Loyalty Matrix™

Insight into how your customers perceive you is invaluable, and our loyalty matrix is a method that allows you to segment your customers based on their level of loyalty – much like the NPS measurement. The loyalty matrix, however, is slightly more comprehensive in terms of both questions and segmentation, without losing the benefit of simplicity that also characterises NPS.

The loyalty matrix is based on two questions:

• An emotional question: “All things considered, how satisfied are you with your supplier?”
• A rational question: “All things considered, how attractive do you rate your supplier compared to the alternatives?”

Based on their response patterns, customers can then be plotted into one of the matrix’s nine segments.

The two Axes

Rational Loyalty:The customer’s rational evaluation of you compared with other alternatives on the market which includes factors such as price, quality and delivery.

Emotional Loyalty: The customer’s emotional involvement with you e.g. is happy about the collaboration.

The Five Loyalty Segments

Ambassador: Customers who are ”religiously” convinced that your company is the right place to be a customer.

Loyal: Customers who are sure they are customers at the right place but can also pinpoint things that need to be improved.

At risk: Customers who all-in-all are satisfied but are also easy for your competitors to lure away from you.

Shopping around: Customers who think there are better alternatives on the market.

Lost: Customers who have (mentally) decided to leave your company at the next available opportunity

Loyalty Matrix™ → Loyalty Index

Calculation of Loyalty Index

The distribution of customers in the Loyalty Matrix™ can be expressed as one Loyalty Index number. Every customer segment in the Loyalty Matrix is weighted in the following way when calculating the Loyalty Index:

• Ambassador: 100
• Loyal: 75
• At risk: 50
• Shopping: 25
• Lost: 0

An approach with many advantages

The loyalty matrix is more nuanced than NPS, and the nine different segments provide a more precise picture of where your customers are – and where and how action is needed. The questions also make the model better suited for situations where the NPS question does not immediately make sense – for example, in the case of highly niche products and services.

On the other hand, the NPS score has the major advantage of being so widely used – and has almost become a standard for measuring customer loyalty. This, combined with the simplicity of the score, makes it very easy to relate to and, not least, to benchmark against yourself and your competitors.

Please note that Loyalty Group conducts comprehensive yearly market research in Denmark and to some extend also Norway and Sweden. Once a year a “NPS Benchmark” report is published in Danish.

We make extensive use of both the NPS and Loyalty Matrix methodologies – depending on what the results are intended to be used for.