What is customer loyalty
Posted: Wed Jan 29, 2025 6:50 am
Retaining customers and increasing repeat sales are important factors for business development. Repeat sales bring in additional revenue and demonstrate customer trust. In this article, we will talk about ways to increase repeat sales and understand the role that customer loyalty plays in this.
Loyalty is the commitment of customers to a brand that leads to repeat purchases and recommendations to others. Loyal customers feel attached to a company and prefer to buy from it, ignoring competitors or becoming their ardent antagonists.
In marketing, there are several ways to measure customer loyalty:
Net Promoter Score
(NPS, Net Promoter Score). Measures the likelihood that customers will recommend a product or service to others. NPS is calculated on a scale from 0 to 10. Customers are sent a survey asking them student data to rate their interactions with the product or service on a scale of 1 to 10. After that, all respondents are divided into categories. One of the popular divisions is promoters (those who gave a rating of 9-10), passives (rating 7-8), and detractors (rating 0-6). But the number of categories may vary, as may their names - it depends on the desire of the person doing the counting.
NPS = Percentage of Promoters - Percentage of Detractors
Frequency of repeat purchases
This method measures how often customers return to purchase a product again.
Purchase frequency = Total number of purchases during the period / Number of unique buyers during the period
Retention rate
The metric measures the percentage of customers who stay with a company for a given period of time.
Retention = (Number of customers at the end of the study period - Number of customers acquired during the study period) / Number of customers at the beginning of the study period
Customer Participation Level
This method measures customers' willingness to engage with a brand, such as through comments, reviews, loyalty program participation, or social media.
Participation = Number of active customers / Total number of customers
Ratings and reviews
Ratings and reviews can be collected at different stages of the user's journey through the sales funnel. Studying them helps to understand whether customers are satisfied with the service and what they want, whether there are systemic problems that need to be urgently solved, and how to improve the customer experience.
Technically, feedback can be collected using various methods, such as onsite personalization widgets or surveys .
Each business can choose the appropriate method for measuring loyalty levels depending on its goals and the characteristics of its customer base.
Loyalty is the commitment of customers to a brand that leads to repeat purchases and recommendations to others. Loyal customers feel attached to a company and prefer to buy from it, ignoring competitors or becoming their ardent antagonists.
In marketing, there are several ways to measure customer loyalty:
Net Promoter Score
(NPS, Net Promoter Score). Measures the likelihood that customers will recommend a product or service to others. NPS is calculated on a scale from 0 to 10. Customers are sent a survey asking them student data to rate their interactions with the product or service on a scale of 1 to 10. After that, all respondents are divided into categories. One of the popular divisions is promoters (those who gave a rating of 9-10), passives (rating 7-8), and detractors (rating 0-6). But the number of categories may vary, as may their names - it depends on the desire of the person doing the counting.
NPS = Percentage of Promoters - Percentage of Detractors
Frequency of repeat purchases
This method measures how often customers return to purchase a product again.
Purchase frequency = Total number of purchases during the period / Number of unique buyers during the period
Retention rate
The metric measures the percentage of customers who stay with a company for a given period of time.
Retention = (Number of customers at the end of the study period - Number of customers acquired during the study period) / Number of customers at the beginning of the study period
Customer Participation Level
This method measures customers' willingness to engage with a brand, such as through comments, reviews, loyalty program participation, or social media.
Participation = Number of active customers / Total number of customers
Ratings and reviews
Ratings and reviews can be collected at different stages of the user's journey through the sales funnel. Studying them helps to understand whether customers are satisfied with the service and what they want, whether there are systemic problems that need to be urgently solved, and how to improve the customer experience.
Technically, feedback can be collected using various methods, such as onsite personalization widgets or surveys .
Each business can choose the appropriate method for measuring loyalty levels depending on its goals and the characteristics of its customer base.