Customer Loyalty Simulator™
Companies can drive customer satisfaction and loyalty higher and higher by improving quality, reducing prices, and improving service—but this road can lead to bankruptcy.
We believe the goal should not be higher and higher levels of satisfaction but, rather, a level of satisfaction that optimizes a firm’s long-term profitability.
Marketing research can assist companies in achieving this goal by quantifying how customers’ experiences and perceptions of brands lead to future market outcomes such as:
- Brand preference
- Brand endorsement
- Brand purchase
- Brand usage
- Customer retention
- Share of market
- Sales revenue
- Profitability
Decision Analyst’s Customer Loyalty Simulator™ predicts future market outcomes as a function of rational and emotional perceptions of the brand, its products or services, and its customer service.
The processes involved in developing a Customer Loyalty Simulator™ are:
- Factor Analysis—to determine the underlying factors that summarize and explain the correlations among the many brand, product, and service perceptions of category customers.
- Latent-Class Regression Analysis—to quantify the link between future market outcomes as dependent variables and the rational and emotional factors as independent variables.
- Combining Factor Scores and Models—to predict the impact of improved performance and perceptions on future market outcomes that indicate and produce customer loyalty.
A Customer Loyalty Simulator™ is an interactive model in which simulations for each product or service reveal the impact of changes in customer experiences and perceptions upon customer loyalty. In the following diagram, impact elasticity is reported by attribute and by factor.
In this hypothetical example, a 1% increase in the rating of “delivery” causes a 0.24% increase in “rational” customer loyalty. A 1% increase in the rational component of loyalty causes a 0.30% increase in customer loyalty. Customer loyalty is measured as a weighted average of three market outcomes: sales (24%), preference for the brand (50%), and retention (26%).
Customer Experience Optimization Services
Decision Analyst is a leading global marketing research and analytical consulting firm and a recognized leader in Customer Satisfaction. If you would like more information on Satisfaction Research, please contact Bonnie Janzen, President, by email at bjanzen@decisionanalyst.com, or Felicia Rogers, Executive Vice President, by email at frogers@decisionanalyst.com. Both can be reached by calling 1-800-ANALYSIS (262-5974) or 1-817-640-6166.