MarketingNPV(r) Journal: How Can You Measure Customer Loyalty?
Friday, 10 February 2006
Loyalty" comes in many forms. Is it a feeling? Or is behavior the only thing that counts? The key to loyalty measurement is having a very clear picture of the economic value you are trying to create by engendering more of it, according to the latest issue of MarketingNPV(r) Journal, a publication focused on helping marketers make smarter decisions and stronger cases to secure, allocate, or defend resources.
"For most businesses, the promise of customer loyalty implies potential economic value creation. In order to successfully measure loyalty, companies need to first define loyalty in very specific terms that apply to the business outcome," observes Pat LaPointe, managing partner and editor in chief of MarketingNPV Journal. "Properly measured, loyalty is a leading indicator of future purchase behavior, and thereby profitability."
In this issue's cover story, MarketingNPV Journal takes a look at defining customer loyalty, goes in-depth to define the different types of loyalty, and looks at the similarities and differences between customer satisfaction and customer loyalty. The article guides the reader through the process of how to measure loyalty including the different indicators of loyalty.
Featured in this issue of MarketingNPV Journal is a discussion with a notable authority on customer loyalty, Fred Reichheld, director emeritus at Bain & Company. He shares his point of view on the "one-number" approach to effectively measuring and managing loyalty.
In the first of a two part piece, Tim Ambler, senior fellow at the London Business School, addressed some critical flaws in the common approach to marketing measurement. This installment has Tim examining the technical and organizational merits of using ROI as a metric for marketing. In a word, don't.