ELoyalty Translates Customers into Dollars

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Customer loyalty consulting firm eLoyalty, Lake Forest, IL, recently unveiled a new product that measures how customer retention initiatives affect a company's bottom line.


The technology, called Loyalty Value Added Analyzer, allows companies to quantify the impact of eLoyalty's customer retention programs, as well as those applied inhouse.


"It's a metric that allows you to look at your customer segments to determine how profitable they are and then can be utilized to look at your portfolio of projects to determine how much incremental value those projects add to your specific customer segments," said Paul Markushka, vice president at eLoyalty and architect of the product.


LVA Analyzer allows companies to see how deferring a decision on a project can affect a relationship with a customer.


For example, several customers of an insurance company contacted the company's call center with questions about their life insurance policies. Many of those calls were not routed to the appropriate customer service representatives, and the customers were transferred into voice mail. ELoyalty set up a project that offered scheduled callbacks to those customers.


"What we were able to measure [using LVA Analyzer] before and after the implementation of our solution was the number of customers that were being lost prior to the implementation and then how many customers [they] were able to obtain," Markushka said. "We turned that into a revenue number."


As a result, eLoyalty found that the project could add $10 in profitability per customer, said Markushka. So, if the customer was worth $50 before the implementation of the callbacks, he would be worth $60 after its execution.


The product allows companies to track how much money they lose by holding off on implementing customer relationship initiatives for six, 12 or 18 months.


"If you wait six months, will you actually still get to that $60 in profit per customer? No, because a lot of your customers are upset because their calls aren't being returned, so they're moving away to other insurance companies," Markushka said. He added that over time, the customer's value could drop to $45.


Three clients have signed on to use the Analyzer, but eLoyalty would not name the companies. The firms represent the financial services and energy industries. ELoyalty also will promote the product to companies in the insurance and hi-tech industries.


ELoyalty was a division of 5-year-old Technology Solutions Corp. before it became an independent entity earlier this year. ELoyalty has 100 clients worldwide and expects to generate approximately $200 million this year, with a 40 percent to 50 percent growth rate.


While eLoyalty had relationships with catalogers during its former parent company's six years of business, eLoyalty has not actively sought to sign on catalogers to use LVA Analyzer.


"But for those who are very much in the transition from a call center-based approach to a mixed call center- and Web-based approach, this is a perfect technique to apply so that they can make the right decisions about the solutions that they should try to deploy," said Mark Turchan, eLoyalty's senior vice president of loyalty strategy.
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