The Economics of Loyalty – What Is Loyalty Worth?

If you are a commercial banker, you know intuitively that some of your customers are worth far more to your business than others. The best customers maintain higher deposit and loan balances, use more banking services and stay with you for a long time. They are loyal, enthusiastic advocates of your bank, singing your praises to friends and colleagues. They are promoters.

Say you run a chain of hotels. You know that your best customers are the guests who visit your properties time after time, spend a lot of money because they value the amenities and services your hotels offer and recommend your hotels to other travelers. They treat your hotel staff well. Those customers, too, are promoters.

Here’s the challenge: Do you know how much more valuable these customers are than others? Do you know what it might be worth to turn another 10% or 20% of your customers into promoters? Unless you can answer such questions, you are flying blind. You can’t know how much to invest in the efforts and initiatives that will create and retain more of these valuable customers.

via The economics of loyalty – Loyalty Insights #3 – Bain & Company.

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