Metrics to use for tangible customer loyalty insights

As a business, you need customers. That's a fact. But there's a big difference between attracting customers and being able to keep them. Being able to get customers to part with their hard-earned money in exchange for your goods or services means that you are officially in business. Keeping your customers, however, is what will enable your business to continue running as a business.

Regardless of how big the business is, customers play a crucial role in determining whether it will be successful or fail. Fortunately, customer experience metrics are tools that can help you get a deeper insight into what motivates your customers and improve your customer experience.

Why should businesses invest in customer loyalty?

Acquiring one new customer can cost your business between 10 and 25 times more than the cost of retaining a customer you already have. This is just one good reason you should prioritise your existing customer relationships and look at how you can nurture them through customer experience, loyalty programmes and marketing.

But aside from the cost savings, loyal customers can boost your business in several different ways. Your happy and satisfied customers can bring new business to your door. They can become your unofficial brand champions and word of mouth marketing heroes by sharing their experiences through customer reviews, on social media, or simply telling their friends and family.

Loyal customers are also more likely to spend more and are less sensitive about the price when shopping with a brand they know and trust and have loyalty towards. Higher customer satisfaction can also mean less pressure on your customer service and support teams too.

But it's important to remember that customer loyalty can fluctuate. You may notice that loyalty shows up in a customer's purchasing behaviour but doesn't result in positive reviews, referrals or recommendations. Due to the power and complexity of customer loyalty, you should try to track it over time using different metrics and capture the entire customer journey through customer feedback and business data. This will enable you to understand what drives customer loyalty, what parts of your customer base you should prioritise and how you can encourage customer loyalty towards your business.

How to measure customer loyalty

Customer experience describes what customers think and feel during their research, while purchasing and when using goods and services. It is an integral part of customer journey mapping. The more satisfied a customer is, the more likely they will remain your customer. You must track the customer experience journey to enable you to understand if your customers feel satisfied at each touchpoint on their journey. You can then look at ways to improve your products and services. However, the customer experience is a tangible one. You cannot see it or touch it. Therefore, you need to use a variety of customer experience metrics to determine whether your customers are satisfied enough. Here are some examples of metrics that can help you get a good insight into your customers' loyalty:

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Net promoter score (NPS)

As many as 65% of businesses use NPS. It measures the percentage of customers willing to recommend your business to others by asking them to core your business between 0–10. It provides a valuable insight into customer emotions towards your business, products and services and their willingness to recommend your brand to friends and family. Responses fall into three categories based on the customer score, with 10 being the most positive. For example:

  • 9–10 are 'Promoters' who will speak highly of your business and remain loyal
  • 7–8 are 'Passive' and are neither unsatisfied nor passionate about your brand
  • 0–6 are 'Detractors' who are dissatisfied and unenthusiastic to respond

When customer journey mapping, NPS feedback is placed at several different points to enable you to look at a customer's first NPS with their second, to see how you compare.

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Customer satisfaction (CSAT)

CSAT focuses on the quality of customer experience at a particular stage in the customer journey. CSAT asks customers a series of questions starting with asking them how satisfied they are with their experience. The answers are scored, usually between 1 and 5. CSAT can be sent to customers multiple times along the customer journey, such as at the point of purchase, after a successful transaction and after an interaction with customer service.

Customer effort score (CES)

CES is a useful metric if you want to find out whether your customers are likely to recommend you. It focuses on the efforts a customer makes when interacting with your business, and helps to identify any issues and bottlenecks along the way. It usually begins by asking the customer to rate how easy it was to use your product or service.

Average order value (AOV)

This metric is useful in helping you understand customer spending habits. It can also allow you to recognise opportunities to upsell or create personalised offers. To determine the AOV, you need to divide the amount of generated income by the overall number of orders.

Repeat purchase rate (RPR)

Repeat purchase rate measures the number of loyal and repeat customers a business has. To calculate the RPR, you need to take the number of customers who purchased from you at least once during a given period and divide that number by the total number of customers during the same period.

Customer retention rate (CRR)

This metric will measure the proportion of customers who remain with you and help you determine how well you are doing at retaining customers. To calculate this figure, you first take the total number of customers at the end of a set period, for example, one year. You then deduct this figure from the overall number of customers you have in this timeframe and divide by how many customers you have at the beginning of that period.

Loyal customer rate (LCR)

The loyal customer rate lets you determine your loyal customers to reward them with VIP treatments such as incentives and loyalty programmes. You can calculate your loyal customer rate by taking the number of customers who have bought from you at least four times across one year and divide it by how many unique customers you had in that same period.

Customer churn rate (CCR)

If you seem to be mainly selling to new buyers, measuring your customer churn rate will help you determine if this is correct and identify the proportion of people who stopped buying your products and services. It tracks the number of customers you have at the beginning and end of a certain timeframe. Take how many customers you've lost over a certain period, for example, over a month, and divide it by the number of customers you had to start with. Comparing month-to-month churn rates enables you to be more proactive with your retention strategy.

Customer reviews

While the above metrics provide quantitative data, they don't explain how customers feel about your business and their motivations. However, customer reviews provide a deeper insight into your customer experience and help you understand customer loyalty, satisfaction, and motivation.

Customer insight platforms

Customer insight platforms enable your business to measure customer metrics and get a deeper insight into customer loyalty. These platforms enhance customer data to provide insights on customer behaviour and engagement. When used effectively, this data can help a business improve and enhance its customer experience. You can use customer insights platforms to develop effective marketing strategies that cater for your customers in the best way and increase conversions. You can analyse your customer's feedback and metrics to improve your services and customer journey mapping, identify the latest trends and help you stay ahead of your competitors.

Feefo provides a range of valuable customer loyalty insight tools, such as performance, profiling, surveys, and a campaign management tool, so you know what customers are saying and feeling about you. Smart themes provide extra data that businesses can combine with customer experience metrics to streamline their customer reviews. You can track customer sentiment and provide the relevant information that customers need while also helping you make smarter decisions to increase your customer conversion rate.

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Tips for improving customer loyalty

Given the high cost of attracting new customers, guaranteeing customer loyalty can make all the difference between success and failure for your business. You can build customer loyalty with the help of these key drivers:

Great customer service

If you want more loyal customers, fantastic customer service is essential. Even if customers love your products or services, they are unlikely to form any positive emotional connection to your business if they don't feel respected and valued. Customers also want and expect good service on social media, with 42% of consumers expecting a response on social media within 1 hour. Meanwhile, 32% expect to receive a response in just 30 minutes.

Listen and act on feedback

Along with a helpful and friendly service when a customer makes a purchase, good service also relates to how you receive customer feedback and what you do with it. If customers feel listened to when something goes wrong or when in need of support, they are more likely to have positive emotions towards your business in the future and share their positive experience on social media or face-to-face with friends and family.

Reward loyal customers

A key way to keep your customers coming back is by rewarding them for their loyalty. Around 72% of men and 76% of women are likely to buy from a business that provides a loyalty programme. A loyalty programme that offers gifts, customer discounts and exclusive offers can make your customers feel appreciated.

Consider employee experience

Employee experience is a surprising but key driver of customer loyalty. Customers are more likely to feel warm about a business that treats its customers well. Furthermore, happy and engaged employees are more likely to deliver a good service, leading to satisfied and loyal customers. For example, at Starbucks, 87% of customers who feel loyal towards the brand do so because of how the company treats their people.

Customer insights are not only crucial for monitoring business growth, they also help you understand what drives your customers and keeps them either coming back or putting them off returning. After all, the only way your business will grow and flourish is by having a loyal customer base. Start by establishing your goals, then identify which resources you want to use to gather your customer insights. Once you've collected all the relevant data, you can evaluate what you are doing right and what you need to improve.

Feefo has a range of tools to help your business grow. Get in touch with our experts today to find out how we can help you better understand your customers. If you are already a Feefo customer, get in touch at clientdevelopment@feefo.com.


Net Promoter® and NPS® are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.


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