The Metrics of Customer Loyalty
Here are some numbers dealing with customer loyalty. It has been proven that organizations with high levels of loyal customers typically grow sales at 2X the rate of their competition. It costs 5 times as much to get a new customer than to keep an existing customer. The most effective and least expensive form of adverting is word-of-mouth. An organization with disloyal customers will typically spend 4 to 5 times more in advertising to get additional customers. Loyal customers will be less likely to be swayed by discount pricing and other incentives offered by the competition. They are generally willing to pay more and are more forgiving if there is a mistake. 6 out of 10 customers will never return when they experience bad service. They won’t complain, they just won’t come back. The ultimate question to measure customer loyalty is, “How likely is it that you would recommend our organization, products and services to a friend or colleague?” Get your customers to answer this question on a scale of 1-10. It has been shown that there is a direct and strategic correlation between an organization’s revenue growth and this customer loyalty score.
Action Step for This Week
Develop a way to measure customer loyalty in your organization. Add up how much customers spend. What get’s measured, get’s focused on and has the best chance of being improved. Develop a questionnaire with the key question. “How likely is it that you would recommend our organization, products and services to a friend or colleague?” Poll your clients via email, phone calls or postcards. Listen, listen, listen. Summarize and share the information throughout the organization. Make this an on-going strategic policy.