Every day, consumers make decisions about where to spend their time, money, and efforts. When a customer genuinely prefers to spend their time, money, and efforts at your business rather than a similar business, that is customer loyalty – and it really affects your business’s longevity and success.
Consider the following benefits that loyal customers bring to your business:
- Loyal customers cost less to keep around. It costs seven times as much to attract a new customer than to keep an existing one. Therefore, it is more cost-effective to retain customers than to acquire new ones.
- Loyal customers tend to be less inclined to switch and are less price sensitive. This can lead to stable cash flow and increased profits.
- Loyal customers are generally less expensive to service. They know what to expect and are familiar with what you offer. They require less hand-holding which means increased savings for you.
Knowing how to measure customer loyalty will not only give you a snapshot of how happy your customers are, but it is also a great tool for making comparisons, goals, and improvements in your business.
Here are three effective methods for measuring customer loyalty to get you started.
Calculate Your Repeat Customer Rate
Your repeat customer rate is the percentage of your customer base that has made more than one purchase from you. While repeat purchasing doesn’t fully equate to loyalty, it is a pretty strong indicator of customer satisfaction. After one purchase, a customer has a 27% chance of returning to your store. And if you can get that customer to come back and make a second and third purchase, they have a 54% chance of making another purchase.
As you can see, getting a repeat customer makes it easier to get a loyal customer. Therefore, one way to increase the loyalty of your business is to entice a customer to come back at least twice. You can easily do this and improve your repeat customer rate with a rewards program that encourages customers to make a habit of visiting your business.
Evaluate Your Influence on Customers
Do have a good conversion rate when it comes to getting your customers to buy new products, subscribe to your newsletter, try new classes, etc.? This is your influence: the degree to which a customer can be influenced by your business in a way that positively impacts your business.
You can increase your influence among customers by investing some time in building a relationship with them. For starters, gather some information on what your customers are looking to gain from their relationship with your business. If you’re studio or a club, speak with your members about their fitness or mental well-being goals. If you’re a retail shop, actively seek out feedback from your most loyal customers and use it in a meaningful way.
Additionally, make an effort to connect with your customers online. Consider running an online reputation audit to make sure you’re showing off your best business self. It will help you check to see if you’re doing important tasks like righting any wrongs mentioned in the reviews of your page. Don’t worry if you’re not online; you can grow your online presence in 30 minutes a week or less. Whether you’re engaging in-person or online, just keep in mind that increasing influence is an opportunity to show customers that your business is listening to them and working to create a better customer experience.
Take a Look at Your Customer Advocacy
Advocacy is the extent to which a customer is willing to actively promote your business. Consequently, measuring advocacy is important for retention because when a customer is a cheerleader for or is satisfied with your business, they are more likely to remain with you and bring you new prospects – hence loyalty.
You should have some tools in place to measure advocacy. If you have a rewards program, you’re probably awarding points to your customers that check in to your business on Facebook or Twitter, or those that are contributing Facebook photos to one of your social campaigns. Search your business’s name on Facebook and Twitter to see what people are saying about you.
Your rewards program may also show you who your top advocates are. You can use this information in creative ways such as giving customer appreciation shout outs.
Another platform you can use to measure advocacy is an online survey. Asking questions like “How likely are you to recommend…?”, “How likely are you to purchase other products from us?” and ” How satisfied are you with…?” can help you gauge where you stand with customers.
Get a picture of advocacy at your business and use it to make improvements or keep doing the right things to keep customers happy.