Data shows a dramatic rise in AI use for CX, though consumers still rely on human support when needs are more complex

Operational silos stall CX progress – data collection increases while 30-40% of departments fail to act on critical customer insight

Medallia Inc., the global leader in customer and employee experience, today released its 2026 State of Customer Experience Report, a comprehensive look at how organizations are navigating rapidly shifting consumer expectations, AI adoption, and operational pressure. The findings reveal a concerning trend, that while organizations remain bullish on their progress, actual experience quality has hit a plateau and the gap between brands’ perception and consumer reality is widening. Although 66% of CX practitioners believe experiences improved last year, only 17% of consumers agree. This gap underscores a pivotal opportunity for CX teams to prove value, not just intent – and they’re finding early success with AI.

The report drew insights from surveys to over 1,500 consumers and 550+ global customer experience practitioners, as well as benchmarks from over 600 anonymized Medallia customer programs, illuminating that a key reason for lagging improvement is that CX progress breaks down at the point of action. Although companies collect more data than ever, 30-40% of departments take no action after receiving the information.

"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," said Carrie Parker, Chief Marketing Officer at Medallia. "In 2026, it's time to ditch outdated signals that miss out on where friction truly occurs for the modern consumer.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.”

Experience management professionals still have more challenges to overcome, as many teams operate with limited organizational scope and budget, and rely on customer feedback surveys to inform CX strategies, which are losing favor with consumers. Customer survey response rates have declined year-over-year, and over half of the consumer respondents believe companies should infer satisfaction from behaviors and signals, not surveys alone. Meanwhile, professionals still rank them as a top data source for experience insights.

These pressures are accelerating a shift toward holistic signal-based strategies, with 78% of surveyed practitioners planning to adopt new metrics or approaches in 2026. Teams that use a wider array of data sources – such as conversational intelligence paired with digital behavior analytics – are significantly more likely to prove ROI and exceed performance targets.

Businesses and Consumers Alike Embrace AI, But Still Appreciate a Human Touch

AI is making its impact, as more than 80% of CX practitioners see positive returns employing AI. Even more, 81% say their organization has clear, measurable goals for using AI in customer experience, up six points from last year. It is clear that what began as experimentation is becoming core to operational planning.

On the consumer side, however, there is still a demand for real human engagement. Consumers embrace automation for simple needs, but prefer human support when issues escalate. They cite trust, privacy, and accuracy as their main concerns with AI in CX environments, suggesting that AI succeeds best when paired with transparent, human-centered design.

And organizations agree, as 83% say equipping frontline employees with effective AI tools is essential for meeting 2026 goals, highlighting a shift toward augmented human engagement, rather than full replacements.

Looking Ahead: 2026 Priorities and Expectations for CX

As 76% of CX leaders expect higher budgets in 2026, focus must turn to broadening signals and expanding the influence of CX across the entire organization. It’s not just about leveraging AI, but scaling it responsibly to expand narrow feedback loops. Success will depend on CX teams building deeper business relationships that turn insights into cross-departmental action. Every touchpoint – from digital behavior to frontline service – must have a lens on financial outcomes.

Consumers are clear about what builds trust. They want knowledgeable employees (43%), consistent experiences (43%), and meaningful appreciation of brand loyalty (36%). However, with only 22% of consumers feeling “very loyal” and 40% having switched brands recently, the mandate for 2026 is clear: CX must move from a siloed metric to a core business driver that maintains loyalty through coordinated, organization-wide action.

To explore the complete findings and insights, download the full report.

About Medallia

Medallia is the global leader in customer and employee experience, trusted by the world’s most iconic brands — including 7 of the Fortune 10. Medallia’s AI-driven platform helps enterprise organizations turn billions of feedback signals into clear, prioritized actions. With deep domain expertise, a powerful partner ecosystem, and consistent leadership recognition from top industry analysts, Medallia transforms customer experience into a strategic driver of business growth. Learn more at www.medallia.com.

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