000 U.S. consumers. The analysis tracked these companies’ quarterly stock performance, adjusted for industry-wide changes, and compared it against corresponding industry indexes, before, during and after the recession caused by early COVID fears.

“Today’s customers have higher expectations of the brands they do business with, and these numbers show that investing in the customer experience and meeting those expectations can really pay off,” said Bruce Temkin, head of Qualtrics XM Institute. “Organizations that get it right can address customer feedback in a quick and meaningful way to set themselves apart in uncertain times.”

Key findings:

• Companies with top-rated customer experiences drove greater shareholder value than peers within their own industries. The difference between stock prices of top-rated companies and their S&P industry index doubled between the end of 2019 and the end of 2021.
• The stock performance of organizations with poorly-rated customer experiences underperformed compared with their overall industry, lagging by 21 percentage points at the end of 2021.
• Companies with highly-rated customer experiences saw their stock performance increase 45% between 2019 and 2022, while companies with low customer experience ratings saw their stock returns decline 21% in the same time period.
• The difference between the stock performance of the companies with the highest and lowest-rated customer experience saw the biggest quarterly change between Q4 2019 and Q1 2020, just as COVID started to impact the U.S.

Methodology

The XM Institute at Qualtrics identified the 20 publicly traded companies with the highest and lowest XMI Customer Ratings from the data gathered in the Qualtrics XM Institute Q2 2019 Consumer Benchmark Survey, an online study of 10,000 U.S. consumers representative of age, income, ethnicity, and geographic region according to the most recent U.S. Census.

The business performance for all 40 companies was normalized by comparing their stock prices against a representative industry index for each company using the most appropriate S&P 500 or S&P 1500 industry index. The percent change of the industry index portfolios was subtracted from the percent change of the company portfolios to find the normalized change for each quarter. See the full methodology here: http://xminstitute.com/blog/XM-stock-COVID

About Qualtrics

Qualtrics, the leader and creator of the experience management (XM) category, is changing the way organizations manage and improve the four core experiences of business—customer, employee, product and brand. Over 16,750 organizations around the world use Qualtrics to listen, understand and take action on experience data (X-data™)—the beliefs, emotions and intentions that tell you why things are happening, and what to do about it. The Qualtrics XM Platform™ is a system of action that helps businesses attract customers who stay longer and buy more, engage employees who build a positive culture, develop breakthrough products people love and build a brand people are passionate about. To learn more, please visit qualtrics.com.

About XM Institute

Qualtrics XM Institute is the world’s premier resource for experience management (XM) professionals. Led by industry visionary Bruce Temkin, XM Institute’s faculty researches trends and emerging practices in how organizations interact with their key stakeholders, including suppliers, employees, customers and partners. XM Institute also leads XM Pros, a thriving global community of more than 6,000 XM leaders who participate in an ongoing calendar of monthly events. The Institute maintains the XM Professionals Certification, the gold standard credential in the field. To access the latest XM content or for more information about XM Institute, please visit xminstitute.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220712005480/en/

Lauren Braun

press@qualtrics.com

Source: Qualtrics

FAQ

What is the impact of customer experience on XM stock performance?

Companies with high customer experience ratings saw a 45% increase in stock performance between 2019 and 2022.

How did top-rated companies outperform their peers in stock performance?

Top-rated companies doubled their stock performance lead over peers between 2019 and 2021.

What were the stock performance trends for XM companies during COVID?

The difference in stock performance between high and low-rated customer experience companies peaked during the early COVID period.

What percentage of executives expect customers to be more demanding?

73% of executives predict that customers will become more demanding, up from 67% the previous year.

How did low-rated companies perform compared to their industry?

Low-rated customer experience companies lagged behind their industry peers by 21 percentage points by the end of 2021.