Professor Byron Sharp conducted the largest cross-vertical study to date on understanding drivers of loyalty. What he found was devastating.

The main predictor of loyalty and churn is simply the market position. Each brand might have individual factors, but this simple mechanism explains the bulk of variance across verticals.

When you look at benchmarking studies, you may feel an “aha” moment right now. The most significant player not only has most likely a good CX score but also performs exceptionally well in most drivers. There is an implicit bias based on market dynamics and psychology.

Benchmarking assumes that your CX KPI is somehow comparable – so that the player with the higher score is performing better. This assumption is broken in many ways.

You mostly do not own the same type of customers. Some customer segments are more critical in giving ratings while still showing the same loyalty. The customers you own differ also in what’s important to them.

Even if the best competitors would be comparable, benchmarking does not answer the question “What is possible” , so it does not answer the question “what’s is good” in absolute terms.

This exposes companies to multiple risks:

• RISK #1: False signals of performing well: If you overperform competition, you will be satisfied, and there is no reason to improve further.
  
  
• RISK #2: Wrong benchmark due to serving up different customer segments: This is further problematic since the benchmark is typically biased, thus wrong.
  
  
• RISK #3: False signals of performing weakly: These signals causing the blame game and even giving no information on how to become better.