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11 Steps to Measuring Customer Loyalty

Is your CEO breathing down you neck about building and keeping your customers?  You’re not alone.  In today’s world where Customer Relationship Management is paramount, most businesses are measuring customer loyalty as part of their CRM and continuous improvement processes. If you are embarking on such a journey, these are some key considerations.

measure performance

1. Begin with the end in mind.  Know exactly what actions will be taken as a result of this research, secure alignment across the organization, and budget – the actual surveying is a minor investment of time and money compared to what it takes to actually use the knowledge to drive a business forward.

2. “Bottoms up !”  You can take a Top Down or Bottom Up approach. They serve different business purposes. One survey can’t serve both these functions.

  • Top down: you measure the loyalty of your customers and competitors’ across the general population of relevant consumers.  It gives you a relative measure of how you stack up in the marketplace across all category users.
  • Bottom up: a transaction triggers a survey (call to a service center, renewal of a subscription, etc.).  This gives you a clear, immediate sense of what is working/not working about your product or processes.
  • The base of respondents is crucial to data integrity: you have to get to the right people.

3. A rose by any other name is still a rose.  Select a key measure. This is the “dependent variable” that you want to measure and improve on.

  • Net promoter score (NPS)? Satisfaction?  Don’t reinvent the wheel – there are well-researched key scales. 
  • Use the power of statistics: one path we often use is to create a new variable based on several key scales (appeal + purchase intent + NPS, for example); it is often more discriminating than any one scale.

4. How do I love thee, let me count the ways… discover the bases of loyalty among your customers. 

  • You want to know how sustainable they are, how “sticky” or resistant to competitive threats, potential for cross-sell or upsell, and more.
  • The way questions and answer choices are worded, their order in the questionnaire, the amount of material you are covering – many factors can impact the results; you need an expert in survey design here. 

5. Well begun is half done.

  • Invest in a research program upfront to identify key drivers, subsequent studies focus just on measuring those few key drivers. For Bottom Up studies, get granular: know exactly what actions are key.
  • Use customers’ words, flush out all the salient diagnostics, make sure the scales make sense, that the survey isn’t too tedious, that it formats well across multiple platforms (desktop, tablet, phone). 

6.There are 3 kinds of lies: lies, damned lies, and statistics” (Mark Twain) Well wait a minute, stats can be a powerful path to knowledge. 

  • Modeling can wring great value from your survey at low cost, showing you where changes in product/process/etc. will have the greatest impact on loyalty. Two attributes with identical performance scores may have very different impact on your business, and modeling identifies that.

7. “Not everything that can be counted counts and not everything that counts can be counted.” (Albert Einstein): A “root cause analysis” may be required to understand why scores are as they are, and what it would take to improve performance.

  • Use that to plan actions the Company will take to change.
  • Root cause analysis boosts efficiency.

8. Share: Nothing will change unless Stakeholders know, accept, and use the results.

  • Create a clear Action Plan, provide tools/training to enable change, and motivate to change.
  • Dashboards, “success story” memos, strategic access to data online can all help embed a customer-focused culture.
  • Beware of tying customer sat metrics to employee pay: any program can be “gamed”.  There are many stories of programs gone awry because of that.  

9. Embrace Change. Measuring without a committed action plan is a waste.

  • Run an Employee satisfaction survey, ask employees to estimate how they think customers rate the Company. Showing the results, especially the discrepancies, can go a long way to gaining alignment from the front ranks.
  • As part of the pre-survey planning process, plan how Stakeholders will identify areas to target for change, how change will be mapped, communicated, enabled, budgeted, implemented, and rewarded.

10. Track impact.  Remeasure at appropriate intervals.

  • Consider how long it will take to identify areas to change, deploy corrective action, and have consumers see that something has changed. 
  • This interval will be quite different for “top down” vs. “bottom up” customer measurement plans.
  • Define metrics to assess the ROI of the measurement program. 

11. Celebrate success. A relentless striving for more/better/faster is debilitating.

  • Plan how you’ll enjoy success, hail those who’ve made it happen, share their steps to success and hurdles they’ve overcome. 
  • For one of our clients with retail outlets, we recommended highlighting top performers in the Company’s newsletter.  The person’s picture, and details on “how I did it” were inspiring and rewarding.

 This just scratches the surface, there are components I haven’t addressed here at all.   There are excellent resources online (Satmetrix is a great resource on NPS).  Anyone can deploy a survey quickly and easily today, but an effective study requires expertise. A poorly designed study is treacherous: it provides the appearance of valid data without the foundation to support sound business decisions. Contact Julia at or (805) 497 9090 for specific examples of what we’ve done, or to chat about your specific questions, issues, experience.

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