How to measure customer loyalty at your business

If only it was that easy

Imagine if you could measure customer loyalty just by looking at a customer. Would that change how you interact with them? As a business owner, the value of a loyal customer has been drilled into your head since the day you opened your store (a repeat customer spends 67-percent more than a new one — you knew that, right?) and that improving customer retention by just 5 percent can yield a 20- to 100-percent increase in profits.

While these facts are great little nuggets to impress your friends with at the next dinner party, they’re pretty useless unless they’re in full effect at your business. But how do you make that happen? How do you drive loyalty at your business so you can bring your customers back and see that ROI of up to 15 times that you’re always hearing about?

First, you must build a customer following at your business.

 

A loyal customer will choose your business over any competition — they want to do business with you and they continually do. So not only must you have a product to bring new customers in (whether that’s cupcakes, flawless hair styling or incredible margaritas), you must also focus on serving and retaining the customers already inside your store so that they’ll want to come back.

By understanding your customers’ loyalty, you can predict their intentions so you’ll know which ones will be back for another round and which ones need a little more convincing.

One important thing to note: loyal customers view interactions with your business as more than simple transactions. They don’t want to be perceived as dollars on an income statement but rather a name you need to remember, a face you see every Wednesday at 2 p.m., a daughter to a crazy mom you know everything about, the owner of a car that only starts when you jiggle the key just right, etc. Loyal customers are choosing to share themselves (and their wallets) with you, so don’t take their relationship for granted.

Measuring the strength of the business-to-customer relationship is the best way to measure customer loyalty.

What makes a loyal customer?

Let’s take a look at what loyal customers even look like (we’re using the word “look” loosely here):

  • Will recommend your products and services to their friends and family.
  • Will purchase your products and services at a constant frequency.
  • Doesn’t hesitate to purchase new products and services your business offers.
  • Views your products and services are superior to competitors.
  • Isn’t swayed or influenced by competitors.
  • Provides positive and constructive feedback for your business because they want you to prosper.

So yea. Loyal customers are awesome.

Measure customer loyalty: Define your goals

Define Your Goals

Before you start measuring customer intentions, you must define your goals. What do you want to learn about your customers? What is the best way to collect this information? And remember, actions speak louder than words. It’s easy for a customer to tell you that they’re “satisfied” with your product or quality of service, but that might not be enough for them to choose your business over the competitor down the street. Therefore, get feedback from your customers that you can actually act on.

Ask questions like:

  • Will you purchase again?
  • Will you refer a friend to my business?
  • What can we do to make your next experience here better?
  • How can we win you as a long-term customer?

Don’t be afraid to dig into the specifics. The more you know about your customers’ intentions, the better shot you’ll have at gaining their loyalty, trust and repeat business.

  • Are you completely happy with the product you purchased from us?
  • About how many times a year do you choose us?
  • Do you sometimes make similar purchases from one of our competitors?
  • What goes into your purchasing decisions?
  • What can we do to improve your customer loyalty to our business?

Once you’ve outlined what you want to ask your customers, you must decide how you’re going to collect your responses. The three most common methods are survey, informal feedback and purchase analysis.

Conduct a survey

Surveys are great. You can collect honest feedback from a group of customers, plus, the information collected is precise and highly organized so you can easily review it and draw conclusions.

Remember, the top 3 reasons consumers switch brands are cheaper pricing (31 percent), rude staff (18 percent) and too many mistakes (16 percent). So by asking the right questions, you can learn how your customers truly feel about your brand, helping you to make improvements to keep them for life.

Be sure that your survey questions are clear and only ask one question at a time. Overwhelming your customers with too many questions won’t produce conclusive results. Stick to five to seven questions and toss in an incentive like a Free Appetizer on Your Next Visit for any customer who completes the survey. Leverage your business’s loyalty program by emailing the survey to customers who’ve visited your business. With Belly’s Campaigns tool, you can even segment your customers by their visit history so that you can measure any trends among unique customer groups.

Get informal feedback

Utilizing your business’s social media accounts is another great way to collect customer feedback. While the results aren’t highly scientific, they will yield quick insights from your engaged customers.

Curious as to whether or not your new taco recipe is a hit? Post a photo of your new South of the Border creation on your Facebook page with the caption “Let us know what you think of our new Tacos!” Comments from your customers will give you a pretty good indication as to whether to keep the new menu item or stick to the original.

And as we’ve learned, engaged customers are happy customers — they are four times more likely to say they “appreciate when a brand reaches out to me” and seven times more likely to “always respond to a brand’s promotional offers.”

Do a purchase analysis

Use your POS system to examine when customers are purchasing, how frequently they’re visiting, and how much they’re spending on any given transaction. Are your most frequent customers only purchasing items or services on sale? Is their behavior restricted to certain days of the week? Are customers who spend a lot on their first transaction more likely to become one-time customers?

Try to draw conclusions and use the data to make improvements across your whole business.

Unfortunately, you can’t determine which customers will be loyal just by looking at them (we tried it on folks around our office, it didn’t work, people were offended). Therefore, it’s important that you as a business owner regularly assess how your customers feel about your business so that you can turn every customer into a loyal one.


Also published on Medium.

Image by: Pink Sherbet Photography via Visual hunt / CC BY

Jenny Beightol
Jenny Beightol is the Director of Words & Reputations at Belly, the leading digital loyalty and marketing solution for businesses. Her expertise in brand identity and customer loyalty comes in handy when playing the "Loyal Brands" edition of Trivial Pursuit. When she isn't writing, she can be found in Chicago running along the lakefront trail, dancing at a concert or running to a concert. Tweet her what you're listening to here.