Customer Loyalty's Crystal Ball?

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Customer Experience
Customer Experience

When it comes to predicting long-term customer loyalty and engagement, "business line managers are settling for mediocre data-lagging indicators like an annual customer surveys, for example," says Chris Cottle, vice president of corporate marketing for Allegiance. "Don't manage your business completely on what has happened in the past; leading indicators like customer confidence indices are much better."

Cottle recommends finding leading indicators that may be overlooked. "Economists know that when consumers' confidence is dropping, lipstick sales increase," he says. "Every business should discover what their leading indicators are and use them as a part of their business planning."

Although Cottle suggests focusing primarily on leading indicators, there are some lagging indicators that can provide useful information, he says. He cites such data as percentage increases in sales and profitability as "good" lagging indicators. "You have to look backward and forward to get the whole view," he says.

There's no crystal ball for determining potential long-term loyalty, but technology can help, Cottle says. "CRM gives the who, what, when, and where," he says, "predictive analytics give the why." He suggests learning customers' emotional drivers and purchase intentions and using them to model what areas (products, service, pricing, and the like) will most likely impact engagement. This can also help marketers to uncover which customers might be at risk of defecting, allowing them to proactively retain those customers.

 "Engagement is an asset you can manage," Cottle says.

 

EXPERT OPINION
EXPERT OPINION