How to Use a Loyalty Analysis

Most companies acknowledge that it costs from five to ten times more to acquire a new customer than to retain an existing one. So a lot of time, energy, and conversation are devoted to the idea of building customer loyalty.

Unfortunately, most companies have no reliable way to measure customer loyalty and have no effective way to see if their efforts to increase it are bearing fruit. They are usually limited to deriving loyalty measures by looking at total revenues or revenues from individual customers. This makes the best and worst customers easy to spot. But quantifying the loyalty and value of the huge middle majority of customers has been impossible until recently. Now that Loyalty Builders has developed an effective set of measures for this task, a commonly asked question is “How do we use this new information?”

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