Challenges with Popular Approaches to Measuring Loyalty

Most people equate customer loyalty to a loyalty program. Airline frequent flyer miles, hotel points, retail shopping points, credit card points, etc are all popular loyalty programs that are etched in the minds of people. However, does enrollment in these programs equal customer loyalty? Nothing could be further from the truth. If as a consumer you are planning your vacation, looking for flights, you have a favorite airline whole loyalty program you are enrolled in, but you see a lower fare on a comparable airline, what do you do? Many would pick the lower fare (and also enroll in the new airline’s loyalty program). In a similar vein, if a consumer shops at a retail store pretty often, is it because the store is conveniently located? Perhaps on the way back from work? Or does one shop at that store because one likes the store – and would drive a few extra miles to go there? What would happen if this consumer were to move to different neighborhood? Would they continue to shop at this store?

Another measure people use to think about loyalty is a Net Promoter Score. However, this is not directly tied into revenue.

Management Foresight Solution

Management Foresight has a proprietary loyalty framework that incorporates (at least) two dimensions while measuring loyalty. This framework is a unique segmentation approach

  • Measures $ value of loyalty
  • Helps track loyalty over time
  • Helps design marketing programs to improve loyalty
  • Better more comprehensive view of loyalty compared to Net Promoter Score or loyalty programs
  • No changes required to marketing vehicles or activation mechanisms

Please Contact Us to get a copy of a case study demonstrating the results from this solution.