One metric to measure the link between loyalty and WoM.

2. Customer Loyalty is Widely Believed To Have Several Benefits One such benefit is – Loyal customers generate incremental revenue through WoM marketing What is Loyalty? How is it measured? How does it lead to WoM?

3. Loyalty, Measured by Repurchase has Two Dimensions Behavioral Attitudinal Low High Low High Attitude: Deliberate intent to re-purchase Behavior: Actual repurchase action

4. Price Shoppers are Opportunistic Buyers Treats products as substitutable Behavioral Attitudinal High High Low Low

5. Customers May Continue To Repurchase Despite Aversion Behavioral Attitudinal Low High Low High Bound by contract, high switching costs, lack of alternatives

6. Exogenous Factors Create Attitude-Behavior Gap Behavioral Attitudinal Low High Low High Tempted by low cost alternatives, price promotions

7. True Loyalty Means Customers’ Attitude Matched by Behavior Behavioral Attitudinal Low High Low High Has high perceived and realized value

8. WoM Can Occur Only if Customers Exhibit High Attitudinal Loyalty Behavioral Attitudinal Low High Low High Customers keep the brand in Consideration Set even if they don’t repurchase Most likely top of the mind brand, reinforced by frequent repurchase

9. But Attitudinal Loyalty Only Goes Halfway to WoM Loyalty WoM Marketing Inertia Apathy Inconvenience Attitudinal

10. Customers Must Follow Through With Actions Loyalty WoM Marketing Attitudinal Recommend Inertia Apathy Inconvenience

11. How Can We Measure the Length and Strength of the Loyalty-WoM Bridge?

12. In the next 30 days, how many times are you most likely to recommend our product? iTRM™ – iterative Total Recommendations Metric Copyright © 2010 Rags Srinivasan iTRM™ Computed as simple sum of responses or as a weighted metric specific to industry and/or brand. Higher the iTRM™ the better! -4 -3 -5 -1 0 -2 2 3 1 5 4

13. Questions? http://IterativePath.wordpress.com http:// twitter.com/pricingright