Kinesis CEM, LLC

Loyalty / Engagement Segmentation

https://blog.kinesis-cem.com/2015/12/07/loyalty-the-foundation-of-brand-perception/https://blog.kinesis-cem.com/2015/12/14/imageperception-a-mirror-to-your-brand/https://blog.kinesis-cem.com/2016/01/06/beyond-loyalty-engagementwallet-share/

Eric Larse is co-founder of Seattle-based Kinesis, which helps companies plan and execute their customer experience strategies. Mr. Larse can be reached at elarse@kinesis-cem.com.

http://www.kinesis-cem.com

kinesis-cem.com 206.285.2900 info@kinesis-cem.com

Loyalty / Engagement Segmentation

Loyalty is the Single Business Attribute with Strongest

Correlation to Profitability

Benefits of Customer

Loyalty

Loyalty

Amortized Sales and Acquisition Costs Per Customer

Depending on the Industry:

Benefits of Customer

Loyalty5% Increase in Loyalty

25% - 85% Increase in Profitability

Customer Experience Managers Want to Include Loyalty in

Customer Experience Research

CustomerExperience

Measurement

Behavior Attitude

However…

Loyalty is a Behavior not an Attitude

Surveys Best Measure Attitudes

Behaviors Observed Longitudinally Over Time

As a Result Researchers Use Attitudinal Proxies for Loyalty

Behavior Vs.

AttitudeBehavior Attitude

Would Recommend

&

Customer Advocacy

Loyalty Proxies

Typically NPS

Would Recommend0 1 2 3 4 5 6 7 8 9 10

Customers segmented into 3 groups as a result of their answer to the following question:

“How likely is it that you would recommend us to a friend or colleague?”

(On a scale of 0-10, where 0 is “not at all likely” and 10 is “extremely likely”)

Detractors Promoters

However…

Any Likelihood of Referral Question Will Work

Agreement with Following Statement:

Customer Advocacy

“You care about me, not just the bottom line.”

(On a scale of 1-5, where 1 is “Strongly Disagree” and 5 is “Strongly Agree”)

Agreement With This Statement Strongly

Correlated with Loyalty

Some Researchers Just Ask NPS Alone With No Other Questions for Context

NPSAlone

Kinesis Believes This is a Mistake:

NPS Alone

Customer Experience

Actionable Research

Design

Customers who have agreed to participate in the survey want to give you their opinion.

NPS with no context will not lead to any conclusions about how customers feel about the brand.

Brand perception research should produce insight beyond loyalty. It should determine the extent to which customers’ impressions of the brand are aligned with

your desired brand image.

Insight Beyond Loyalty

Loyalty

Brand Image

BrandDefinition

Adjectives

Statements

Ask yourself: what personality characteristics would you like your customers to describe you with? What adjectives would you want used to describe your brand?

In addition to describing your brand personality with adjectives, come up with a list of statements that describe your desired personality.

What adjectives would we want to describe our brand?

Adjectives

Statements

What statements would we want used to describe our brand?

• We are easy to do business with.

• We are knowledgeable.

• We are like a trusted friend.

• We are interested in customers as people, not just the bottom line.

• We are committed to the community.

Brand DefinitionInforms Survey Instrument Design

Survey Instrument

SurveyInstrument

Adjectives Statements

Ask Customers for One Word That Would Describe Your Company

Unaided Top-of Mind

Compare Responses

to

Adjective List

This Will Determine How Close Perceptions Are To Your Goal

Aided Image

Ask Customers The Extent To Which They Agree With Your

Brand Statements

Compare Agreement

to

List of Statements

This Will Determine How Close Perceptions Are To Your Goal

Cross-Tabulate Brand Attributes with Customer Advocacy and Would Recommend to Identify

Attributes with the Highest Potential in Terms of Customer Loyalty

Attributes With Most

ROI Potential

HighestPotentialfor ROI

BrandAttributes

CustomerAdvocacy

WouldRecommend

The Next Step Beyond Loyalty is Determining Engagement or Wallet

Share.

Engagement/Wallet Share

Capturing Top-of-Mind Comparisons to Competitors

Ask Agreement With….Comparison to

Competitors• Their products and services are competitive• They are more customer-centric• They have lower fees• They have better service• They offer better technology• They are more nimble and flexible• They are more innovative

Does Customer Consider You Their Primary Provider

Primary Provider

Loyalty/Engagement

Segmentation

We Now Have Identified Loyalty and Engagement and Have a Basis for Segmentation by Both Loyalty

and Wallet Share.