Customer loyalty program is an important element of the customer retention and development strategy. Correctly built loyalty program can bring the relationship with customers to a new level and increase the number of regular customers.

The main driver of growth in modern commerce is customer retention. Companies are introducing loyalty programs, such as customer relationship management software, with the goal of creating the largest possible community of loyal customers. But, despite all the efforts, 13 out of 30 loyalty programs stop working already a year after they are launched.

Perhaps the reason is that the business is implementing loyalty programs without thinking about what the consumer really needs. Or maybe loyalty programs are so complicated and confusing that even marketers themselves cannot handle them.

To form a successful customer loyalty program with the help of customer relationship management software, and to adjust an existing one, you need to evaluate to what extent your customers are loyal to your brand. But how to measure loyalty?

How to Measure Customer Loyalty

You can determine the extent to which your consumers are loyal to your brand with different criteria and aspects. Below are the most effective metrics that will allow us to obtain the most objective result.

  • Percentage of regular customers.

Regular customers are already loyal

  • Procurement volume based on client recommendations.

This is one of the key indicators for measuring loyalty. Customers want to see the company taking their opinion into account. According to statistics, a satisfied customer will share his/her experience with the brand with a maximum of five of his acquaintances, and when dissatisfied, with a minimum of ten.

  • Loyalty Index

The loyalty index is the ratio between the total number of customers of the company and the number of loyal customers. But since it is extremely difficult to clearly distinguish between loyal and disloyal customers in such a way that the index is fair, it is necessary to take into account the relationship between all customers and those who, for example, made repeated purchases.

  • The share of sales to old customers.

Often companies simply copy the key factor from another’s loyalty program. In that case, defeat is inevitable. You can copy the key factor, but not the business environment and the competitor’s values.

Customer loyalty programs in customer relationship management software: types and examples

Today there are many different models of customer retention on the market. Below are the most popular ones, the effectiveness of which has been proved by many companies.

Cumulative Loyalty Program

The easiest and most common way to keep customers. Buyers accumulate points for each purchase, which they then exchange for goods, services or other material benefits. The main rule of implementing customer relationship management software is that everything should be as simple, clear and transparent as possible.

Loyalty Program with Elements of Gaming

Game mechanics, embedded in the loyalty program, can greatly heat up the interest of customers. The easiest option is to hold competitions. In this case prizes should be valuable and easily achievable.