Loyalty profiles help target spending more effectively and assess the degree of satisfaction among your customers. Here’s one approach. Using a loyalty profile provides a company with new insights. Loyalty profiling reinforces the importance of managing loyalty. There are different types of loyal customers. Each type requires a different type of management.  

A loyalty profile helps target spending more effectively and assess the degree of satisfaction among your customers. Although emotionally loyal customers often constitute a relatively small segment, building emotional ties should be a long-term goal for most companies. Emotionally loyal customers are crucial, for given their higher spending and lower rate of downward migration; they are the most valuable of all.

This concept of migration provides a way to understand your customer spending behavior. Migration is a metric you can use to determine the direction, up or down, of what a customer is spending with your company, even though the customer may be very satisfied. With this metric, you can begin to develop strategies that influence customer spending.

A new way to think about profiling loyal customers

Start by creating two primary categories: loyalists and migrators. There may be several sub-segments in the loyalist group:

1. customers who are emotionally tied to your company and would unlikely reassess their relationship
2. those that are loyal out of convenience and most likely feel it’s not worth the effort to change and
3. those that analyze the relationship frequently against set objective criteria

The second category, migration, intends to help you identify what we’ll refer to as downward migrators. Downward migrators generally reduce their spending with a company and are in one of three subgroups:

1. market/business conditions change resulting in new needs
2. deliberators who have found a better solution and
3. those that are actively dissatisfied because of a bad experience

Deliberators-both those who maintain their spending and those who spend less-are on average the largest group. They can represent as much as 40 percent of all your customers across industries. Therefore, the rewards from influencing deliberators can be twice as high as the rewards from influencing other types of customers.

Deliberators frequently reassess their purchases by criteria such as a product’s price and performance and the ease of doing business with a company. Emotional appeals won’t trump such objective factors, although these customers’ requirements vary from person to person.

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The Deliberator as a Loyalty Profile

Market and customer research are necessary to better understand what Deliberator’s (or any customer segment) value.  Research helps you determine

• the importance of functional benefits (how well the product works compared with alternatives to it, for example, and whether it is worth the price),
• process benefits (which improve the way the customer receives it), and
• relationship benefits (such as being a “preferred” customer, who gets special discounts or services).

Insights and intelligence derived from research reveals helps you identify and shore up weaknesses and create and tailor superior value propositions . This approach not only reduces the chance a customer will defect but also encourages them to consolidate their spending in order to go on receiving benefits, thus encouraging upward migration.

We encourage you to create a loyalty profile and to start your customer retention program by trying to influence deliberators, since they make up some 40 percent of the overall opportunity. Deliberators are particularly important for industries in which brands are relatively indistinct, comparisons are easy to make, and competitors differentiate primarily on such functional attributes as price.

Learn more about customer-centric measures, loyalty, retention and best practices for measuring loyalty.

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