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How to Measure and Improve B2B Customer Loyalty

by Bob Murphy  |  
July 25, 2016
  |  4,613 views

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.

Measure loyalty


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:

  1. 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.
  2. 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.
  3. 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.

Increase—and make us of—loyalty


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Bob Murphy is a managing partner at Movéo, which partners with category-leading brands to craft strategies and build tactics that engage audiences and drive business growth. Bob manages the Data & Insights group and the Strategy & Planning team at Movéo.

LinkedIn: Bob Murphy

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Comments

  • by neil mahoney Mon Jul 25, 2016 via web

    Prompt response to needs & requests is one of the best ways. Occasional calls by mgmt. also helps keep customers loyal.

  • by Frans van het Schip, ProPositions Brand Management Mon Jul 25, 2016 via web

    I strongly recommend studying the work of the Ehrenberg-Bass Institute and Professor Byron Sharp - @ProfByron - How Brands Grow Part 1 and 2 . They provide loads of empirical evidence that loyalty programs don't work for growing any business. Loyalty programs essentially reward existing buyers for what they already do. So, from a cost perspective, a loyalty program needs to recruit as few customers as possible who are already loyal to the brand. But the contrary is true: loyalty programs are good at recruiting existing buyers of a brand and lousy at recruiting heavy category buyers who are not current buyers of the brand.

  • by Adam Fri Aug 19, 2016 via web

    NPS is an odd metric that doesn't fit all businesses (some would be better served by a customer satisfaction metric)... And either way, finding out the reasons for low scores are as, if not more important than the metric used. But if you are going to talk about NPS, the scale is actually 0-10, not 1-10 as the article states. Detractors are 0-6 rather than 1-6...

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