Boost the referral programme by offering rewards to both senders and receivers, encouraging customers to spread the brand across different channels, and creating motivating and shareable referral messages. While it is obvious that returning customers who spend more money are good for business, there are other, more subtle benefits for loyal customers. A recent Harris Interactive survey found that customers would pay more if they could guarantee superior service. If you get into the realm of measuring customer loyalty, you can identify customers who have forged an emotional connection with your brand and are likely to stick around.
By simply typing in a description of what they want to buy, customers can compare prices across all online businesses. New customers (discussed later) tend to be more expensive to acquire and do not spend as much money as loyal, repeat customers. By combining customer value (AOV multiplied by purchase frequency) with average shop lifetime (which represents the average time customers are active before they churn), CLV provides some important information. Customer Acquisition Cost (CAC) typically includes elements such as marketing spend, sales labour and software cost.
It is the result of customer satisfaction, positive customer experiences and the overall value of the goods or services a customer receives from a company. The simplest and probably the most popular loyalty programmes use a points system, i.e. customers earn loyalty points each time they buy from the brand. While satisfaction does not necessarily translate into loyal customers, dissatisfaction almost certainly leads to disloyalty.
Another study by Rare Consulting states that 83 per cent of customers say their brand loyalty is due to trust. Customer service teams that measure customer effort scores can have a big impact on reducing friction and increasing customer loyalty. Start with smaller rewards for all customers who are in the programme, and then encourage repeat purchases by increasing rewards for each rung of the loyalty ladder. Measuring referrals not only allows you to know which customers are staying, but also those who are so happy that they spread the word.
Another type of loyalty programme is a card-based system where customers are rewarded for loading and spending money through the card.