3 Customer Loyalty Metrics That Actually Matter

by Chris Arringdale Client Loyalty, Customer Success

Did you know 67% of existing customers spend more than new customers? So what keeps your customers coming back? Their loyalty to your brand and business. Customer loyalty is a measure of how likely your customers are to purchase from you again. Loyal customers tell their friends and family about their positive experiences with your brand. Simply put, loyal customers spend more with brands they like. This loyalty-driven revenue is a critical factor of success for your business.

There are 3 specific customer loyalty metrics that actually matter. In this article, we’ll explain how to measure them and how they can assist in the success of your company.

What keeps your customers coming back? Their #loyalty to your brand and business. See which #CustomerLoyaltyMetrics @kilterly thinks actually matter! Click To Tweet

Loyalty Metric #1: Customer Churn Rate

Customer churn rate is the rate at which customers stop purchasing or doing business with you.

A customer can churn or leave your company for a number of reasons:

  • Lack of communication
  • You lost their trust
  • Problems with your product or service
  • Poor onboarding process
  • No customer support

The key customer loyalty takeaway is understanding why your customers are leaving. In other words, this issue is the first step in improving how you retain them. If your annual churn rate is higher than 5-7%, it’s time to sit down and reevaluate the happiness of your customers.

How to Calculate Customer Churn

Annual Churn Rate = (Number of Customers at Start of Year – Number of Customers at End of Year) / Number of Customers at Start of Year

Loyalty Metric #2: Net Promoter Score

Net promoter score (NPS) is the indicator of whether or not a customer is going to refer you to their friends and family. This is a fairly simple metric to measure, but it’s also very crucial to assessing customer loyalty and retention.

To calculate your customer’s NPS, ask them this simple question: “How likely are you to recommend our company (or product) to your family or friends?” Voilà! The customer then chooses a score between 0 and 10. The lower the score, the less likely they are to recommend your company or product.

The scores fall under three categories:

  1. Promotors (score of 9-10) – Extremely likely to recommend your company or product
  2. Passives (score of 7-8) – May or may not recommend your company or product
  3. Detractors (score of 0-6) – Not likely to recommend your company or product

These scores will help your company understand how well you are retaining loyal customers. More importantly, they’re key indicators of customer loyalty roadblocks and how you can resolve them.

How to Calculate Net Promoter Score

Net Promoter Score = % of Promoters – % of Detractors

Loyalty Metric #3: Repeat Purchase Rate

Repeat Purchase Rate (RPR) is the percentage of your current customers that have returned to buy your service or product from your business again. This customer loyalty metric is often used by marketing and sales teams to evaluate performance and the impact of the overall customer retention strategy.

No matter how often repeat purchase rate is calculated – weekly, monthly, or quarterly – the data always has value. Because of this, RPR can be applied to repeated purchases of products, subscriptions, or even contract renewals. The most useful part about RPRs is their application to specific demographics. The types of companies or customers making repeat purchases provide insight into your buyer personas. These personas help your marketing team to focus on the most important and relevant target markets.

How to Calculate RPR

Repeat Purchase Rate = Number of Returning Customers / Number of Total Customers

These three customer loyalty metrics are crucial to understanding your existing customers. Additionally, these three metrics provide insight into possible areas for your company needs to improve. With the proper data, your company can take action to improve your customer loyalty, retention, and increase the revenue of your business.

Discover the metrics you need to measure to ensure #CustomerLoyalty in @kilterly’s latest blog: Click To Tweet

Want a window into your customer’s mind? Kilterly gives you a clear view of the customers that are engaged with your company and those that might be ready to leave. Let us tell you what is off-kilter. Book your demo now!

worker taking notes on different customer metrics

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