We love this model – created by Harvard Business School professor James Heskett and developed by the likes of Jones, Sasser, Xerox and Intuit. This can be used in so many situations including projects where you may not appear to be selling anything. In this approach you represent customers graphically plotting satisfaction against loyalty:
Terrorists – at the very bottom of the scale you have customers who are extremely dissatisfied and have very low loyalty. They can do great damage to your business – particularly in the Internet age – just take a look at this websiteorangeproblems to see this sort of action, though blogs, emails and word of mouth are the more likely outlets.
Apostles – at the other end of the scale the highly loyal and highly satisfied customers. What sets them apart is the fact they actively go out and spread the good word. Some interesting research carried out by Xerox found that customers rating “extremely satisfied” were 6 times more likely to repurchase than those ranking “satisfied” the very next option down. These are your company’s best friends.
Hostages – with medium to high loyalty and satisfaction these customers tend be to “stuck”. Think of contracts where you are locked in for 12-18 months, not very happy but no easy way out or where other “costs of switching” keep you locked in to your current supplier. Monopoly / oligopoly supply situations create hostages too.
Mercenaries – often the bulk of your customer base. Apparently satisfied and loyal these people tend to switch to the best deal as they see it. In industries with a low cost of switching they are likely to change supplier quickly and without warning. For example where there are plenty of reasonable “me too” products then price / special offer is often the differentiator. Many Mercenaries have the behaviour to deeply ingrained to change, but others would willingly become Loyalists when they receive the right product and service combination from a supplier.
Defectors – neither particularly loyal nor particularly satisfied. If they haven’t already left they are likely to. However they tend not be as vocal as the Terrorists in expressing their dissatisfaction. They are often one trigger away from leaving. As with Mercenaries many would willingly become Loyalists when they receive the right product and service combination from a supplier.
Loyalists – High satisfaction and high loyalty but do not spread the word that much. What separates loyalists from apostles is really how they spread the word. As well as being active Apostles need to be very well connected and typically influential – i.e. they are able to spread the word to lots of people and those people are likely to listen. However the loyalists can be thought of as the bedrock of your company, they keep on coming back.
As with all such models the key lies not so much with the analysis, but what you actively do to improve things for your business. How do you win over the terrorists or increase the number of apostles, for example. It would be wrong to stand idly by and watch all your defectors defect, though it may be the case that not all of them could be cost effectively satisfied and retained.
One area to look at is ensuring the dissatisfied have plenty of places to express their frustration – if they can’t vent at you then they will vent to others even more vigourously. Of course it goes further than just listening, you need to make amends too. Look out for cheap, unempowered, “customer service ” help desks, I typically put down the phone even more frustrated than when I first called in.
Remember, one shoddy product or one bad piece of service could tip a Loyalist into the Defector zone – however effectively and rapidly addressing the problem can really increase loyalty and even create an Apostle.
Peter Stansbury is Managing Director of Stansburys, a consultancy focused on helping customers improve the way they do business. This is carried out primarily through delivery of business change projects aimed at improving service quality, an effective use of technology and a strong customer focus.
Peter is a seasoned executive with several decades of experience in several continents. He is a Visiting Executive Fellow at globally renowned Henley Business School. Whilst still a hands-on consultant Peter also uses speaking and writing to share the ideas he enjoys, and more can be found at: