In today’s competitive brick-and-mortar landscape, customer loyalty is crucial to business success. Restaurants and retail establishments need to be tracking key customer loyalty metrics to understand how their customers feel about their brand. And in an environment where customer sentiment is greatly impacted by online reviews, businesses that are not tracking customer satisfaction, sooner or later are going to feel the effects on their bottom line.
The same is true for customer loyalty. Companies that have the ability to closely monitor their customer loyalty metrics in detail will have a huge advantage over their competition.
If you’re unclear about what metrics you should be tracking to understand and improve your customer loyalty, we’ll discuss four key metrics to help you get started, as well as how to collect this valuable data.
Increased customer loyalty means increased revenue. Anecdotal evidence and online customer sentiment cannot give you the crucial data points you need to understand one of the most important ingredients for your business’s success – customer loyalty.
- Are you currently tracking how your customers feel about your brand?
- Do you know what percentage of your customers are returning?
- Are you receiving accurate, measurable data from key customer loyalty metrics?
So, what metrics should you be using to measure your customer loyalty, and what do they mean for business? Here are four important metrics to help get you started.
#1. Customer Lifetime Value
The lifetime value of your customer directly relates to how long a customer remains with you and how much they spend during that time. The more loyal the customer, the greater their lifetime value. Loyal customers not only purchase with reliable frequency, but they do so over long periods of time. An increase in the lifetime value of each customer improves your revenue and carries financial relevance for your company.
There are various tools available that attempt to track and understand lifetime value, but it boils down to simply knowing how often a customer visits and/or makes a purchase over a certain period of time. Once you have that data about your customers, you can extrapolate the numbers to understand the revenue you can expect to generate. If you’re not tracking your customer’s lifetime value with accurate and measurable data, you are missing a crucial customer loyalty metric.
#2. Customer Return or Repeat Rate
Similar to lifetime value, whether a specific customer is returning or making repeat purchases is critical to your company’s revenue and growth. If you’re in the restaurant or retail business and patrons aren’t coming back (i.e., you have a high customer churn rate), you have a big problem and it needs to be addressed as soon as possible.
If your data indicates your customer repeat rates are low, you know it’s time to consider your restaurant marketing. You could send out coupons to your email list, promote your new menu items on Facebook and Instagram, and bump up the incentives for joining your loyalty program.
But taking this kind of action starts with having the data. A WiFi marketing and analytics platform is the only practical way of gathering and viewing this type of data.
#3. Customer Loyalty Program Participation
How many of your customers want to join your loyalty program? How many are actually participating after they’ve signed up? It’s important to know if your customers love you so much that they want a digital punch card or membership perks, or if they see participating in your program as pointless. Getting your customers to participate is also important because the loyalty program is a direct-to-consumer restaurant marketing channel.
Once customers sign up, you can send promotions and offers, track whether they are opening your emails and visiting your website, and ultimately, know whether they are cashing in on the perks. Knowing the redemption rates of offers is a key data point that helps deepen your understanding of the “sticking” power of your brand, and tells you if you’re spending your money in the right places.
Do you currently present each customer who walks into your business with the option to join your rewards program? How are you tracking whether they show interest? How are you tracking whether those in the program redeem their perks?
#4. Net Promoter Score
A Net Promoter Score is an index that measures the willingness of your customers to recommend your company to others. Understanding where your customers fall on this index helps you understand your level of customer loyalty because it helps to gauge your customers’ overall satisfaction with your business.
People share their favorite businesses and products for a few main reasons: increased social capital, financial gain, and the rare selfless share (helping a friend out, etc.). But, even when they are getting the benefit of sharing, people still want the process to be easy. So, it’s important to give customers an easy and accessible way to share information about your business. Once you’ve made it easy, all you need to do is track the response.
If the response is low, you have an opportunity to make adjustments. Knowing there is room for improvement can be a good thing, especially for brick-and-mortar businesses. Room for improvement means there is room to improve your marketing and grow your revenue. But without the data, you don’t truly know that the opportunities exist.
Get the Data You Need for the Growth You Want
These four customer loyalty metrics are crucial to understanding your current customers, and areas for improvement. With accurate, measurable data in hand, you can effectively take action to improve your customer loyalty and increase profits.
Generating the data with the proper tools, like a Wi-Fi marketing and analytics platform, is the first step. If you don’t take that step, you’re missing out on key opportunities to improve your marketing strategies and grow your revenue.