Customer loyalty plays a key role in any customer experience management program.
Customer loyalty reflects the degree to which customers engage in positive behaviors toward and experience positive feelings about a company or brand.
Your customer loyalty metrics plays large part in your customer experience analytics efforts; the goal of analytics is to uncover ways to improve customer loyalty.
Consequently, how you measure customer loyalty will necessarily impact the insights you get from your customer experience analytics.
The difference between valuable and misleading insights rests on the loyalty metrics you use.
In today’s post, I will talk about two important measurement factors you must consider when selecting your customer loyalty metrics.
Types of Customer Loyalty
First, you need to be cognizant of the multi-dimensional nature of customer loyalty. We know that customer loyalty is not a single thing. While I provided a pretty generic definition of customer loyalty above, when we consider how that definition translates into measuring the construct, we found that there are really three different types of customer loyalty:
Retention loyalty – the extent to which customers will stay with you / not defect to a competitor
Advocacy loyalty – the extent to which customers will recommend your company/brand
Purchasing loyalty – the extent to which customers will expand their relationship with you by buying more and/or different products/services from you.
Each of these types of customer loyalty are responsible for different types of business growth.
Retention loyalty leads to long-term customers who are easier to service. Advocacy loyalty brings in new customers. Purchasing loyalty increases the average revenue per customer.
Our research also showed that different CX touch points impact the three types of customer loyalty differently. So, when considering your CX measurement plan, be sure you consider what type of loyalty you want to measure and manage.Multiple Measurement Methods