This is the tenth post in our Horizon Deep Dive series. To follow along with the series (and receive exclusive content) click here.
ELVIS – a new way of measuring customer relationships
Over the past several posts, weâve shown some of the ways ELVIS can be used to influence and tailor the customer journey, helping to make your loyalty marketing efforts more relevant and effective. But this week, weâre looking specifically at this unique framework – how it works and how it can be used to provide actionable insight into your loyalty marketing strategy.
Why did we create ELVIS to begin with? We realised that sifting through large amounts of data to glean key insight could be challenging and time consuming – yet it’s essential to effective, data-driven marketing. We wanted to give marketers an at-a-glance picture of the health of their customer relationships, both on an individual level and across their base as a whole. Of course, this couldnât just be used to give marketers some useful insight; it also needed to be actionable.
So, we carefully selected five key metrics that we believed would give businesses a clear, well-rounded picture of their customer relationships, that could also be used in real-time to improve those relationships. And we ended up with ELVIS: Engagement, Loyalty, Value, Influence and Sentiment. (We didnât intend for them to spell such an iconic name; itâs just a happy coincidence, and weâre rolling with it.)
ELVIS brings together the ârationalâ elements of your customer relationships – such as interaction with your marketing comms, loyalty program activity, and average spend – and combines them with âemotionalâ factors like sentiment and social influence. Bringing these metrics together provides context, to help marketers look at the big picture and see how each of factor impacts the customer relationship.
And because weâve baked ELVIS into the rest of the Horizon platform, the insight it offers can be applied in real-time to all of your marketing and loyalty efforts. Below, Iâll look at each of the metrics and its purpose in a bit more detail…
Engagement
To grow more profitable and lasting customer relationships you need to connect with customers on an emotional level. That means going beyond rational factors like price or features, and instead helping customers to feel something about your brand – to identify with your message and values, to like doing business with you and being associated with your products.
And to do this effectively, customers must be engaged with your brand. Those who arenât actively engaged are less likely to connect in a meaningful way – and therefore, less likely to exhibit the valuable behaviours that typify emotionally loyal customers.
Measuring engagement, then, is the first step in monitoring the overall customer relationship, and can help you identify whatâs working and what isnât. A low engagement score suggests that the content and offers youâre providing arenât relevant to customers or providing enough value.
Loyalty
The reasons for measuring loyalty need little explanation. Truly loyal customers are more valuable to a business, not only in terms of spend, but also because theyâre more likely to forgive mistakes, advocate for the brand to their peers and try new products or services.
Traditionally, loyalty is measured by metrics such as repeat purchase, program membership and referrals of new customers. But this only provides part of the picture. As with engagement, true loyalty has an emotional aspect – you need to understand how customers feel about your brand.
ELVIS quantifies multiple streams of data – from purchase history and program activity, to customer comments and feedback – into a single loyalty score for each customer.
Of course, loyalty goes hand-in-hand with engagement. To be truly loyal to the brand (rather than the discount), customers must be emotionally engaged. A high engagement score, combined with low loyalty, suggests that not enough is being done to nurture and maintain loyalty down the line.
Value
Measuring value is fairly standard when it comes to evaluating your customer base. Itâs usually calculated by some variant of the RFM model – based on how recently customers have purchased, how frequently, and how much theyâve spent over a period of time. Itâs useful for identifying your best customers, and if used in real-time, spotting churn risks before they happen.
But calculating value in real-time can often be challenging, meaning that for many businesses, this useful data can only be analysed retrospectively. In addition, measuring based on the RFM model alone can miss out on other important indicators of value, like advocacy or overall tenure.
ELVIS calculates value in real-time based on a variety of factors, weighted towards what matters most to your business. In this way, value becomes more about helping you focus your efforts on the right customers and spot potential problems early on.
For example, loyalty and engagement scores across your entire base might be ok, but within that, your highest value customers might have the lowest engagement scores of the lot – and thatâs cause for concern. It might mean that a change in your messaging, rewards or approach has left these key customers feeling that they no longer connect with your brand.
Influence
Consumers today have more power over brands than ever before, with the ability to share their experiences – good or bad – with thousands (or even millions) of people in just a few clicks. And research has found that the opinions of their peers can influence your customers (and potential customers) more than most other forms of advertising / marketing.
Understanding the social influence of your customers is essential. Knowing a customer is particularly influential should change the way you handle their feedback / complaints, as well as the way you reward them for sharing your content, advocating for your brand and referring friends.
Additionally, it’s useful to know, across your base, whether your most influential customers are engaged, loyal, valuable and feeling positive about your brand. If any one of these areas is low, itâs an indication that you need to revisit the way you communicate and build relationships with this key group of customers.
Sentiment
With the rise of machine learning, understanding and processing a customerâs sentiment towards your brand is becoming easier and more accurate. And thatâs good news for marketers.
Of the five ELVIS metrics, sentiment is probably the most changeable, and the most temporary – but that doesnât make it any less important. Understanding how a customer is feeling about your brand (or how they were feeling the last time they engaged with you) should shape the tone and content you use next time you communicate with them.
For example, a customer whose sentiment is low (i.e. negative), is unlikely to respond well to an email or push message thatâs trying to sell to them. But they probably will appreciate a phone call from your customer service team, or a message telling them theyâve been awarded extra loyalty points to make up for a bad experience. Similarly, a customer with high (i.e. positive) sentiment is a great target for a message requesting that they post a product review or share some branded content.
None of these metrics on its own is enough to give you a complete and actionable picture of your customer relationships. But by bringing them together and overlaying key data, ELVIS gives you deep insight into your customer relationships, to optimise your loyalty marketing efforts and deliver a more relevant customer experience.
—————–
Interested in ELVIS Insight, or want to know more about Horizon? Get in touch.
