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HBOK 1-136

Title Lessons in Loyalty
Author(s) Bob E. Hayes
Source Quality Progress
Topic Listening to Customers

Qualities of Customer-Focused Organizations

Data Analysis

Abstract All behaviors representing customer loyalty are manifestations of the three general components of customer loyalty: retention, advocacy, and purchasing, or RAPID. Customer loyalty leads to financial growth for a company. While the management of customer survey data has advanced over the years, there is still little scientific basis for the formation and interpretation of customer loyalty survey questions. A factor analysis of a typical customer satisfaction survey in the wireless service industry shows that the 11-question survey actually measures the three components of retention, advocacy, and purchasing. Aggregating these questions by component leads to three measures: the retention, advocacy, and purchasing loyalty indices (RLI, ALI, and PLI), which combine to form the RAPID loyalty measurement approach. Surveys of five studies across the wireless provider, PC manufacture, and insurance industries indicate the correlation of RAPID loyalty measurements to growth across all three stages of the customer life cycle.
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