Improving customer loyalty has clear, quantifiable benefits. Our research has shown that improving customer migration can bring four times the economic impact typically achieved by reducing attrition rates alone.

Yet as attitudes change, new competitors enter, and technology evolves, customer loyalty is declining across a broad range of industries. To meet this challenge, we work with clients in all sectors to develop high-impact approaches to boosting customer loyalty that will drive profitable growth.

Target the Right Sources
To contribute effectively to a company’s growth plans, customer loyalty improvement programs must work on the most powerful levers. To identify growth levers, we take a broad but measurable view of loyalty, focusing on patterns of customer migration – the change in customer value over time.

Our research has shown that the factors that lead customers to migrate downward to lower-value products and services vary significantly across industries and from company to company. We help clients understand the primary drivers of downward migration in their customer base and identify the customers who offer the greatest opportunity for enhanced value.

A targeted customer loyalty program, one which addresses multiple profit levers, can reduce the value lost to downward migration by 20 to 30 percent. This translates into significant top- and bottom-line growth.

Programs for all Situations
Our work with clients to improve customer loyalty involves designing programs in three crucial areas:

• High-impact loyalty architecture. Drawing on experience and proprietary research, we work with clients to quickly identify the highest-leverage customers and sources of downward migration. We then design a set of initiatives based on the loyalty tools most suited to these opportunities. High-impact direct, online, and face-to-face programs to influence customer behavior are the architecture of an effective loyalty effort. To maximize speed and impact, we help our clients run pilots – taking a test-and-learn approach. We then help roll out successful approaches across the organization, offering support when these approaches require new skills and capabilities.

• Targeted value proposition and delivery redesign. Longer term, improving loyalty involves changes to a company’s value proposition and delivery. The trick is to eliminate key sources of dissatisfaction, increase customer “stickiness,” and/or exceed competitive offers. McKinsey helps identify changes that are likely to have profit impact far in excess of the investment required. We work with clients to transform their measurements of customer satisfaction into the means to track the 100-plus attributes linked directly to migration behavior. We then help redesign key service processes at the front line to significantly improve the elements of the experience that customers most value.

• Effective and efficient rewards programs. For some companies, a rewards program is an effective tool for gaining share of customer wallet. For other companies, a competitive rewards program is expensive but necessary to be fully competitive in their industry. In either case, we help craft a high-impact program or improve the design of an existing program, adding critical relationship management elements and developing a powerful partnership strategy with other industry participants, if appropriate.