Separating Loyalty From Value
by Michael Greenberg | President
While perusing a short but interesting bit of research on multi-channel customer behavior by Opinion Research Corporation on Marketing Charts, I noted some interesting data that points out the difference between Loyalty and Value.
The chart shows the dollars spent with the subject company and with its most important competitor. Note how spending with the company increases as the number of buying channels increases:
1 channel – $44
2 channels – $51
3 channels – $62
4+ channels – $82
This is consistent with what most companies see.
But now if you calculate the share of wallet using both companies, the picture changes:
1 channel – 36% share
2 channels – 60% share
3 channels – 52% share
4+ channels – 48% share
Granted this is a fairly small sample size for this type of analysis, but some interesting questions arise. Which segment of customers should marketers target? Those with the most available wallet share (1 channel)? Those with the largest available to spend (4+ channel)? Or should you focus on migrating to multiple channels?
The answer depends on a variety of other factors, which I’ll address in other posts.
But by examining this basic example, you can begin to see how indicators of loyalty (share of wallet, net promoter score, year over year retention) aren’t always the same as customer value, and that the best options for high return on investment are found by looking at several factors, not just customer value.
