Medallia has today released its 2026 State of CX Report, revealing a widening gap between how brands perceive their performance and how customers are experiencing it, as 66% of CX professional believing CX has improved, whilst only 17% of customers agree.
This is a result of several core failures in the customer experience sector, with organizations failing to act on insights despite the increase in data collection, response rates are declining, and consumers still expect brands to understand their needs through behavioral insights without explicit feedback.
To see real results from AI adoption, CX teams will need to understand how to turn real insights into coordinated actions, reduce operational silos, and balance automation with human engagement to rebuild trust and loyalty.
Carrie Parker, Chief Marketing Officer at Medallia, argues that simply collecting customer data is not enough, brand need to act on meaningful, modern signals that reveal real friction points and connect experience improvements directly to measurable business results.
“Gathering insights alone isn’t a strategy, and the real magic happens when you stop just listening and start actually doing something with what you hear,” she said.
“In 2026, it’s time to ditch outdated signals that miss out on where friction truly occurs for the modern consumer. Brands that come out on top will be those that act with purpose and tie experience improvements directly to business outcomes.”
2026 CX Report Reveals Growing Perception Gap
The Medallia survey highlights a significant perception gap between organizations and customers, with most brands believing that they are improving their experience, very few customers are noticing this.
This widening gap is likely dependent on multiple factors; whilst organizations feel they are progressing, this improvement in going unnoticed.
With low loyalty levels and high switching rates, these results reveal an increase in CX stagnation rather than advancement in overall experience quality.
Many organizations are continuing to measure success through internal KPIs or survey scores as their understanding of their customer experience, however these alone do not always reflect the full customer journey.
To close this gap, brands will need to shift from interaction-level measurement to journey-level accountability, including examining switching behaviour, repeat purchase patterns, complaint resolution time, and trust indicators.
By moving beyond evaluating isolated interactions and understanding customer ease, consistency, and trust across touchpoints, brands can gain a broader view of their customers’ needs.
Insight without Action and Organizational Silos
Although companies are now reportedly collecting more data than ever before, insight often fails to translate these results into actionable change.
Survey response rates are also rapidly declining, as more than half of consumers now prefer brands to infer customer satisfaction from their interaction behaviors rather than from static responses that take up unnecessary time.
Despite these demands, 30 to 40% of departments are not acting on feedback, with improvements remaining local rather than systemic, limiting impact and preventing systemic friction from being addressed.
As a result, customers continue to experience recurring pain points across channels, with issues likely to be identified but not consistently resolved at the root cause level, reinforcing the perception and preventing meaningful change across the full customer journey.
AI Adoption and Human Expectations
Despite negative customer results in data research, the report reveals that over 80% of practitioners see positive returns from AI adoption.
AI is reportedly effective for brands in efficiency gains such as routing, conversation summarizing, and handling routine queries, resulting in positive ROI at the operational level.
This is resulting in more organizations preparing for the next stages of AI implementation in their departments, as 81% report having clear AI goals for their businesses, with the technology continuing to move beyond experimentation.
These capabilities are proving to be a core driver of customer experience for many brands, as 83% of respondents see AI tools for frontline employees as essential, as more consumers are now preferring automation for handling simple tasks.
However, customers are still demanding human agents during complex or emotional issues that have higher risks, seeking reassurance, empathy, and accountability in their experiences.
AI continues to be a concern for customers regarding trust, privacy, and accuracy, as AI systems that lack transparency or make errors in tasks reduce trust.
Instead of replacing frontline staff with AI agents, brands should augment employees with AI capabilities to handle routine tasks, improving speed and accuracy, whilst customer-facing teams remain in charge of judgment, empathy, and complex decision-making.
By implementing transparency around data use and decision logic can improve trust between brand and customer.
Investment, Trust Drivers, and 2026 Priorities
Medallia’s report shows that 76% of CX leaders are now expecting higher budgets in 2026, as 43% of consumers say consistent experiences build trust.
With a stronger executive intent to invest in CX, customer trust and loyalty remain weak, creating tension between organizational expectations and customer behavior.
Increased budgets in customer experience shows that brands are understanding the value in enhancing the customer journey, however, the report shows that customers are currently not demanding more digital features or new channels.
To ensure customer retention, consumers argue that the customer journey needs fundamentals, such as competent staff, predictable service, and recognition when they stay loyal.
Customer loyalty amongst brands is rare today, as only 22% of consumers agree they feel very loyal to at least one brand, with 40% having switched brands recently.
This argues that the experience gaps are caused by operational issues rather than conceptual ones.
As more brands begin expanding tools and technology into their systems, customers still aren’t receiving the basic expectations in their services, such as reliability and human competence.
Customers argue that brands need to invest further in frontline capabilities, improving employee knowledge in decision-making and AI tools to drive trust, with customers recommending frontline staff receive training on AI tools to improve accuracy and consistency, as 43% of consumers say knowledgeable employees build trust.
For customers who choose to stay loyal, recognition should feel personalized and meaningful, using data to acknowledge consumer tenure, behavior, and preferences in a relevant way.
By expanding CX influence across an organization, customer behavior can reshape product design, operations, marketing, and service standards to align with true customer expectations, ensuring cross-functional accountability.
Medallia’s 2026 State of Customer Experience Report reveals that CX is at a turning point, as organizations invest more, adopt AI at scale, and expand their data collection, the insight into customer behavior will be clearer than ever.
However, customer perceptions are not improving at the same pace, as the gap between internal confidence and external customer reality remains wide.
Progress in 2026 will require brands to measure outcomes with all relevant data to reflect the real customer experience to understand how to achieve retention and trust rather than just relying on surveys, and brands should augment employees with AI to improve consistency, whilst ensuring transparency and human judgment.
