Loyalty strategy development using applied member‐cohort segmentation

Marketers in service industries face challenges similar to those in packaged and durable goods. However, the approach to these challenges is often quite different. This case study examines how a health insurance company used common market segmentation techniques to better understand member needs to improve customer loyalty and increase member retention. The author describes a new paradigm for considering customer loyalty in service industries. A two‐stage segmentation approach identified four key member cohorts for loyalty intervention. Primary research then uncovered three themes among these members and cohort‐specific barriers to achieving loyal relationships. Broad representation on the Customer Loyalty Steering Committee facilitated disseminating results and developing shared learning among organizational units. Planning and implementation efforts using this knowledge were widespread. A comprehensive strategic framework was developed to assess new enhanced services and existing programs against member needs.