Brands across the globe are developing loyalty programmes that re-focus their strategies on retaining existing customers and building on their loyalty. With the key objective being to build impactful long-term customer relationships with their most loyal customers, so that they become advocates spreading positive customer voice, they connect more with the brand on an ongoing basis resulting in more sales opportunities.

Therefore, measuring customer loyalty is critical for brands to understand who their loyal customers are and to identify improvement areas while preparing for their customers’ future needs.

Below is a simple tool kit for brands to use for measuring customer loyalty.

Understand your customer behaviour

  • Gather as much information as possible on customers through the marketing, data analytics and BI teams incorporating both current and historical data.
  • Understand who your customer is, their segment, life stages, gender, age, geographical location etc.
  • Understand their purchasing habits, average purchase, spend, seasonality factors, frequency in spend / visits, establish their customer lifetime value (CLV) etc.
  • Understand how often they engage with you, what offers / rewards they like and dislike, positive and negative comments etc.

Develop your objectives, KPIs and metrics

  • From the findings and insights start to define your objectives and then introduce metrics against each objective to measure performance, such areas could include:
    • Recruitment – how many loyalty customers are registering and through what methods.
    • Participation – are customers redeeming rewards, offers or another feature of the loyalty program and what ones do they like and don’t like.
    • Penetration – compare frequency of visits, sales baskets, total sales etc of your loyalty customers as a percentage against non-loyalty customers.
    • Return on investment – how much revenue are loyalty customers generating for the brand.
    • Growth – is the loyalty member base growing or declining in numbers and what factors influence identified significant changes in growth/decline.
  • Introduce benchmark KPIs and realign any existing KPIs and objective based on the new found customer truths, then communicate them across the organisation.

Measure periodically and adapt

  • Where possible automate loyalty campaigns and customer behaviour measurement.
  • Each customer segment is based on groups of customers with similar interests and behaviours and so each segment needs to be measured separately.
  • Understand the power of both online and offline customers.
  • Email gives brands high levels of customer segmentation and personalisation, tracking performance across various customer segments with A/B testing, delivery rates, open rates, click rates, bounce rates, conversion rates and opt-out.
  • Set up tailored periodic reports for various management levels to analyse customer loyalty.
  • Continually measure and adapt the strategy and processes where needed to keep customers loyal.

Brands use customer data effectively to empower teams with actionable insights, better understanding of customers and the fruits of their customer loyalty. All to continue innovating and informing future loyalty strategies and processes, while offering real commercial benefits to the brand.