Ways to Use Loyalty Metrics to Ensure Customer Retention
Have you ever met someone for coffee and insisted on going to a specific coffee shop just so you could redeem your completed punch card for a free drink? That is a loyalty program at its finest because not only have you visited enough times to fill your card, but you are also bringing in an additional customer who may not have chosen that shop otherwise, and these repeat visits, redemptions, and referrals are valuable loyalty metrics for the business.
Both of you will get new punch cards (most of them on apps now), and your friend will be so blown away by the experience that they will be a new loyal customer and regularly use their card as well.
The coffee shop can then take these customer loyalty metrics to see how often people come in, what they buy, and how fast their punch cards fill up. By doing this kind of customer loyalty tracking, they can learn what resonates with each customer and personalize the reward program details so that all customers feel valued and motivated to continue buying.
It’s not just coffee shops that benefit from this type of loyalty program, you can also gain key insights into your customers and your business through customer loyalty tracking and implement customer retention strategies based on those. So what exactly does that entail?
Customer Loyalty vs. Customer Retention
Before we get into rewards program details, we need to clear up the difference between customer loyalty and customer retention and how they work together.
Customer Loyalty is why customers choose your business and why they continue to engage. What they like about the product, and then specifically what they like about your business in particular for that product or service. Why do they keep coming back to you? For many, it can be that they like what your company stands for, or the benefits they get from shopping with you, like rewards programs details or coupons. Through measuring customer loyalty metrics, you can learn what your customers like and lean into it for more business.
Customer Retention is if customers return and how frequently they do over a period of time. Customer retention is the result of customer loyalty since loyal customers are the ones who keep coming back, even when they have other options. Consumers have admitted that once they join a loyalty program, they continue to go back to that brand for their original product and are also more open to buying other products from that brand.
Customer Retention Rate
So while customer loyalty tracking should be the focus, the customer retention rate is an important number to know as a baseline, and that way you can use customer loyalty metrics to develop customer retention strategies.
Like we said, customer retention is measured over a period of time, so the way to find the rate is to subtract the number of new customers that came in during that period from the total customers at the end of the period, divide that by the number of customers at the start of the period, and multiply that 100 to get the rate.
Customer Retention Rate = [(# end of period – # new customers) / # start of period] X 100
Analyze Repeat Purchases to Personalize Marketing & Loyalty Programs
The way to boost your customer retention rate is to use your customer loyalty metrics to get personal! Time and again, consumers have admitted that they look with more favor on companies that personalize the shopping experience to them.
Just by figuring out who is buying what and how frequently through customer loyalty tracking, you can know when to send emails promoting certain products or special promotions and coupons so that it hits them at the right time, inviting them back to buy seamlessly and naturally.
By analyzing and personalizing your rewards program details, you can directly maximize your customer retention strategies and grow your business.
Track Your Rewards Redemption Rate
A huge part of customer loyalty tracking depends on if the customers engaged with your loyalty program are taking advantage of the rewards or not. Higher collection and redemption of the rewards means more engagement with and more purchases from your company.
One of the simplest and most common examples (that we brought up earlier) is the coffee/snack/etc punch card where after a certain number of purchases, the next one is free. Having a digital punch card and seeing how frequently users redeem the free one is a great way to measure both loyalty and retention.
Tracking these rewards program details is a sure shot way to see if your customers and you see eye to eye on what is important when it comes to purchasing. If you notice that customers hoard their rewards or don’t buy as often to accumulate rewards, then that could indicate to you to revise your rewards program details.
Give Extra Perks to Your Highest Users
This is a step beyond just a regular loyalty program. These customer loyalty metrics can show who is spreading the word the most about your products through sharing things on social media, directly from your app, or through conversation. After all, word of mouth is absolutely everything for a business, and 90% of people would much rather go with a recommendation from someone they know over a completely new brand.
And since this is word of mouth, customer loyalty tracking in this form can look like a “Refer a Friend” promotion where both the recommender and the friend get a certain percentage off, or even a reward for leaving a review or answering a survey about how likely they are to recommend the product to friends or family.
This is not only one of the best customer retention strategies since it shows your most loyal users how much you value them, but it also increases your business by having them bring in new customers.
Conclusion
Loyal customers who are excited about your products and services and keep coming back are the ones who will make the biggest difference in your business growth.
By having a rewards program and using it for customer loyalty tracking, you can increase your customer retention rate. Great ways to do this include analyzing repeat purchases and personalizing the rewards program details based on consumer behavior, tracking the rate at which rewards are redeemed, and giving extra perks to those customers who spread the word about your business.
LincSell has advanced customer loyalty tracking features and a great team to help you implement customer retention strategies that work. Book a Demo and see what LincSell can do for you!
