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Low Loyalty Vertical

January 4, 2011 Leave a comment

The Low Loyalty Vertical is a phrase I use to describe any company that operates in any industry where the customer base is:

1 – Highly transient

2 – Margins are razor thin

3 – Your customer is a heartbeat away from becoming your competitors’ customer.

A great example is financial services companies.  I personally have 4 credit cards from 4 different financial institutions. But with one in particular I have various savings and chequing accounts, as well as a joint account with my wife. Now, imagine that my main provider does something I don’t like – ups their monthly fees for example or increases my interest rate on a credit card. I have no loyalty and the cost to me to switch is zero dollars. I walk into a competing institution, tell them I want to switch, fill out a form or two, and it all magically happens. No effort on my part, no loyalty keeping me.

Something that’s interesting to me, as I travel around talking to many different companies in many different verticals, is how they are all struggling with the same core issues around driving customer loyalty to maintain and grow their businesses.

They talk about macro-economic challenges and business dynamics like “mergers and acquisitions” or “regulatory pressures” or “innovation and growth” but what they’re really trying to do is understand how to manage loyalty. How to keep their existing customers happy, and how to get new customers from the competition (hey, this is business and nobody should apologize for that!).

Some niche technology companies seem to argue this is the purview of their sentiment anlysis products.  Products that surf around Facebook and blogs and Twitter feeds looking for comments about corporate products and services, or maybe look at the notes written by customer service representatives.

To me, that view isn’t broad enough.  It doesn’t take into account the opportunity to execute on what I call a “Moment to Impact Loyalty” where the immediate – real time – understanding of a customer as the interactions are happening can be leveraged to ensure a customer remains a customer.

The sooner a company can understand a customer is angry, and what that customer cares about, the faster they can react and impact the moment to keep the customer happy.

It’s sentiment analysis, but in a real time complex event processing scenario.