How to measure online loyalty

There isn’t a specific metric you can use to measure loyalty. For this reason, many people struggle to see if their customers are loyal or if their ecommerce loyalty program is effective.

However, combining other metrics together will give you a broad overview of the state of your customer’s loyalty.

This post will look into some of the metrics you should consider if you want an overarching view of how loyal your customers are. These are:

  • CLTV (customer lifetime value)
  • Net promotor score
  • Advocacy

First of all, consider your cash flow. Loyal customers are those who return again and again to spend their money with you.

For most, this data is enough to decipher whether or not customers are loyal.

Considering other factors such as engagement, reviews and customer service will give you a different view into how loyal your customers are.

But first, why would you want to measure loyalty?

If you’re running a loyalty program, then you will want to measure loyalty to see if it’s cost effective.

A further reason why it’s important to measure loyalty is that it helps you understand your customers. From looking closely at loyalty metrics, you are able to know which customers give you the most value. You can also use it as a way to identify which customers need more of your attention.

 

CLTV

For ecommerce, CLTV (customer lifetime value) is the predicted value of a customer. Often customer lifetime value is attributed to a customer to work out how much they’re worth in money to your company.

As it’s only a prediction, it’s not completely accurate. However, it does provide you with an indication of how loyal your customers are.

A high customer lifetime value indicates you have loyal customers. However, this isn’t the only metric you should consider to get a full overview of the state of your customers’ loyalty. See the following:

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Net promotor score

Net promotor score is your customers answer to a question:  How likely is it that you would recommend your company or product to a friend or colleague?

This question is answered using a scale going from 0-10.

Anyone who answers with 9 or 10 are noted down as promoters. These are people who are loyal to your brand, will refer you to others and keep buying from you.

Those who answer 7 or 8 are known as satisfiedThese customers are at risk of leaving you to a competition who is offering similar products or prices.

Finally, those who give a score of 0-6 are known as detractorsThese are customers who are unhappy with your product or service and would not recommend you to their friend.

To work out the final score, you subtract the % of detractors from the % of promoters and this will give your score.

 

Advocacy

Brand advocates are enthusiastic customers businesses can leverage as a source of referrals, traffic, and marketing.

Using social media to see who your brand advocates are, is a great way to see how loyal your customers are. If you have lots of people talking about your brand in a positive way, you can use this to your advantage.

When you notice a customer is an advocate, why not send them a gift? Use social media to find out what they want and provide this to them.

You could even write a simple note such as:

“Hey, [customer],

We’ve noticed you mentioned you needed XYZ, so we decided to send it to you. Thank-you for always supporting our company.”

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