This Halloween, leave the bone-chilling frights to Stephen King and work on making your customer experience a treat. Read these 3 tricks.
There’s no doubt about it: we live in a customer-centric age. Technology has empowered people to research products, services and suppliers more thoroughly than ever before, and this – combined with the sheer amount of choice – has made retention harder than ever.
So how do you drive repeat purchases in this competitive environment?
You track and analyse relevant data, so you can make evidence-based decisions about investing in marketing and the customer experience – which in turn inspires loyalty. Here are 4 ways to do this…
Measure retention, but remember its limitations
Perhaps the most obvious way to measure customer loyalty is to track how many customers continue to use your product or service. However, it is important to remember that retention and loyalty are 2 different things. Customers could be choosing to stay with you because they don’t know of any local alternatives, or because switching seems complicated (as is often the case with utilities or financial services).
Therefore, you should use retention data in conjunction with other metrics to give you an accurate indication of customer loyalty.
Observe purchasing patterns to determine lifetime value and share of wallet
This is perhaps the most accurate way to measure loyalty.
Review transactional data to assess behaviour and customer lifetime value. You should also look at whether customers are purchasing other products or services from you (i.e. whether they have been cross-sold and you have a higher share of wallet), since this is a good indication that a customer is loyal not just to a specific product, but to your brand.
To get the most out of your purchasing data, you should also look at volumes, frequency and spend level. This will allow you know to what kind of loyal customer people are. For example, do they buy from you little and often? Do they buy infrequently but spend a large amount when they do? Some of these patterns will reflect the type of product or service you’re selling, but you can map your specific customer data over industry trends to gauge how often people choose you to fulfil their requirements.
Monitor your loyalty scheme and target your marketing accordingly
Whether it’s a free coffee on your 10th visit or exclusive discounts for customers on a mailing list, many retailers have some kind of loyalty or reward scheme. And for good reason. Research by Accenture Interactive found that members of retail loyalty programmes generate 12-18% more revenue than non-members.
Start by looking at sign-up figures, but also track ongoing purchases to see if membership correlates to loyalty. After all, customers may sign up for a one-time reward and then never buy from you again. The aggregation of your offline and online data is also crucial in getting a true picture here.
When you keep tabs on both metrics, you can target offers based on past purchases (to drive repeat sales) and send discounts and invitations (to re-engage lapsed customers).
Track advocacy in conjunction with transactional data
Advocacy is a key indicator of loyalty because people don’t generally recommend a product unless they’re happy with it.
Traditionally, organisations have used net promoter scores (with survey questions like ‘How likely are you to recommend our product or services to a friend’) to measure advocacy. But it’s much more accurate to track actualities rather than hypotheticals.
While it’s hard to know what people say about your business face to face, you can use social media to get an idea of how many advocates you have. By using social listening tools, you can track how many people are recommending your product or service online.
You can also offer rewards for referrals and track the number of sign-ups. Then you can compare this data to transactional data to see whether customers who refer you continue to purchase in the future.
Ultimately, measuring loyalty is just another way to get to know your customers
By identifying your loyal customers and tracking their behaviour, you’re in a strong position to allocate resource in a way that drives results.
At its heart, loyalty is about providing a superior customer experience and data is your feedback loop, giving you the evidence required to ensure you’ve made the right strategic decisions.
Get in touch to learn more about how you can effectively measure your customer loyalty.