What Metrics Are Critical to Measuring Customer Loyalty?

What Metrics Are Critical to Measuring Customer Loyalty?

Grace Alexander

MarTech Blogger | April 13, 2022

The stakes are high when it comes to identifying the right customer loyalty metrics. These measures are essential for benchmarking your customer relationships and measuring the impact of your retention strategies. To get the most out of a customer loyalty program, you need a reliable way to measure the effort’s impact.

There are many ways to measure customer loyalty, but not all of them provide equal value. If you want to truly understand your brand’s relationship with customers, it’s important to progress beyond superficial “vanity metrics” and drill down on more relevant, revealing key performance indicators.

As a definitive Bain & Company survey on customer retention explained, companies almost never recoup their acquisition costs on a customer’s first purchase. That means you need to understand how retention works to achieve optimal value. Tracking the most important metrics is key to that understanding.

Measuring customer loyalty: The 6 metrics that count

When you’re setting up a dashboard to measure customer loyalty and retention, you don’t need to include dozens of metrics. As long as you focus on meaningful behavioral factors that truly reflect customers’ interests, intentions and engagement, you’re on the right path.

With the following six impactful metric types, you can get a clear view of your campaigns’ performance and the resulting return on investment (ROI):

1. Net Promoter Score

Net Promoter Score (NPS) uses the customer experience to predict your company’s potential for growth. It is based on rating your customers from 1-10 depending on how likely they are to recommend your company to friends. The scale provides clarity on your future prospects by dividing your current customer base into detractors (not likely to recommend), passives (not enthusiastic but satisfied) and promoters (brand advocates).

2. Upsell ratio

In the same vein as your company’s repurchase ratio, your upsell ratio is a valuable descriptor of your customers’ relationship with the brand. If people are willing to spend more money to engage with your products and services on a deeper level, this is good news for your customer experience. If you’re only selling base-level items, it’s time to consider new incentives.

3. Customer lifetime value

Getting maximum value out of each customer relationship is a core objective of retention and loyalty marketing strategies. Your dashboard should therefore include a clear measurement of how much return on investment each individual is providing. These calculations can provide useful intelligence on the relative success of outreach efforts.

4. Repurchase ratio

Getting someone to buy from you once is a triumph of marketing. Twice is the start of loyalty and real customer lifetime value. Considering the fact that a single purchase will likely not recoup acquisition costs, you need to pay close attention to what percentage of your clients buy again. A low repurchase ratio may be a clear sign of a weak customer experience.

5. Customer Loyalty Index

Customer loyalty index is a score used across the marketing space. It combines several of the other scores, such as NPS, repurchase intent and upsell intent to create a unified view of loyalty. A customer who is willing to spend more on your products, buy multiple times and refer others is a valuable asset, so it pays to directly measure how close consumers are to this ideal.

6. Customer Engagement Score

A customer engagement score (CES) is a measurement of the types of interactions your audience members have with your company. If people are actually using your products, communicating with your brand or engaging with your mobile app experience, that raises their CES. It can be valuable to understand which of your outreach efforts are convincing people to engage further and which have a more shallow impact.

With a reliable tracking method for these six metrics, you can stay aware of fluctuations in customer loyalty. That, in turn, will help you shape your outreach and retention tactics for years to come.

Mistakes brands make with customer loyalty and retention

Not every company maximizes ROI with an adaptive, data-driven customer loyalty and retention strategy. Some businesses end up going halfway in these attempts, launching programs that seem effective but are slightly misaligned. What are some of the defining features of these non-optimized attempts?

A lack of relevant rewards: When the MIT Sloan Management Review laid out important concepts of rewards programs decades ago, it established the variables customers use to judge the value of rewards: How valuable do the offerings seem? How many choices are on offer? How easy will it be to earn those benefits? Is the reward program user-friendly? Failing to consider these issues could lead to weak customer benefits.
Limited channel options: Companies that don’t make their customer retention and loyalty programs available on users’ platforms of choice may quickly lose audience attention. Lack of a mobile application interface may be especially devastating today. What’s worse, brands that fail to track effective metrics may never realize if they are missing customers’ preferred platforms.
Focus on the most loyal: Customer loyalty and retention programs shouldn’t be limited just to customers who are already committed to a brand. Businesses that neglect to open their rewards programs to new and recent customers may miss out on opportunities to collect and use data. Processing data on these shoppers can create fruitful new relationships.

Good dashboards help businesses avoid these pitfalls and more by sending clear signals about which efforts are having a positive effect on ROI — and which aren’t working.

Lifestyle marketing for an emotional connection with customers

While modern customer retention strategies are driven by data, they aren’t cold or robotic. In fact, the end result of these programs should be to create a kind of loyalty Harvard Business Review calls “emotional and irrational“.

People who have committed to such customer relationships don’t just keep redeeming rewards because it makes economic sense. Rather, they are happy to keep engaging with the brand because they feel like part of a club. The experience of interacting with the brand and their fellow customers feels good, and the incentive to stay reaches beyond their wallets.

Do you know if your brand is creating this bond? To understand where you are on the path to loyalty, you need a comprehensive dashboard that tracks the right metrics. This is what you get as part of the Perx Loyalty and Engagement Platform. Request a demo to see how this technology can help you.

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Feasting on a long-lasting connection with your customers

Sundeep Keramalu

Director, Marketing Content | January 27, 2022

According to Oxford University researchers, a tiger’s brain is sixteen percent larger than a lion’s. As a result, Tiger is now widely believed to be the jungle king, contrary to what we were taught in school.

Just as people have traditionally believed that the lion was the king of the jungle, brands have always assumed that customer acquisition was paramount, and that customer retention was irrelevant. The reality, however, has been quite the opposite.

Businesses in the United States lose $136.8 billion annually due to poor customer retention.

Customer retention isn’t hard to achieve; it’s just that brands rarely put up the effort to hit hard where it counts.

When you don’t prioritize customer retention, you’re a sitting duck waiting to get devoured by your competition, who, by the way, has been listening to the sounds of the jungle and is ready to attack when you’re least expecting it.

Have a tiger in your tank.

Customer loyalty initiatives that delighted Baby Boomers and Generation X are not enough to excite the brands’ generations. Today’s loyalty programs perform better when tailored based on previous transactions and customer data. Sixty-four percent of customers expect personalized customer experiences based on previous transactions.

That is precisely what Perx Platform enables you to achieve. To begin, it detects the specific customer behaviors that contribute to your revenue. Second, it finds the incentives that will motivate your customers to take action. Third, it transforms your static digital efforts into dynamic, interactive, data-driven experiences. Finally, gamified rewards make customers feel good about what they do right away.

Don’t have a tiger by the tail.

Companies are frequently attracted to build software in-house to address complicated business challenges. However, while cost, control, connectivity, and maintenance are all reasons why businesses choose to develop software in-house, this is not always the prudent course of action. According to Gallup, one out of every six IT projects had a cost overrun of 200 percent and a schedule overrun of about 70 percent.

Perx is aware of the issue. That is why its industry-leading approaches such as Continuous Integration & Continuous Delivery (CI/CD), automation testing, and dockerization have become industry standards in the SaaS arena. At Perx, we take innovation and delivery to the next level by setting up our technologies and teams and rapid development procedures. We take pleasure in co-innovating to solve difficulties for our partners and clients in a matter of weeks.

When in doubt, ride a tiger.

Customers are more likely to leave if you take a reactive rather than proactive strategy. Find out what your lost customers are complaining about, and modify your product, pricing, or positioning to address their concerns. Analyze the trend if many people leave at a given moment. Collect feedback, centralize it, and figure out why most of them are going.

Fifty percent of millennials said they dropped out of a loyalty program because the rewards took too long to accumulate. In a fast-changing digital economy, traditional static loyalty and rewards programs are no longer effective. They are expensive to maintain and have become a liability for companies worldwide, negatively impacting profitability.

Customers today have a lot of expectations. Perx believes that how businesses interact with consumers and ecosystem partners needs to be rethought as their behavior constantly changes. Perx’s LMP is built to help brands move from being short-term and transactional to delivering meaningful relationships to millions of customers and partners worldwide.

If you want to be the new king, don’t just roar, roar to conquer.

70% of brands having a loyalty program do not allow customers to choose their favorite reward.

When you reward a customer, you are appealing to their emotional side. By doing so, you begin the process of developing a bond. As time goes on, they’ll regard you as more than just a product! As a result, it increases customer loyalty, encouraging repeat purchases that increase your revenue. This means you have to give them what matters to them and not what matters to you.

The majority of loyalty programs have the same goal: to keep consumers, increase customer lifetime value, and demonstrate appreciation. The customer’s last-mile journey is crucial to any engagement strategy. Finally, the platform extends this last mile by engaging customers in dynamic, gamified, and incentive-driven engagements that encourage them to do the actions and transactions they were truly aiming for. Additionally, Perx has established the Rewards Marketplace, which features an extensive curated range of retailer rewards that are linked with the digital consumer’s lives. Brands can respond to the quick gratification trend by rewarding customers for their behaviors through customized lifestyle rewards in only three simple clicks. Furthermore, organizations that want to launch their own in-app mobile commerce store and create a new revenue stream can do it without making significant investments or allocating essential resources.

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4 Ways to Leverage Customer Loyalty Rewards Programs During the Annual Post-Holiday Sales Slump

4 Ways to Leverage Customer Loyalty Rewards Programs During the Annual Post-Holiday Sales Slump

Grace Alexander

MarTech Blogger | January 19, 2022

The holidays are upon us, but the joy and excitement is dimmed a little for retailers, who know that after the high comes the low of the post-holiday sales slump.

While estimated holiday retail shopping by EOY 2021 is $1.147 trillion, it’s all too easy for brands to lose sight of the importance of customer experience once the holiday season has come and gone. Customer loyalty programs are perfect for boosting revenues in January and beyond, but you have to take the right approach and understand your customers psychologically.

Post-Holiday Spending Guilt Is Real – Exploit It!

Traditionally, retail spending takes a dive after Christmas sales as people see credit card bills coming due and promise to be more financially responsible. So they tighten their belts, resolve to save money, and feel good about purchasing through your loyalty program.

Some retailers may find it difficult to launch new campaigns in January. Once the holiday season is over, all of that large marketing money spent on attracting and maintaining clients to boost sales in November and December will be gone. So what will give you the best bang for your marketing buck? Focusing on your most loyal customers, of course.

4 Ways to Keep Customer Loyalty On Track in 2022

Stay connected with your customers

Use your customer loyalty program’s capabilities to keep customers engaged and active through carefully curated touchpoints and opportunities. Connect across different channels (in-app messaging, email) to keep the interest alive.

A study of 46,000 shoppers showed that customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one channel. So by spreading your net wide, you can increase brand awareness and stickiness and customer retention during a time of year that typically sees a slowdown.

Support good spending habits

Use messaging that connects smart spending with saving — which customers can do if they are part of your loyalty rewards program! Around 95% of customers say trusting a company increases their loyalty, and 91% say their trust in a company makes them more likely to buy more frequently.

If your customers trust you and tell them you will help them spend smarter, they will believe you. So focus on messaging that reiterates how much they will save by staying active in your rewards program and keep this message consistent across all platforms and campaigns.

Tap into those New Year’s resolutions

If your brand supports common resolutions, leverage that in your customer rewards program by providing actions that customers can take that make them feel they are contributing towards that goal and rewards that also help support their mission. Consider after-Christmas holiday sales that focus on products that hit typical pain points, like health, fitness, and fiscal responsibility.

The failure rate for New Year’s resolutions is about 80%, and most lose their resolve by mid-February. Offering to help customers keep their resolutions can be a way to increase brand loyalty and participation in your rewards program. However, don’t stop there.

While you should make sure to congratulate your customers when they step up and do something good for themselves, if they quit, you don’t want them to feel judged. So make sure you tailor your program to prompt a feel-good reaction from customers even when they may fail at their New Year’s resolutions. Be ready to give them something else to focus on that prompts them to continue their journey with your brand.

Have a special rewards promotion in January

Spending spiked in January 2021 thanks to government stimulus checks in the United States, but typically January is a slow month for sales and a higher one for returns. However, you can find ways to leverage your best customers into coming back and spending more even during the holiday slump.

Odds are, customers using your loyalty rewards program racked up points with holiday spending. So offer to help them capitalize by providing extra perks like a free shipping coupon on purchases over $50 placed by January 31st.

How a Digital Loyalty Marketing Platform Can Help

How do you keep customers engaged with your brand in the post-Christmas sales slump? It’s crucial to prioritize customer experience through interaction even after the holidays are over. It’s never a bad time to work on your customer engagement methods, and while your competitors are slacking is a great opportunity.

The Perx Loyalty and Engagement Platform (LMP) makes it easier to maintain contact with customers after Christmas holiday sales are over by keeping the journey going through high-quality interactions and high-value rewards.

One of the newest features on Perx Platform is the ability to build and launch time-bound campaigns. So instead of simply having a 9-5 presence, your brand can precisely target consumers on a specific day, for a specific duration (or even during multiple time slots) on any given day of the week.

Find out when your most loyal customers are most eager to make a purchase and develop customized journeys for them that culminate in a reward that can be redeemed inside a tight window to create a sense of urgency and excitement. Target off-peak times, peak times, and any other time.

Using time-bound campaigns in January or any other time creates a lifestyle experience of engaging with your brand that can lead to even more trust and future engagement. Your customers are always “on”, and you too can be “on” and present for them with personalized micro-experiences that delight them and gamification that draws them in and keeps them constantly and consistently engaged.

Ready to start leveraging gamification and rewards to drive customer engagement in the months to come? Watch our video now to learn how Perx can help your brand barrel into the new year without missing a step.

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How Retailers Can Win The Holiday Season By Truly Going Customer-First

Sean Foo

MarTech Blogger | December 06, 2021

As a retailer, the holiday season should be a cheery time of the year where stores would be packed and products flying off the shelves.

However, the current pandemic has changed customer behavior forever, rendering the time-tested marketing strategies of retailers to become increasingly obsolete.

How do you compete in an environment where margins are razor-thin and customers are notoriously fickle?

The solution lies in genuinely understanding what your customers desire, engaging them directly one-on-one, and influencing their decisions to drive what really matters — sales.

The First Step Is To Analyze Your Customer Data

How well do you really know your customers?

While many retailers can easily cite the customer demographics and the products or services that contribute the most revenue, knowing the exact preferences of your shoppers is essential.

Starbucks, for example, utilizes the data collected from their rewards program and mobile app to understand the purchasing habits of their millions of users. The rewards themselves, represent over 36% of US company-operated sales in 2017.

The data intelligence gathered allowed them to better personalize the Starbucks experience for their mobile app users, suggesting highly relevant products and new offerings that each customer might be uniquely interested in.

Through your point-of-sale (POS) system and loyalty programs, you can also start to build preferential data points around customers, segment them into distinct personas and let your customer engagement campaigns deliver a personalized treatment.

This allows you to recommend the right types of products they might be interested in instead of simply broadcasting a message that might reach everyone but pleases no one.

Engaging Your Customers Where They Are, Is A Must

When was the last time you made a conscious effort to go window shopping around a mall, hoping to spot the latest and most fantastic deals?

Sure, the Christmas trees on display in the mall might attract shoppers, but it is undeniable that retail store footfall has been steadily decreasing globally, and the pandemic has all but slowed it down to a trickle.

Online shopping & the digital floor space has taken over.

Most shoppers today live on their smartphones, and retailers will need to capitalize on this by engaging with them where they spend much of their attention.

Through targeted campaigns with highly personalized offers, brands will be able to actively engage their prospects to increase foot traffic to their physical stores or digital storefronts.

How Retailers Can Win The Holiday Season By Truly Going Customer-First

The Perx Loyalty and Engagement Platform allows retailers to target the right audience and hyper-personalize how your brand engages with your customer to influence the shopping cart naturally.

Imagine, your customer getting a digital scratch and win card just before Christmas that entitles him or her to claim their favorite drink from your cafe. The experience is unique, it is gamified and it is instantly gratifying.

It is how one retail chain in the Philippines managed to achieve a 700% increase in customer engagement on their loyalty program and how Thailand’s largest mall operator experienced a double-digit rise in footfall and revenue.

Solving Cart Abandonment Is Mission-Critical

Customers today enjoy an abundance of options; you are not the only retailer in town with a unique brand or quality products.

All too often, this leads to shopping cart abandonment that spikes to an all-time high, especially during the holiday season, where customers are being blasted with a continuous stream of offers and promotions.

How Retailers Can Win The Holiday Season By Truly Going Customer-First In fact, a 2019 research has found that the average shopping cart abandonment rate is an astounding 69.57%.

From a long checkout process to the allure of comparison shopping and the lack of additional last-minute discounts, many factors could suddenly spur a prospective customer to abandon their purchase.

While it is impossible to eliminate cart abandonment fully, you will have to go beyond just optimizing the checkout process and removing roadblocks to a swift conversion. The key is to engage your customers both on-site before they leave and off-site should they exit your checkout page.

By analyzing your customer data and engaging them during the checkout process, you will be able to trigger excitement and influence your prospect towards the sale.

A first-time customer at your checkout page? Let them spin the wheel to win an additional 10% off their first purchase.

A loyal customer about to checkout? Let them shake a virtual tree and reward them with a sweet discount on their next purchase in the same shopping session!

A prospect that left the shopping session prematurely? Engage them through your store’s app with a reminder tied with gamified rewarding experience.

By sprinkling dynamic engagements within a single shopping experience, you will increase your brand touchpoints in an authentic way that influences their decision to purchase by incentivizing it.

This will allow you to reduce your cart abandonment rate and upsize the shopping carts to drive even more revenue per customer and increase the share of wallet.

Fight Against Lowered Margins With Hyper-personalized Offers

As a retailer, you know the drill when it comes to holiday promotions.

1-for-1 deals, 30% off store-wide and flash sales are classic promotional strategies retailers use to drive revenue and stand out amidst the fierce competition.

Sure, these deep discounts are great for your customers but a nightmare to your margins! Furthermore, relying on the loss-leader strategy is not always sustainable and does not guarantee additional purchases once you grab your customers’ attention.

What is more powerful (and profitable) is to hyper-personalize your offers and engagements to the right audience at the right time.

Amazon, for example, uses its customer purchase history and buying behavior to recommend the right promotions and products that matter to the buyer instead of a blanket discount.

You can do the same, too, by leveraging your customer data and sending personalized offers just as the holiday season begins!

A terrific way to gamify and personalize such an experience is a 12-days of Christmas scratchable calendar that can be integrated with your customer loyalty programs.

This allows customers to wake up and anticipate a new ‘present,’ which could be a targeted promotional product or a gift that they love, throughout the Christmas period.

Instead of just slashing prices store-wide, retailers should aim to gamify and personalize their customers’ shopping experience to increase their brand touchpoints while preserving their margins naturally.

Place Your Customer & Their Experience First This Holiday Season

Discounts and promotions alone do not win the day; prioritizing your customer experience and their needs do.

By leveraging your customer data and crafting interactive experiences that blend well with their lifestyle, you will be able to create unique brand touchpoints that go beyond just mere suggestions and indeed influence their purchasing decisions.

Ready to transform the way you engage with your customers this holiday season?

Learn more about the Perx Loyalty and Engagement Platform and how we have helped brands elevate their customer engagement strategies, transforming them from just another brand into an influencer in their customers’ lives.

Get in touch for a tailored demo and discover how you can influence and drive customer actions today.

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