The ROI of Loyalty (Part II)

Posted: 5/11/2009 by Norma Watenpaugh

Part I discussed how demographic segmentation allowedtargeting programs, benefits, and attention to engender greater loyalty and business through their developers. Part II addresseshow segmentation by 'Loyalty' itself helps to identify andto address specific concerns of developers. While net promoter score seems to be the popularrage, we used the Apostle model to segment loyalty. The Apostle model gives much information with respect to how loyalty affects behavior.

The Aposlte model maps the community into a four quadrant graph. One the horizontal dimension we map overall satisfaction. On the vertical dimension, we map likelyhood of continuing to use the service. This gives us interesting insight into behavior.

Apostles:

In the upper right quadrant, the magic quadrant as some would call it, are the Apostles. Those who are very happy and very loyal. They are your evangelists. In this study they value the community blogs, a good thing because it gives them a forum to spread their good will. You want to nuture this community and continue to give them the opportunity to spread the word and do your 'marketing' for you.

Mercenaries:

In the lower right quadrant, were the mercenaries. These were developers who were satisfied but not very loyal. These respondents who fall in this corner, typically as the name implies, can be price sensitive and they can be rather fickle.

Hostages

The upper left quadrant maps the hostages. These are a most interesting segment. They are not happy but they feel they have no choice or feel trapped into the business relationship. Understanding the drivers of loyalty and satisfaction in this quadrant is key. Hostages are very vulnerable to competitive alternatives when they see an opportunity to switch. Their loyalty is often based on features they percieve to be extremely important and cannot be found anywhere else. These features may be competitive differentiators. Ironically many of the hostages actually want the client to be successful. Addressing their grievances can quickly move this segment to the right into the Apostle quadrant.

Sniper:

The lower left quandrant is hostile territory. Here be Snipers. They are dissatisfied and they are dangerous because they tend to be vocal about their discontent. Molify these guys quickly or help them exit your community gracefully.

Managing loyalty is becoming even more critical in a virtual world where social media enables everyone to have a voice. Understand loyalty drivers are critical to managing your on-line reputation and growing your business.

Responses to The ROI of Loyalty (Part II)

Norma Watenpaugh
http://www.phoenixcg.com

You do pose a very interesting question, Mike. And knowing you, I'm sure you have some very interesting thoughts on how successful companies differentiate themselves when their competitors are 'giving it away'. Have you written the blog on this yet?

Mike Dubrall
http://www.gillwellgroup.com

The question in a hyper-active and increasingly interactive marketplace is how vendors will try and maintain loyalty to their products and services when customers can find alternatives for less money. Will paid services edge out free ones (webex vs. dimdim or freeconferencecall.com vs iLinc or even AT&T)? Will brand names triumph because of superior but costly customer service? Measuring and monitoring loyalty when people (customers, resellers, and alliances) can find alternatives so quickly is the biggest marketing issue of the next decade!

Lynn Hunsaker
http://www.clearaction.biz

I love to see segmentation by loyalty levels as a great way to manage customers for immediate and long-term ROI. Dealing with the less-attractive quadrants is fascinating -- I've written about embracing the negative in my blog, as a London School of Economics study determined reducing negative word-of-mouth can grow revenue by 300% versus increasing positive word-of-mouth. See http://clearaction.biz/blog/love-those-lemons/ and http://clearaction.biz/blog/cems-weakest-link-3-tips-for-managing-brand-value/

Tom Halle
http://www.tomhalle.com

"Molify [snipers] quickly or help them exit your community gracefully."An interesting thought comes to mind - remember the scene in 'Miracle on 34th Street' where the department-store Santa recommends the store across the street - a seemingly altruistic act? What if instead he concluded that this was a 'sniper' customer who would never be satisfied with what his store had to offer, and decided to hang this customer around his competitor's neck instead? Whether partners or customers, even better than simply moving the sniper out of your ecosystem would be moving them into your competitor's, so he or she can snipe away at them for a change... :)

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