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Customer Loyalty Metric
Maximizing lifetime customer value
The Client
Major automotive manufacturer
The Challenge
Our client was overlooking future revenue opportunities by not recognizing the true lifetime value of its current customers. The client recognized that there were differences among customers’ loyalty over a lifetime, but could not quantify or act on those differences.
The Breakthrough
SIGMA created the Loyalty Metric, a measurement that allowed the client to make business decisions based on a real and accurate lifetime view of the customer, not a 12-month or even 60-month snapshot.
The Loyalty Metric yielded important and valuable learnings for the client:
- current customers are worth billions of dollars to the client over a lifetime;
- the top 10% of customers contribute 89% of total value;
- the highest-value customers and lowest-value customers shared many similar characteristics, but one critical characteristic differentiates the two – purchase velocity.
The Win
SIGMA discovered that the client could best utilize The Loyalty Metric in:
- the development of retention programs for high-value customers;
- taking cost-effective, pre-emptive action against potential defectors;
- creating intelligent marketing programs to effectively manage both high-value and low-value customers;
- generating additional vehicle sales at higher velocity among medium-value customers, turning them into high-value customers.