People crave human connections. They have an innate desire to connect with like-minded people and brands that align with their values. With so many choices available, building customer loyalty is critical if brands want to stay relevant.
While a lot of businesses tend to focus on transactional metrics such as retention, purchase behavior and incremental sales, there is also monumental benefit in looking at emotional components.
How to track customer loyalty effectively
To get the most out of your measurement plan, look at a combination of customers who act loyal (behavioral) and customers who feel loyal (emotional). The ideal overlap is customers who both act and feel loyal, but there isn't always a direct correlation between emotional and behavioral loyalty.
Here are five areas to measure customer loyalty. Note that each metric might have many others that roll up to one overarching KPI.
1. Engagement
Program interaction recognizes customers for every interaction (across any channel) they make with a brand.
- Understand how often your customer thinks about you. How long is the purchase window for your products? Is it something you buy daily? Weekly? Monthly? Yearly? Once every 10 years?
- Stay top of mind. If you sell a once-every-five-years product, customers likely start the search with you, meaning it’s your consumer to lose.
- Implement trackable ways for people to interact outside the purchase cycle and tie it back to your CLV measurements.
Related: Improve customer engagement with breakthrough touchpoints
2. Loyalty
While loyalty is an outcome of a great customer relationship, it’s something brands should track. Repeat purchase rates are a great metric to include here. They’re the percentage of customers you retain who come back to place another order. Think of it like this: “Once is chance, twice is coincidence, third time is a pattern.” When a customer chooses you several times, you can self-assess why.
- Is this customer looking at you because you’re positioning on price?
- If you’re a premium brand, are they having a positive experience each time leading them back to you? (Note: Transactional brands can also deliver amazing experiences.)
- What’s the timeline between purchases? Are they always choosing you or just buying a lot of products? Your brand’s sales cycle needs to be a consideration.
3. Value
Customer Lifetime Value (CLV) represents the total amount of money a customer will spend in your business or on your products during their lifetime. Admittedly tricky to calculate correctly, but math is on your side. And if you can’t calculate CLV, tracking value increases (and decreases) helps you decide when and where to insert promotions and offers that keep value high.
- Identify value you can track (purchases, repeat purchases)
- Pay attention to and track fluctuations in value
- Incorporate test and learns into your communications and promotions, like subject headings, messaging and offers, to influence value across your customer base
4. Influence
Customers are always willing to listen to their friends. Tracking influence—and metrics that identify influence—can grow your customer base.
- Track referrals to put a dollar value on influence
- Follow social media activity, order insight (purchases, combination of purchases, etc.) and campaign interactions and more to identify likelihood of a customer to promote your brand
- Use tracking information to create opportunities for customers to share their personal experiences about your brand on socials
5. Sentiment
In the past, people measured customer loyalty solely by customer behavior. A new understanding of customer loyalty and access to more insights means that today’s customer loyalty metrics include emotional connections as well. Some experts argue that even though emotional loyalty may be harder to measure, it’s necessary to build a true loyalty measurement equation.
- Uncover specific areas for improvement, track gaps in service and product, and identify where you are outperforming the competition
- Empower your field with data that lets them go above and beyond
- Provide customers with an experience that promotes satisfaction and encourages loyalty, then invite them to make referrals
- Use a survey to ask customers about an interaction or purchase with your brand (i.e., sliding scale [quantitative] or an open-text response [qualitative])
- Put measures in place for recovery and retention
Related: Empower customer loyalty throughout the entire journey with industry-leading technology
Measuring customer loyalty metrics leads to stronger program performance
The buyer’s journey is changing rapidly. You need real-time insights on your loyalty program performance to make informed decisions about budget allocation, future promotions and more. By tracking and measuring behavioral and emotional metrics, you can tap into customers’ motivations easier. This results in reduced marketing costs, increased profits and a more predictable revenue stream. It’s tough to beat that!
A true loyalty program should address every phase in the buyer’s journey, with not only different tactics by phase, but different tactics and journeys by customer type. Does your program check all the boxes of a successful loyalty program?