Measuring Customer Loyalty involves looking at three factors: relationship strength, perceived

alternatives and critical episodes. Ronald van Haaten, a recognized expert on the topic, has a great
slideshare that discusses the link between customer satisfaction and loyalty, including some of the
key things the top companies are doing to measure loyalty.
For me personally, I like to think of customer loyalty as a combo of customer satisfaction and
customer retention. To improve customer loyalty, you first need to know how satisfied your
customers are, and how likely they are to continue doing business with you.
Before I get into discussing my three step guide to measuring customer loyalty, I wanted to shed light
on four reasons you should be taking customer loyalty seriously:
Loyal customers cost less to keep. With customer acquisition costs are rising like weve
never seen before, you need to understand that it costs 6-7 times more to acquire new
customers than it does to keep existing customers. Keep your customers happy.
Loyal customers tend to be less inclined to switch and are less price sensitive. This can
lead to stable cash flow and increases profits.
Loyal customers that have been with you for a long time are your biggest advocates they
will generally initiate free word of mouth and referrals.
Loyal customers are generally less expensive to service because they know what to expect
and are familiar with what you offer. They require less hand-holding which means
increased savings for you.
Now you know why measuring customer loyalty is so important, lets get into my three step guide.

1. Survey your customers

The first step involves surveying your customers. This is a strategy backed up by Bob Hayes, author
of Measuring customer satisfaction and loyalty. He calls it a subjective measurement
approach which aims to self-report your customers feeling and behaviors towards your company.
Here are some great questions to be asking your customers in your survey (use a 1-10 rating scale):
How likely would you be to recommend <company> to your friends/colleagues?
How likely are you to continue using <company>?
Overall, how satisfied are you with <company>?
You can use any of these 4 online survey tools, or use a tool like Client Heartbeat.

Client Heartbeat can periodically and automatically survey your customers to assist you in measuring
customer loyalty. The tool has the questions I have listed above, already built into the system. It aims
to help you determine how loyal your customers are, and identify who you customer advocates are
similar to the popular Net Promoter system.

2. Analyze feedback to measure loyalty and

advocacy
Once youve sent out surveys and got your results back, its time to give them an analysis and
determine your level of customer loyalty and advocacy. If you have used a regular online survey tool
and asked the questions listed above, pop this data into a spreadsheet and work out your overall
average. If you are getting scores above 8.4 youre doing pretty well. Anything below and there is
room for improvement.
Why 8.4? Well over at Client Heartbeat we analyze A LOT of data around customer satisfaction,
loyalty and advocacy. In a recent benchmarking study, we found 8.4 to be the average rating for
customer advocacy which is a strong indicator of customer loyalty. Companies that scored above
that, were considered to have strong customer loyalty, and companies that scored below, they had
below average loyalty.
Remember, customer loyalty differs depending on your industry. I find that property managers tend to
have much lower loyalty and advocacy than say accountants.
If you want to know how your customer loyalty stacks up against others in your industry,
try Client Heartbeat, the tool has a world leading benchmarking feature that gives you
industry averages and top performer ratings across a range of benchmarks, including
customer loyalty.

3. Follow up with customers for further

insight
The final step in my three step guide to measuring customer loyalty involves following up with
specific customers to discover further insight that can help you improve customer loyalty and grow
your business.
There are two particular groups of customers you want to be contacting:
Your loyal customers: pick out your customers that gave you the highest ratings these
guys are you advocates. Nurture them, do whatever you can to continue to build the

relationship, and help them become stronger advocates. If you are interested in learning
more about how you can leverage customer advocates, I recommend watching this
webinar by Rob Fuggetta, CEO of Zuberance and author of Brand Advocates: Turning
Enthusiastic Customers into a Powerful Marketing Force.
Your unhappy customers: these are the customers who have said they wouldnt
recommend you. This is a huge indicator that they are unhappy with your
service. Anyone that wouldnt recommend you to friends or colleagues are not be happy
with the level of service you are delivering. These guys need a follow up call and you need
to help understand what has gone wrong, and why they have given you the low rating.
Use this feedback to save the customer from leaving and improve your service so it
doesnt happen again.
Measuring customer loyalty doesnt need to be hard. If you follow this three step guide, you will get
some amazing insight into exactly how loyal your customers are, and identify unhappy customers
who arent currently satisfied. Use this feedback to improve your customer loyalty and grow your
business.

Second
The following examples of phenomena from a global to a local perspective. The corresponding list of
variables is given to provide a clear illustration of how complex phenomena can be broken down into
manageable pieces for better understanding and to subject the phenomena to research.

Phenomenon: climate change

Examples of variables related to climate change:
1.
sea level
2.
temperature
3.
the amount of carbon emission
4.
the amount of rainfall

Phenomenon: Crime and violence in the streets

Examples of variables related to crime and violence:
1.
number of robberies
2.
number of attempted murders
3.
number of prisoners
4.
number of crime victims
5.
number of laws enforcers
6.
number of convictions
7.
number of car napping incidents

Phenomenon: poor performance of students in college entrance exams

Examples of variables related to poor academic performance:
1.
entrance exam score
2.
number of hours devoted to studying
3.
student-teacher ratio
4.
number of students in the class
5.
educational attainment of teachers

6.
teaching style
7.
the distance of school from home
8.
number of hours devoted by parents in providing tutorial support

Phenomenon: Fishkill
Examples of variables related to fish kill:
1.
dissolved oxygen
2.
water salinity
3.
temperature
4.
age of fish
5.
presence or absence of parasites
6.
presence or absence of heavy metal
7.
stocking density

Phenomenon: Poor crop growth

Examples of variables related to poor crop growth:
1.
the amount of nitrogen in the soil
2.
the amount of phosphorous in the soil
3.
the amount of potassium in the ground
4.
the amount of rainfall
5.
frequency of weeding
6.
type of soil
7.
temperature

Customer Loyalty What is it? How Can You Measure and Manage It?
Posted on December 10, 2012 by Kay Ranade

Customers make decisions about where to spend their time, money, and effort every day. They might be
business buyers between 9 to 5, but consumers the rest of the time. In either case, the scenario is always the
same for the seller to make their product or service offering the preferred choice. They do this by building
offers that will:

Differentiate them from competitors

Generate significant demand by customers

Demonstrate superior value

Build customer loyalty

Loyalty is more than just behavior

It is a fallacy to assume that a customer is loyal just because they continue to buy from you. There are many
reasons why a customer repeats purchasing which have little to do with being really loyal. Consider the
following:

There is a contractual arrangement with your company

It takes too much effort or money to change suppliers

You are currently the low cost provider

Their relationship is with one of your employees and not with your company

Habits are hard to break

They may actually be in the process of finding an alternative supplier

If any of the above is the case, what do you think is likely to happen should a desirable competitor come
around and seek out your customers business? The easier and more attractive they make it for the customer
to switch, the less appealing the above reasons are. Customer loyalty is far more than repeat business.

Loyalty can be defined as a customer continuing to believe that your organizations

product/service offer is their best option. It best fulfills their value proposition whatever
that may be. They take that offer whenever faced with that purchasing decision.
Moreover, loyalty means hanging in there even when there may be a problem. This occurs because the
organization has been good to them in the past and addresses issues when they arise. It means that
they do not seek out competitors and, when approached by competitors, are not interested. It also
means being willing to spend the time and effort to communicate with the organization so as to build
on past successes and overcome any weaknesses.
In a nutshell, loyalty means a customer wants to do business with you and does.
The challenge for organizations is taking this definition and translating it into actual practice, where specific
actions are defined and ideal customer relationships are envisioned. It also means identifying a means for
taking this loyalty construct and putting it into measurable terms so that success and failure can be assessed
and progress or decline tracked.
Customer Loyalty can be Measured and Monitored

Loyal customers believe the products and services purchased from their supplier are superior to those of the
competition. Frequently, they are customers who view their interactions as more than simply
transactional. They believe there is a relationship that is bigger than just the products or services they buy.
Measuring loyalty means measuring the strength of this relationship between buyer and seller, between the
organization and its customer.

It is challenging to measure the level of customer loyalty within the relationship, which is why companies so
often succumb to simply defining loyalty as the number of purchases made or a continuing pattern of buy
behavior. And asking the customer directly about whether or not they are loyal does not provide a valid
measure. Customers will often say they are loyal simultaneously to multiple providers.

What we are looking at is measuring those attitudes as well as behaviors that we know make up this
concept of loyalty. For example, some of the important attitudes and behaviors expected of a loyal
customer include:

Likelihood to recommend your products and services to others

Likelihood to continue purchasing your products and services, at minimum, at the same level

Likelihood of purchasing other products and services you offer

Believing your products and services are superior to others offered in the marketplace

Not actively seeking alternative providers to replace you

Providing your company with opportunities to correct problems and not using these as a basis for
compromising the relationship

Based on customers responses to questions such as these as well as others that evaluate specific aspects of
their relationship with your company, a loyalty profile of your customers can be created. Loyalty segments
categorize customers as Loyal, Neutral and Vulnerable.

The basis for loyalty segmentation should be sufficiently flexible in that it recognizes and accounts for
the uniqueness and special challenges of any one business or organization as well as the environment
in in which it competes. And yet must also be based on sound, well-tested research principles and
validated modeling.

Business success means having desirable customers who are strongly tied to your organization. Monitoring
the number/percent of your customers in the Loyal segment and doing what it takes to increase loyal
customers while decreasing those who are vulnerable should provide the focus of any organization.

Profiling Loyalty Segments

Once the customer loyalty segments are formed, complete profiling based on meaningful customer
descriptors, is provided. (Such information is usually available from organizations customer databases and
other internal customer data sources). Comparison of the segments across the loyalty profile can reveal
significant and potentially valuable differences which would otherwise have remained hidden.

The example shown here is a business to business customer loyalty profile. Note that the diversity across
loyalty types is not unusual. For this company, it was very helpful to learn, for instance, that their West coast
customers were far more vulnerable. While at a very early point in their analysis, this finding coupled
with the market share potential suggested the possible need for organizational restructuring.

Segment Size
Average Annual Expenditures
Share of Expenditures Received
Percent of Product Line Purchased

Loyal
23%
$25,900
62%
38%

Neutral
46%
$18,400
39%
20%

Vulnerable
31%
$20,100
19%
11%

Average Size of Customer Organization

Location
Critical Needs

Medium
East/Midwest
Product Line

Medium/Small
SW/SE
Delivery Time

Large
West
Order Cycle

But demographic and descriptive profiling is just part of the information required for organizations to
manage customer loyalty. Organizations need to know why loyalty segments exist why are some
customers loyal and others vulnerable or just plain in between neutral towards you? And they need to hear
this information directly from the customer not managements best guesses or gut level feelings. Without
customer input, organizations are held hostage to a loyalty goal that has no answers.
Understanding the Loyalty Segments
So what causes one customer to be loyal and another to be almost out the door? The creation of the loyalty
segments assigns each customer to a segment but does not provide any explanation as to why they are in
that particular segment. To implement change that is directed towards improving customer loyalty in
other words to manage loyalty requires in-depth understanding of:

Customers underlying preferences for the products/services being considered

What customers value in those products and services under consideration

Customers experiences, perceptions, and beliefs about the organization itself as well as about its
products and services particularly in areas that are highly valued

The Loyalty Research Center has developed a model that describes how daily interactions (as
perceived by the customer) between customer and provider will ultimately drive overall company
perceptions and lead to attitudes of loyalty (or not) and behavior.
Applying this loyalty model to individual companies requires breaking down the customer relationship into
its various aspects starting with day to day activities and ending with important attitudes, known to
influence loyalty. Identification of organization-specific model elements generally begins with
an Investigative Phase. This phase identifies all potentially relevant reasons for customer loyalty and
becomes the basis for subsequent qualitative measurement.

Understanding how customers perceive all aspects of company performance and quantifying the impact of
each on overall customer loyalty is vital to identifying critical actions to take.

The basic model elements appear in the accompanying

diagram and represent these interactions, experiences and attitudes that ultimately drive your businesses
success.

In addition to gathering performance feedback and perceptions, customers are asked to share any problems
they may have experienced, as well as the extent to which they were resolved.

The following table includes actual results for one company. Note that several pieces of important
information are included: Loyalty impact priority, performance ratings (ratings of Excellent and Very Good),
and problem experience for each Loyalty Segment:
Impact Level

Loyal

Neutral

Vulnerable

% who experience problems

% of problems unresolved
Top 2 Box Evaluations
Order cycle time
Desired delivery time
Overall sales
Overall customer service

1
2
3
4

12%
10%

18%
23%

41%
64%

64%
71%
78%
82%

67%
41%
62%
55%

39%
44%
53%
49%

From this one chart, there were many learnings our client gathered; but first and foremost they learned
that

Loyal customers experiences and perceptions are distinct from those of Neutral customers. There is
yet an even greater gap between those identified as Loyal versus Vulnerable.

Here are just a few of this clients discoveries:

Problems are experienced and remain unresolved far more often by the Vulnerable segment in
comparison to others.

Loyal customers have a low percentage of outstanding problems. This is not an unusual finding.
Note that it is not zero. Some loyalty customers experience significant problems. That means that the
overall strength of relationship and the companys performance in other areas is able to retain these
customers loyalty.

Interactions are listed in priority order in terms of their impact on loyalty. It was a surprise to find
that Order cycle time carries the impact that it does and that it scores so weakly across all segments, but
especially among vulnerable customers.

Other areas of interaction also revealed considerable differences among the segments. Consistently,
Loyal customers perceptions are most positive.

Also noted by our client was the fact that the majority of customers did not fall into the Loyal category!
Taking Action
The previous chart provides just an inkling of the rich information that is potentially available from
customers. As in the case above, companies are likely to find vast differences among their customer loyalty
segments in terms of perceptions, experiences, and attitudes. The question now becomes What do you do
with all this good information? Undoubtedly, the first thing to do is to understand why differences exist.

Variations among segments can be the result of:

Inconsistent levels of service and/or product quality provided

Customers have different priorities

Customer needs or expectations vary

In each of these cases whether it be actual performance differences on the part of the provider, or different
demands on the part of the customer, customer loyalty levels are likely to be affected. In the first two
scenarios, the provider is able to self-correct by focusing on those areas of weaker performance especially
where it counts the most as revealed in the customer feedback results.

However, if customers needs/expectations are sufficiently different from what the provider is capable of
offering, then improving the performance of current offerings may not be the answer. A providers business
model may not coincide with the demands of every customer segment. Needs-based segmentation technique
will be required to determine whether or not you are serving the wrong customers for your business model.
Needs-based segmentation is discussed in a separate piece.

For now, lets assume a simpler scenario where all customers have similar needs and the actions to take are
related to performance improvement.

Using the earlier example, we know that their actions focused on:

Increasing the base of loyal customers

Improving weaker areas of greatest importance to customers across the board

Reviewing identification of specific customers in the Loyal and Vulnerable segment

Determining which customers are most important to the business- and assuring that their
performance concerns were addressed

A plan to increase the base of loyal customers was put into place along with specific targets. They would start
by improving those areas most important to customers where loyal customer perceptions reveal that there
is room for performance improvement. Their message out to the entire company was:
Overall, results clearly point to the fact that while the Loyal segment generally scores highest across
the board, it is also true that Loyal customer scores could be even better. In no area do all Loyal
customers give either an Excellent or Very Good rating. Or, how about setting an expectation for
reaching all Excellent?

Special, targeted efforts to achieve the above were designed, sometimes, around each identified loyal
customer.

There were also plans to further investigate which customers fell into the Neutral or Vulnerable groups.
That, in turn, helped determine next actions. What would it take to address a Vulnerable customers specific
concerns and was the effort worth it? It was important that improvement efforts were considered
reasonable given the desirability of that customer to their business.

As a general rule, a good plan of action includes reviewing (especially within the Vulnerable segment) lower
performing areas with an eye toward the following:

1.

Customers Are these the wrong customers for your business? Are there customers who do not
value the business model under which your organization operates? Will the customer ever
change their negative perceptions and what would this take?

2.

Perceptions Do management and employees believe that scores should be higher, i.e.,
customer perceptions should be better? And what do prospects believe?

3.

Drill down Is there sufficient and specific enough information such that there is an
understanding of what customers are expecting/asking for? Is there need for further
clarification from customers in order to better understand their perceptions? Could qualitative
discussion groups help the level of understanding?

4.

Performance Is performance lacking in one or more areas? Is there a well-defined process? Is

the process being implemented correctly? Do employees understand the process? Have the right
managers and employees been hired to execute the process? Can technology improve the
quality and/or speed of the process? Who is responsible for the process? Is it time for an
overhaul?

5.

Competition Are some customer perceptions being driven by what others are able to provide
within or outside this industry? How are our competitors able to provide a better experience?

Migrating Loyalty Segments

The ultimate goal of your actions should not only be improvement of performance perceptions but, in the
end, increasing the percentage of your customers who are loyal to your company/organization. Why
increase your percentage of loyal customers? Go back to the first table and look at the annual revenue

spend. In this example the Loyal customer segment spends an average of about $6,000 $8,000 per year
more than the other segments. While not shown here, annual profit margins are typically higher as well. It is
usually the case that loyal customers:

Buy more

Buy across your product lines

Will pay for value add services/products

Require less product usage instruction

Do not need sales support

Are more likely to sole source

Make referrals on your behalf

It is financially beneficial for the business to retain and grow a loyal customer.

Successful companies manage customer loyalty by making improvements based on customer input,
identifying desirable customers, and setting goals for increasing the percentage of their customer base that is
loyal. A customer loyalty migration plan is called for.

Customer loyalty migration requires strategies that will move lower level loyalty segments to higher
levels, while maintaining and protecting loyal segment members.

5 Effective Methods for Measuring Customer Loyalty

What if you could measure the loyalty of the people around you? Thats
impossible for friends, family, and partners and probably for the best. The
loyalty of your customers, on the other hand, can be measured.
The difficulty comes from loyalty being an intention. And one that people arent always
honest about. The benefits of having it are great, however.
A loyal customer is...

Likely to refer you to her friends and contacts.

Likely to continue buying from you as long as the need is there.

Not actively looking for other suppliers.

Not open to sales pitches from competitors.

Open to other products and services that you offer.

Easy going towards emerging issues and gives you time and trust to fix them.

Likely to give feedback about how you could improve.

Measurement is the first step in customer loyalty management. By measuring customer

loyalty we can compare, aim, and improve. Here are the 5 most effective methods.

1
Net Promoter Score (NPS)
This metric indicates the likeliness of your customer referring you to her friends. She
answers this simple question with a value between 1 10.
This is a powerful metric. Firstly because its simple, but also because of the fact that
when you recommend a product, you put your own credibility on the line. And you only
do that for companies you support 100%.
NPS divides your customers into three categories:
Detractors. Customers answering with a score of 6 or lower are segmented as
Detractors. They wont recommend you to anyone, will probably not buy from you
again, and might even hurt you through negative word-of-mouth.
Passives. Those with a 7 or 8 are segmented as Passives. They are quite satisfied,
but not ecstatic enough to recommend you. They wont hurt you, they arent looking for
alternatives, and theyll likely stick around as long as they dont run into a supplier with
a better value proposition.
Promoters. Those with a 9 or 10 fall into the Promoters segment. They are your
groupies, your equivalent of the people camping in front of the Apple store. Theyre
likely to recommend you and buy from you again.
Your total Net Promoter Score is calculated by subtracting your Detractors percentage
from your Promoters percentage.

Most NPS tools work by importing a list of your customer contact data and sending the
questionnaire per email. Trustfuel NPS (free), and Promoter.io (paid) are two popular
tools. I personally like in-app tools like Wootric (freemium). Instead of targeting your
customers inbox, it politely asks for feedback while shes on your website or app.

Through in-app questionnaires you can ask for feedback with minimal
disruption
Your Promoter - Detractor ratio doesnt depend on your service and product quality,
only. Some customers simply fit your company better than others. Tying your NPS scores
to customer information, like demographics and industry, can also help you identify your
ideal customer type.

To put your results in persepctive, you can have a look at the Net Promoter Network.
They offer a report on NPS benchmark scores per industry.

2
Repurchase Ratio
This measures the ratio of repeat purchasers over one-time purchasers. A purchase is at
the core of a commercial relationship, which makes this metric a valid representation of
customer loyalty.
This metric can be easily distorted, however. If it takes a big effort to switch between
providers, for example, you could have a large portion of repurchasers who would
nevertheless switch if this effort would be mitigated.
At Userlike, for example, we had been renewing our contract with a helpdesk software
for a long time. We didnt think of switching, because all our customer data was locked
in the tool. When Help Scout showed up, however, with the option to easily transfer all
this data to their tool, we didnt hesitate.

Help Scout lowers the barrier for switching between suppliers

The way to calculate this repurchase ratio differs per business model. If you have a
subscription based model, you simply divide the number of customers that extend after
their first contract period by the ones that cancel after their first contact period.
Its a bit trickier for transaction based business models, because the intervals between
purchases aren't fixed. To know your number of repeat buyers, you need to first
calculate the average time between the first and second buys of repeat customers, as
well as its standard variation. By adding two times the standard variation to the average
time, you will have captured 95% of your repeat customers. Divide this by the number
of non-repeat buyers, and you have your estimated repurchase ratio. Here is a tool to
calculate your standard deviation.
Another way would be to measure the repurchase intention, which we cover in method
4.

3
Upselling Ratio

This tracks the ratio of customers whove bought more than one type of product divided
by the customers whove bought only one. This sounds similar to the Repurchase Ratio,
but its different because it concerns another product.
Buying new products is a clear indication of customer loyalty. The trust you gained
through your customers previous experiences has reflected on your other product
offerings.

Apple afficionados trust whatever tool the tech giant brings out
The more different the added product is from the first product, the more significant an
indication for customer loyalty it is. Buying a kilo of pears at the grocery shop you know
to have great apples, for example, isnt too big of a leap. Buying a smartphone because
youre happy with your laptop, however, does constitute a big leap.
You calculate the upselling ration by dividing your number of customers with multiple
products by the number of customers with a single product.
Another way would be to measure the upselling intention, which we cover next.

4
Customer Loyalty Index (CLI)
This is a standardized tool to track customer loyalty over time, and it incorporates the
values of NPS, repurchasing, and upselling.
It calculates all three values with an NPS-like questionnaire on a 6-point scale. 1 stands
for Definitely Yes, 6 stands for Definitely No.
1.

How likely are you to recommend us to your friends or contacts?

2.

How likely are you to buy from us again in the future?

3.

How likely are you to try out other of our products/services?

Your total CLI is the average score of the 3 responses.

Answer scores:
1 = 100
2 = 80
3 = 60
4 = 40

5 = 20
6=0
The downside of this approach is that you ask directly for the customers intention,
which is less reliable than measuring actual behavior. The advantage is that this score
incorporates all of the loyalty values. Also, by consistently sending this questionnaire
over time, it allows you to systematically track changes.
Heres an example of a CLI Questionnaire that you can easily copy using Google Forms.

5
Customer Engagement Numbers
According to Curtis N. Bingham, customer engagement is the most effective predictor of
customer loyalty. He argues that compared to NPS and CLI, customer engagement
metrics are easier to measure, to influence, and that theyre more strongly correlated
with revenue and profits.

Customer engagement is a strong predictor of loyalty

Bingham explains that customer loyalty results out of positive interactions and
experiences with your brand. These nurture emotional attachments that shield your
customers from competitor influence.
Through this, says Bingham, customer engagement:
1.

Stimulates repurchasing

2.

Lowers price sensitivity

3.

Promotes referrals
Customer engagement is indeed an interesting area, especially for online businesses
for whom its metrics are relatively easy to track. For offline products and services,
though, the tracking is much harder.

When users explore new features and start

to use them, the service is growing on
them, and they are happy to use it more.
Guy Nirpaz

Guy Nirpaz suggests a few metrics to measure customer engagement for online apps:

Activity Time. This is the average time your customers spend with your service;
per day, week, month, or year whichever is most relevant for your offering.

Visit Frequency. This tracks how often a user returns to your service. Keep an
eye on patterns in returning user visits. If you have a brain training app, probably
your users should return a few times per week. While for website analytics tools, for
example, a few times per month should be fine.

Core User Actions. Track whether user gets to experience the main features.
For us: adjust the Chat Widget coloring, set up operator picture, set up chat macros,
etc.

By keeping track of these metrics over time, you see whether the fit with your user base
is improving.

Champion of Customer Loyalty

When you search for customer loyalty, you soon run into case studies about Apple Inc.
Indeed, this company nailed it.

Apple, a champion of customer loyalty

When Apple launches a fancy new device, its most fervent fans set up camp in front of
the Apple store a few days in advance. If Samsung would bring out a phone that beats
the iPhone in both functionality and price, people would still buy buy from Apple.

Anyone can sell products by dropping their

prices, but it does not breed loyalty.
Simon Sinek

Thats not rationality; thats loyalty. Apple is number one in its category in Brand
Keys 19th Annual Customer Loyalty Engagement Index, and its part of what turned it
into one of the worlds most valuable companies.
Customer loyalty is one of the main predictors of success. No company can stay ahead
of the herd all of the time. The loyalty of your customers determines your breathing
space for catching up.

Not every customer is desirable. Understanding your customer ROI as a basis for determining future
investment in the relationship is important. What level of resourcing is required today? What will it take to
improve their perceptions and either migrate this customer to the next segment level or for the loyal
customer, maintain their loyalty?

Migrating customers to the next level usually means adding more or different resources, but only at
appropriate levels the right amount, on the right things, for the right customers. It does not mean
losing money in the process.

An appropriate migration plan for a high revenue but costly Vulnerable customer may be one of out
migration.

Final Thoughts
Unless companies regularly seek input from their customers by using objective and valid measurement
tools and techniques they really know very little about them. Its amazing, because it is the customers who
keep a company in business!

Think about it. Do you really know

Whats important and what is valued in the relationship?

Whether what customers tell your sales people and account managers truly is what they mean?
What is said behind your back?

Whether their continued business means they really want to do business with you? Do you know
who the truly loyal customers are?

How does the competitors offering affect what they think about yours?

The true costs of serving your customers relative to their loyalty and revenue/profitability?

And most important of all: are you treating your loyal customers as loyal customers should be treated?

Only your customers know!