Customer Loyalty—How to measure and improve it?

Customer Loyalty

Customer loyalty is one of the biggest challenges facing many businesses. With the changing nature of customer behavior, it’s becoming increasingly difficult to satisfy your regular customers and ensure that they remain loyal. The challenge is to keep them coming back, to reactivate them or attract them if they’ve been dormant for a while, but how can you do this? How can you actually improve customer loyalty?

How to measure customer loyalty

Retention rate

The retention rate measures how many customers are returning to your business. It is calculated by dividing the number of returning customers by the total number of customers. For example, if you have 100 customers and 10 return, your retention rate is 10%.

Engagement rate

The engagement rate measures how many people interact with your brand. This could include visiting your website or reading your blog posts, following you on social media or subscribing to your email list, or even replying to texts in case you use a texting service for business. The engagement rate is calculated by dividing the number of engagements by total interactions (either users or transactions). For example, if you have 1 million page views and 10% of them click on an ad banner, then the engagement rate is 100,000 clicks out of 1 million page views — which equals 0.10%.

Brand advocacy

Brand advocacy is the most important indicator of customer loyalty, as it measures the willingness of customers to actively promote a brand. Brand advocacy is often measured using a simple survey question: “How likely are you to recommend a company to friends/family/colleagues?” The higher the score, the more likely a customer will recommend your company to others.

How to improve customer loyalty

Know your customer

The first and most important reason is that it will help you to build a better product or service. You will know what problems are important to them, what they need from your business, and what they like about your offerings. This information can be used to improve your product or service in ways that will delight customers and keep them coming back for more.

Another great reason for knowing your customers is that it will enable you to market more effectively. When you know who your customers are, what they want, and how they like to be communicated with, it becomes much easier to market to them in an effective manner. This can mean the difference between losing customers and gaining new ones.

Finally, knowing your customer enables you to make more money by providing them with opportunities for upselling or cross-selling additional products or services that they might need or want.

Provide something unique

Why should you provide something unique? Because the more unique your offerings, the more likely it is that customers will be willing to pay a premium for them. If you are looking for ways to improve customer loyalty, then consider offering something that no one else does or can do. This is where you can stand out from your competition and build long-lasting relationships with customers who value what you offer.

Create a rewards program

There are many reasons why businesses should have a rewards program in place; these include:

  • It helps you stand out from competitors by offering something extra for customers who choose your brand over theirs. It makes it easy for customers to remember your brand and get more information about it (especially those who may not be active on social media).
  • It also helps build trust between the company and its customers by showing that they’re appreciated enough to receive special treatment or benefits not available elsewhere. Receiving rewards gives users a sense of accomplishment when they reach goals, which can encourage them to keep using the system or even share it with friends and family members who might find it useful as well.

Ask for feedback often

It’s easy to forget about customer satisfaction if you don’t check in on it often. Asking for feedback helps remind you that good service matters — even if it’s not something that comes naturally to everyone on your team. It also shows your customers that you care about what they think and want to know how they feel about their experience with your company.

Put a face to the company name

When someone knows who they’re dealing with, they’re more likely to trust your brand and stay loyal, especially in the case of an online business like an eCommerce store or an online bookkeeping service.

Measuring customer loyalty is one thing. Improving it is another. This can’t be achieved by simply employing a few tricks but rather by understanding the psychology of your customers and then applying this to your brand experience.