Building customer trustworthiness is one of the most important things to do when you are running a business. The reason being that loyal customers tend to bring in and refer more customers. Usually the frequenters convert the individuals interacting within their circles. From friends to family members, and acquaintances by recommending your company’s products or services once, becoming a dedicated consumer becomes easy. On the contrary, disloyal customers harm the company’s brand and reputation through negative reviews. Of course, a single damaging evaluation can turn hundreds of potential customers away from your brand. Here are some of the metrics you can use to measure customer loyalty and are as follows:
- Net Promoter Score (NPS)
It is recommendable to rely on Net Promoter Score to measure customer loyalty instead of traditional customer satisfaction surveys. This metric is good at gauging customer loyalty as it only asks one important question: “How likely are you to refer us to your friends and family?” This prevents the hassle of annoying the customer with many questions and helps the company know the satisfaction level of a customer. The question is answered on a scale of 1-10 which accurately tells the percentage of customers who are more likely to be loyal to the company.
- Customer loyalty index (CLI):
This metric is almost the same as NPS in functioning. However, the difference is that it has more than one question. The measure also touches on multiple and repeated purchases. It is derived from customer surveys and is also effective in measuring customer loyalty towards a company’s brand. Instead of recording the customer’s actual behavior, it records the individual’s intent for the future. This tool determines the intention scores of the customers. The estimate is then compared against the same reality over the lifetime of the customer. This helps the company build up a picture concerning the trustworthiness of the customer.
- Customer engagement score:
This metric assigns each customer a score based on each person’s activity and usage of the company’s services. It measures customer loyalty based on how the individuals are engaged with the brand. Engagement can be a reflection of customer’s enthusiasm for the company’s brand and in addition, customers get the idea that the company values their engagement. What drives higher customer engagement is a better functional experience such as efficiency, convenience, among others. It is effective in measuring loyalty.
- Customer Lifetime Value (CLV):
This metric can help your company understand the worth your customers by giving insight into the overall value of the same. Even though CLV may be different from customer loyalty, the two are closely related. One reason is that there is no way you can measure the lifetime value of the customer without measuring the loyalty of the same. CLV paints a picture of the estimated amount of money the customer is likely to bring in your company through purchases. By calculating that, your company also gets to measure the loyalty of that customer.
- Upsell ratio
When customers buy a single product from your company repeatedly, that is an indication that that individual is loyal to your company’s brand. When the same customer branches off and buys a new product from your company, then there is no doubt that that customer is loyal to your brand. This metric tracks the ratio of customers who have purchased more than a single product of the same brand divided by the customers who have only purchased one. The percentage of those who buy more than one product indicates the percentage of customers who are loyal to your company’s brand.
- Operational and Experience Data
Operational data (O-data) and experience data (X-data) are very useful tools that your business can use to propel its growth. Each tool is useful in its right but when used in tandem, the two can work magic for your business. O-data is the internal data of a company about its operations. With O-data, your company can understand several things including the customers your company has gained and the ones you have lost, sales figures, referrals among other things. This data can give your company a clue about customer experience.
X-data is external; it gives your company information concerning customer experience right from your consumers. This data is usually collected through surveys, emails, customers’ feedback, focus groups among other methods. The X-data reflects how your consumers perceive and feel about your services and products. The data can either be quantitative or qualitative. By using O-data and X-data metrics together, you can identify customers who are showing signs of loyalty and convert the data to actionable insights.
In conclusion, your business should focus more on improving its products and services. The efforts also involve continuously working on other strategies to build customer loyalty. While at it, your business must take time to frequently determine the magnitude of customer constancy. However, measuring customer loyalty is not quite easy given that loyalty is an emotion, but it is also not impossible. Fortunately, your business has several tools at its disposal to be used to effectively achieve this aim.