There is much discussion around ROI and measurable insights regarding digital applications in marketing and sales. The big overarching goal is usually the amount of increased sales you might receive from the use of a new application and will it pay for itself plus profit. Since all companies are different from their sales, marketing, customer support, staffing and corporate culture approach (not to mention products or services), having a common formula available is not realistic sometimes. This report from DotDigital is another method using four ways to measure Customer Loyalty. My opinion is not all may work for your situation but 2 or 3 might be useful.
Four ways you can measure customer loyalty to build a complete and reliable picture of your customers.
1-NPS-Net Promoter Score
It’s a measurement of your customer’s likelihood to recommend your brand to friends and family, scoring you one out of ten. Email is also a great way to collect NPS scores; keep it simple, and include it in campaigns sent out after a purchase or other meaningful interaction. You work out your NPS score by subtracting the percentage of customers who choose a 6 or lower from the percentage of customers who answer with a 9 or 10.
2-Customer Retention Rates and Repeat Customers
Customer retention rate is the rate at which your customers stick around over a period of time. It’s the opposite of Churn rate. For example, if you choose a period of one month and you begin the month with 4 customers, gain 2 , and lose 3, ending the month with 3, your customer retention rate would be 25%. There is a formula for this in the report.
3-CLV-Customer Lifetime Value
Customer lifetime value is the total amount of revenue or profit generated by a customer over their entire relationship with your brand - whether that’s just one day or decades. Essentially, the higher a customer’s CLV is, the longer they’re going to stick around with your brand.
Purchases per year X Average order value X Number of years active=Customer lifetime value
For example:
3 purchases X $50 avg order X 4 years active customer = $600 CLV
4-Engagement Metrics
Engagement metrics are the classic ways you measure customer engagement such as clicks, orders, and website sessions. Measuring your engagement metrics is important for overall customer loyalty as these insights can highlight opportunities to improve the customer experience, thereby boosting the likelihood of loyalty. Our Heron Martech technology provides a unique Engagement score composed of 12 different metrics where each can be weighted. When your customer engagement numbers are high or growing, it indicates that your customers are highly engaged with your brand.
This is a fairly lengthy report but an easy and quick read. I think you’ll find it a worthwhile look if you’re trying to figure out the best way to create a reliable scoring and objective way to determine where your company stands with your customers and even prospects. Let me know how it goes. We can give you a new means of measurement as we have been developing a more comprehensive means of determining ROI for our platforms. More on that in my next report. Let me know what you think.
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