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Developing your people to enhance your customers experience

Measuring customer loyalty = cash in the bank



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If you’re a regular reader of our posts you’ll know that we often talk about the essential need to improve customer loyalty to ensure they keep coming back and spending money with you time and time again.

Done well it creates a real win-win - for your customer who feels valued and enjoys the experience when speaking with your people - and for you when we understand that loyal, returning customers can spend 10 times more with you than with your competitors.

So why don’t more businesses readily embrace the culture of service and loyalty? We’d suggest it’s simply because senior managers and business owners don’t know how, or what, to measure the loss or gains together with the bottom-line impact each inevitably delivers.

Whether they keep customers or lose customers is all part of a big “mix” and reactions are predictable – when sales are up backs are slapped and there’s no real incentive to investigate further improvements. Conversely if we lose revenue we go in hard on the customer service manager and his/her team and proceed to crack the whip over the sales and marketing departments to get more customers through the door – usually at speed incurring “race to the bottom” discounting and freebies.

Understandable you may say but remember it costs 5 times more to adopt this remedy than it does to have great value relationships with your existing customers. As the revenues and margins drop so the costs increase to replace the losses eroding margins even further – it’s a vicious circle that, sadly, remains very common even in todays enlightened workplace.

So if we’re not measuring we’re not managing but what if we don’t know what to measure or where to begin? Firstly, let’s be realistic – what most of us small business owners and managers really need is a small, yet effective, set of tools we can engage with and quickly implement to gauge how effective our relationships are and so increase our chances of keeping our customers delighted and ensure loyalty is maintained and improved.

We’ve highlighted 3 metrix that are a really valuable place to start;
1. Repeat customer rate (RCR): In a nutshell, RCR shows you the percentage of your current customer base that returns to shop with you time and time again demonstrating clear loyalty to your brand and product or service. By measuring RCR you will immediately be better equipped to benchmark yourselves against your direct competitors and your industry in general. Another great benefit is you’ll be better able to assess the success of loyalty programmes and gain greater insight into individual marketing campaigns and initiatives.

2. Customer lifetime value (CLV): one of the easiest numbers to establish CLV is a prediction of the net profit attributed to the entire future relationship with a customer. Put simply it’s understanding how frequently a customer buys from you and how much they spend over a typical customer lifetime. Using this figure will help you decide what you’re prepared to spend to acquire new customers and gain insight into areas of your business that are hindering loyalty amongst low-value customers.

3. Net Promoter Score (NPS): Perhaps the most contentious and frequently argued metrix is NPS. In very simple terms, using a 1-10 scale, the question is posed “How likely are your customers to recommend you to friends and colleagues”. Responses of 9 and 10 confirm that your customer is a real “fan” ready and willing to promote your business. Everything below this requires greater intervention and cultivation – 7’s and 8’s may use your service repeatedly but loyalty to the brand is not exclusive. Below that and you’re relationship and loyalty factor is uncertain and likely to include detractors – they may be buying from you but will be likely to leave as soon as something cheaper/better comes along.

There are many more loyalty and service based tools, surveys and monitors you could consider – a quick Google search will quickly show there’s a complete industry set up to drill down into specific industries, markets, campaigns and models.

We’d recommend, by adopting these relatively simple measures, you’ll achieve a much clearer indication about how your marketing and loyalty programmes are performing. If that helps you avoid costly mistakes we think that’s worth its weight in gold.

Until next time....Keep FIT!




As co-founder of First Impression Training David is passionate that all organisations can quickly achieve positive bottom-line impact when the customer experience is placed at the very heart of a business culture. You'll often hear him say "It's not rocket science" and his sleeves-rolled-up approach ensures FIT achieve results for our customers - FAST!

Hello...I'm Marie Cross!

Marie Cross

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