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

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.

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.

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“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” — Bruce Temkin, head of Qualtrics XM Institute

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.”

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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.

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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.