Snake (oil) and loyalty ladders

Many market research houses now market a “loyalty ladder” or “loyalty pyramid” product. These dissect a brand’s customer base into 4-6 groups, starting with something like “no awareness” at the bottom and ending with something like “passionate loyals” at the top. This classification is usually based on behaviour (or claimed behaviour) such as share of category purchases devoted to the brand in question. Some add attitudinal statements into the customer classification. Others, like The Conversion Model, claim to be entirely attitidudinal.

All these do is reflect the brand’s relative popularity (i.e. market share) and random sampling error (which looms large when you have 4-6 groups).

Marketing Science has known for decades that loyal behaviours and attitudes follow a set statistical distribution, and so any brand’s true loyalty ladder can be accurately predicted simply from knowing its size compared to rivals. And if it has 100% relative share, then all customers will be at the top of the ladder, but not until then.

I suppose these ladders are attractive because intuitively marketers feel it’s their job to move people along this path, sorry up this ladder. Yet I notice that my practitioner colleagues rarely draw any practical insights from these ladder metrics, they provide more entertainment value (“that looks interesting”) than knowledge. Which is fine, because that’s all they are, an entertaining expensive way of presenting, and obscuring, loyalty metrics.

And there is more

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2 thoughts on “Snake (oil) and loyalty ladders

  1. Pingback: What’s wrong with loyalty ladders ? « Marketing Science

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