Loyalty isn’t exactly something you can hold up to a yardstick. But although it’s abstract, we all know that loyalty is valuable – and it’s a good thing to have.
Regardless of whether you have good customer loyalty or not, it’s important to know where you stand so that you can use loyalty to your advantage or improve it if it’s an area of struggle. But how can you measure loyalty? We’re glad you asked. We don’t have a loyalty yardstick for you, but we do have three essential metrics you should keep in mind as you measure loyalty for your business.
1. Net Promoter Score
This is one of the most important metrics to be aware of when measuring loyalty. To find your Net Promoter Score, or NPS, you’ll need to ask your customers: “How likely would you be to recommend our business to a friend or colleague?” based on a scale from 1 to 10. Respondents who answer with a 9 or 10 are your promoters. They will almost certainly be repeat customers when given the chance, and they’ll provide positive word-of-mouth that is great for any brand. To find out what your business’s NPS should be, look at industry benchmarks.
To get even information from your NPS, follow up the first question on your survey with a question to determine why the respondent feels the way they do. This will give you invaluable information to improve your customer loyalty.
2. Churn Rate
If you want to increase your loyalty, you’ll have to start by decreasing your churn rate. This is the rate at which your customers abandon their relationship with your business during a given period of time. Every business has customer churn, but the best ones have as little as possible.
To measure your churn rate, you’ll need to do some research into your customers’ buying behavior to determine how frequently they purchase from you, and the standard deviation of purchase frequency. Together, these metrics can help you determine a churn rate that will accurately reflect your customer loyalty.
3. Repeat Purchases
This is fairly straightforward, but that doesn’t mean it’s not important. What percentage of your customers buy from you more than once? Again, check industry benchmarks and try to stay above the averages. Loyalty means that your customers keep coming back for more.
So, there you have it: three metrics to help you measure your customer loyalty. Want to learn more about loyalty metrics? Download our free whitepaper, The Three Key Indicators of Loyalty Program ROI. Want to increase your loyalty? A loyalty program like LoyalTap is a great way to do just that. Get in touch with us to learn more, or visit us at LoyalTap.com.