Case Study: Strategic Insights for Optimizing Customer Loyalty

The Business Challenge

Amegalabs, a global leader in medical supplies for physicians, dentists, and veterinarians, was in the process of developing a corporate-wide strategy that would tighten financial performance by improving customer satisfaction and loyalty.

The company had been querying customer satisfaction levels for years by way of including a customer satisfaction survey with every order. It was a simple and effective means of measuring satisfaction at the transactional level--a critical component to managing satisfaction--but it did not provide the company with a complete view of its relationship with its customers. Further, the company's satisfaction measurement efforts were unique to each division.

Amegalabs asked Ipsos Loyalty to work with them to construct a company-wide assessment of customer loyalty levels upon which they could build strategy for operations and marketing teams to achieve their financial goals.

Ipsos Loyalty Approach

Amegalabs chose the Loyalty Optimizer(TM) approach because it provides a wide view of a company's relationship with its customers. The model includes the five strategic building blocks of loyalty--which reach far beyond customer satisfaction alone. Amegalabs could also compare its performance to norms on key measures.

Through this model, Amegalabs obtained information about its customers' relationships with the company, its sales reps, its products, perceived value, and commitment to Amegalabs. Drill-down measures provided answers to key tactical driver questions like: How satisfied are clients with the ordering process and delivery? How satisfied are clients with their sales rep? How satisfied are clients with the ease of ordering by fax? How satisfied are clients with the timeliness of deliveries?

And, because the building blocks of customer loyalty are established long before an order is delivered, Amegalabs also needed a strong brand presence, as well as a solid offer that meets their clients' needs, at a price point where clients recognize value. The model also provided answers to key questions like: Is the Amegalabs brand recognized and recommended by medical and dental professionals? Are Amegalabs' offers differentiated and viewed as innovative? Is Amegalabs' pricing considered competitive?

In addition to these diagnostics, Amegalabs' also received a Loyalty Index--a benchmark of customer satisfaction attributes related to customer relationships and experiences with Amegalabs, as well as perceptions of the Amegalabs offer, brand, and price--and actionable means of improving loyalty levels.

Data for the model was collected through online surveys among 1,700 Amegalabs clients.

The Results

First, Ipsos Loyalty examined the drivers of loyalty and disloyalty to prioritize the strategic areas that needed improvement in order to earn greater customer loyalty.

Second, Ipsos Loyalty analyzed the tactical drivers to reveal operational elements where Amegalabs could make specific, direct improvements, such as improving shipping costs and ease of ordering by fax.

Third, Ipsos Loyalty segmented Amegalabs customers into clusters that required different plans of action. The clusters are based on two dimensions:

1. Loyal versus Vulnerable
2. High Value versus Low Value

Missed revenue opportunities are represented by potentially High Value customers who are dissatisfied and vulnerable to defection. By understanding how many and which customers they could influence, Amegalabs developed effective action plans to influence loyalty among key segments that presented major opportunities for profitability growth.

In sum, Ipsos Loyalty quantified the effect of improving loyalty, demonstrating to Amegalabs that they could measurably increase revenue by improving satisfaction levels. This allowed the company to analyze the cost/benefit relationship of making changes to their operations and marketing to improve loyalty.

The client reported that the study was groundbreaking. It enabled them to identify improvement areas and determine the impact of improvements on each area so they could prioritize the tasks that would reap the largest rewards. Follow-up research will help Amegalabs improve the profitability of their loyal customers.