The Customer Loyalty Matrix is a tool used to evaluate the loyalty of the current customer base. It segments customers into categories, such as at-risk, neutral, and loyal. By profiling each customer segment it can be determined what creates an at-risk vs. a loyal customer in order to convert at-risk customers without alienating those who are loyal.
How is customers’ loyalty determined?
Customer loyalty can be measured by taking several aspects into consideration. Most commonly, customer satisfaction, repurchase intent, and/or likelihood to recommend are included when looking at customer loyalty. For example, those customers who score high on all three aforementioned aspects are most likely to fall in the ‘loyal’ quadrant, while those who score low on all three are definitely ‘at risk’. Those in between can be qualified as ‘neutral’ and should be considered potential ‘at risk’ customers. After customers have been categorized as either loyal, at-risk, or neutral, common characteristics of, or attitudes towards, the product/company can be determined, thereby allowing the company to make adjustments that will most likely enlarge the loyal group of customers.
Are Net Promoter Score and Loyalty Matrix somehow related?
Yes, they are. NPS is calculated by looking at how likely a customer is to recommend a company/product. As seen above, the loyalty matrix is in part based on this score as well, thus showing a connection between the two. However, while you may know the NPS and may have drawn a loyalty matrix, to improve customer loyalty it is critical to understand the factors that are driving these scores. Multiple regression is the most common analysis technique used to determine the underlying factors.
For more information, go to http://www.customerthink.com/blog/customer_loyalty_2_0_part_5_measurement_and_m
