Byron Sharp wrote a blog post titled What’s wrong with loyalty ladders?
« The ratios of non-buyers, to light buyers, to medium, to heavy, are perfectly predictable (by the NBD-Dirichlet). So they are set. If a brand gains in share/sales, the ratios all move in a predictable way. »
« All loyalty ladders do is show these ratios – but they imply that you can change the ratios through particular strategies. This is wrong, they will only change if you increase or decrease in market share. »
« Loyalty ladders are a waste of money spent on market research and reporting. Most of the tiny changes and differences they report are sampling (and other) error. »
« And really importantly, loyalty ladders distract marketers from the real issue which is how to grow penetration (reach all sorts of category buyers). »
Byron Sharp is the author of How Brands Grow.
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