We are pleased to have a guest blogger for this post, Rodney Laws. Rodney is an eCommerce expert with over a decade of experience in building online businesses. Check out his reviews on EcommercePlatforms.io and you’ll find practical tips that you can use to build the best online store for your business. Connect with him on Twitter @EcomPlatformsior. Read on to learn why it’s so important to track customer loyalty for your brand, and how you can start doing it today.
Customer loyalty is the bedrock upon which successful brands are built. Loyal customers are repeat customers, which means sustained sales that spur your business as it grows.
But it’s not enough to simply incite loyalty from your customers. You need to track and measure it to finesse your customer engagement and retention strategy.
There is a myriad of reasons why tracking customer loyalty is so important for growing brands. Here are just a few that you need to know.
For starters, it’s cost-effective. it costs more to source a new customer than to keep an existing one.
New conversions often rely on special offers or promotions — these cost money. You also incur the costs of launching new campaigns and paying for social ads, all costly endeavors.
Personalizing your strategy so that it speaks to your unique customers is a powerful way to drive repeat sales again and again.
A personalized strategy boosts sales by addressing customers as individuals, rather than as numbers. Offering products tailored to their unique interests, sending them discount codes on their birthday, and storing payment information for smoother checkout all create a positive customer experience that encourages shoppers to become repeat customers.
And tracking customer loyalty means knowing how to keep them hooked. Personalize your strategy and speak to your customers in a way that drives repeat sales again and again.
It retains that important loyal minority
You’ve heard of the Pareto principle before. It applies to a range of situations outside of marketing, but it essentially boils down to this: 80% of events are caused by 20% of actions.
In this case, the loyal 20% of your customers are responsible for around 80% of your sales. Retaining these customers is, therefore, a crucial step towards eCommerce success.
By tracking customer loyalty and determining why these customers are so loyal to your brand, you can increase that 20% share even higher.
It values customers as people, not numbers
It’s easy to get lost in the numbers when seeking to boost your store’s sales.
But when you look at customers in this way, you reduce them to numbers rather than individuals. It’s important to view customers as people with emotions, rather than flat, predictable figures.
Tracking loyalty combines the best of both worlds. It puts a numerical value to an emotion so you can enhance your strategy by connecting with customers on a human level.
There are countless ways to measure customer loyalty. Here are a few of the most essential and easily-accessible ways you should know.
Net Promoter Score (NPS)
Perhaps the most common way for businesses to measure and track customer loyalty is through a Net Promoter Score (NPS).
This is an assessment that indicates how likely your customers are to refer you to their friends, generally on a score of 1-10. NPS surveys are sent out at random, rather than immediately after purchase. This provides a more general overview of how customers perceive your brand.
A Net Promoter Score categorizes your customers into three different groups:
- Detractors: customers who provide a score of less than 6 are deemed not to recommend you to others — quite the opposite, they might even complain about you. They are also not likely to shop with you.
- Passives: customers who score either 7 or 8 are, while happy with their experience of your brand, not likely to recommend you to their friends or family. They are often fair-weather customers, shopping elsewhere if a cheaper deal comes up.
- Promoters: finally, these are the customers who rate you highest, either 9 or 10. They rate you highly, recommend you willingly, and will shop with you time and again.
Your NPS is found by subtracting your detractor score from your promoter score. Sourcing your brand’s NPS is best done through tools. Net Promoter Score apps like Qualtrics make it easy to collate customer responses and calculate your NPS to help you pivot your customer strategy.
Customer Loyalty Index (CLI)
In a similar vein to NPS is the Customer Loyalty Index (CLI). This is a standardized measurement of customer loyalty based on surveys. While it is similar to NPS, the CLI survey includes a few more questions, including a few that span multiple or repeat purchases.
Each question in the survey is scored from 1-6, with the final score indicative of a customer’s future intentions to shop with your brand. This is slightly disadvantageous because it quantifies intent rather than behavior. However, as the CLI spans a wide range of loyalty values, it’s still a worthwhile way of measuring customer loyalty.
You probably already use one or two customer loyalty apps for your eCommerce store. Reward schemes, VIP programs, referrals — these are just a few of the ways tech can help you boost customer loyalty for your brand.
But beyond boosting customer loyalty, these tools can also help you track it too. Most decent online store providers offer an array of customer loyalty tools which, alongside their loyalty programs, also offers a means of measuring their efficacy.
As an example, Shopify has a wealth of comprehensive yet user-friendly tools on offer. Smile.io is one option that has a sophisticated analytics feature. Your customer loyalty strategy’s success is trackable in real-time, a feature made all the more rewarding by the actionable insights provided by Smile.
Smile’s analytics dashboard offers a comprehensive overview of tracked metrics. These include:
- Value generated: the total revenue of all your active programs. This spans coupon codes, referral links, repeat customer sales, and so on.
- Program members: the total number of customers participating in your program(s). This indicates your program’s rewards and how attractive it is to new members.
- Rewards issued: the total number of rewards given that are not based on points. For instance, free products or discount codes. As these are more tangible than points, they indicate whether these rewards are actually attractive to customers.
These metrics can also be drilled down into more specific time periods; for instance, during the last 30 days. This gives you a quick overview of your more recent campaign’s success.
Your customer loyalty tool’s analytics likely measures both NPS and CLI as standard. But many tools also provide app-specific measurements that you can use to fine-tune your strategy. Check out this comprehensive customer loyalty tool list to find a suitable app for your online store.
Customer loyalty is as important to your growing business as your product, marketing, values, and so on. Consequently, it’s worth spending the time tracking and measuring customer loyalty to ensure you’re getting the most from it. Follow the tips above and fine-tune your customer loyalty strategy in 2019. Create happy, loyal customers and the conversions will surely follow.