The Wall Street Journal and MIT Sloan Management Review recently published a useful reminder, to identify the kind of customers whose loyalty is worth having. The majority of customers whom many corporate leaders see as loyal, based on attitudes and actions, are not profitable. Loyalty is not synonymous with profitability.
Consider this:
* Profitable customers typically comprise only about 20% of a company's customers
* Break-even customers typically comprise 60%
* Unprofitable customers typically comprise 20%
Key take-aways: The loyalty measurement that matters most for corporate financial performance is the percentage of profitable loyal customers. An effective loyalty program will target and satisfy the wants of already-profitable loyal customers, and also work to increase the value of break-even loyal customers. For additional details, see the Sloan Management Review article.
For additional ideas, view Oracle's brief Smart Strategies for Uncertain Times: Siebel Loyalty Management Solutions webcast. To learn more about Siebel Loyalty Management 8.1.1, read the datasheet or visit our website.
