How to Measure Customer Loyalty

This is actually a pretty straightforward thing. The problem is that we all have a tendency to try to associate added complexity to concepts like customer loyalty when it comes time to evaluate the state of it all. And, well, there’s a lot to be said for seeking higher order to things, in a case like this, though, you’re just needlessly spinning your wheels. Hey, I catch myself doing it all the time too.

Well, it’s a good thing measuring customer loyalty turns out to be such a simple thing, because it’s an important analytic to have, no matter what kind of business you are or where you operate.

Why Loyalty Counts:

Subscription services seem the most obvious place for loyalty to count, and well, yeah you could say that’s true. But, that’s all you can really say. You see, everyone needs to maintain and strive for loyalty from customers, for a few reasons.

The biggest thing to keep in mind, and this is Business 101 here, is that customer acquisition is expensive, where customer maintenance is not. Ergo, a return customer is one that required less cumulative energy from you to have.

It’s easy to not see this directly. You’re putting out a finite amount of effort to acquire customers, and it’s likely a fairly predictable and controlled rate. Marketing, sales calls, pre-purchase customer service inquiries, all sorts of other energy you have to bleed out.

Every new customer this effectively hooks is in direct ratio of value to that energy put out, when deciding the gain of things. However, a customer hooked by a previous release of this energy is not in ratio to it this time, it is mostly net gain.

So, even if you’re consumer goods or consumer per use services, return customers are valuable and necessary.

Measuring It:

It’s actually easy to measure this in a service industry, because you have account periods, initial account creation records, and last renewal dates all on hand. Most CRM suites can measure loyalty off this data automatically for you, and generate reports.

Merchandise and consumer goods are a little trickier most of the time, and here’s where people get frustrated. See, the only exception are cases where customers order from businesses directly, or via a common mercantile platform (such as EBay, Amazon or others of that ilk). Those have explicit customer records, and therefore can tally in mot software just as easily as a service industry.

But how does a company that just distributes in mass to general over the counter vendors measure loyalty? Someone like Coca Cola or RCA?

Well, the answer used to be “very inaccurately and tediously”, through surveys, polls and a lengthy and convoluted set of analyses on fiscal and regional figures. Oh boy, it was heck.

Now, the digital age has made that easier to do, too. It’s still a bit convoluted, but at least the computer suffers the convolution, not the users! See, all you need are BI tools that can do deep net tracking, and run in tandem with your CRM and financial software. This is not hard to make happen.

From there, most of them can measure customer loyalty just by configuring mention tracking and patterning to spot positive and negative opinion over social networks, rankings over search engines, and the like. Along with that distribution and financial data from the other side, a good portrait of how many repeat consumers are present becomes evident in the consistent need for it in small sections of area.

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Amy Clark is the Lead Author & Editor of IWantItNow Blog. Amy established the Customer Engagement blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to customer service, support and engagement.
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