Loyal customers can account for up to 84% of total site visits and spend 10 times more with your business than new ones. What's more, acquiring new customers can cost up to five times more than generating new business from someone with whom you've already worked.
With those statistics in mind, are you doing enough to both inspire loyalty among your customers and harness that loyalty?
By ensuring that your marketing encourages repeat business, brand loyalty, and customer referrals, you're giving your business the kind of boost that can't come from any other source. But how do you go about instilling true loyalty in your customer base and empowering your loyal customers to do more for your brand?
This article explores how to measure and increase customer loyalty. You'll learn how to inspire customers to interact more meaningfully with your brand and help you gain new leads.
What does customer loyalty look like? It's a difficult metric to measure, simply because loyalty can exhibit itself in so many ways. However, you can use three metrics to measure customer loyalty:
- Repeat customer rate (RCR): How many of your customers buy from you more than once? This metric tracks how long customers continue to patronize your business after the first sale. Establish RCR as a baseline metric and track it in your customer relationship management (CRM) system.
Use RCR as a baseline by which to judge the success of your loyalty programs and initiatives, and track it on a monthly basis to determine what percentage of customers are coming back to you as your loyalty efforts evolve.
- Customer lifetime value (CLV): This metric measures the total profit contributed by each of your customers during the entire duration of their time purchasing from your company. Use data in your CRM on annual revenue, purchase frequency, and purchase trends to predict the CLV for each of your customers.
By tracking this metric, you can determine your highest-value customers and understand what practices are hindering loyalty among your lowest-value customers.
- Net Promoter Score* (NPS): One of the most direct ways to measure customer loyalty, NPS elucidates how likely your customers are to recommend you to a friend or colleague. Because of its ability to simplify our understanding of the often complex relationships between B2B companies and customers, this score is an essential tool for any marketer who wants to better understand customer loyalty.
To determine NPS, ask customers to rate how likely they are to recommend you on a scale of 1 to 10. Those who select either a 9 or a 10 are your key promoters—the high-value customers who are most likely to evangelize for your brand. Take the percentage of customers who are promoters and subtract those who are "detractors" (they rate you 6 or below) to gain an understanding of the ratio of promoters versus detractors.
Any one of those three metrics will give you valuable data on how loyal and engaged your customers are; together, they provide a holistic view of your prospects for harnessing customer loyalty to your benefit.
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