How to identify your most loyal customers using loyalty metrics

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How to identify your most loyal customers using loyalty metrics

What is Customer Loyalty?


The Oxford dictionary defines Loyalty as “unswerving in allegiance; faithful to a cause, ideal, custom, institution, or product”. Customer loyalty is no different and is defined as “Customer loyalty is positively related to customer satisfaction as happy customers consistently favour the brands that meet their needs.


Loyal customers are purchasing a firm’s products or services exclusively, and they are not willing to switch their preferences over a competitive firm.” Not every customer is going to be loyal, even if they are signed up to your loyalty program.


It is invaluable for businesses to identify their loyal customers because “5% increase in customer retention can increase profits between 25% and up to 125%” and driving sale through engaged customers is easier and more cost effective than trying to acquire a new customer.



Characteristics of a loyal customer?


Loyal customer display similar behaviours across all sectors. The characteristics most common in loyal customers are;



• A customer that makes repeat purchases.
• A customer that is engaged with your loyalty program.
• A customer that follows your brand.
• A customer who refers your brand to a friend.
• A customer that is not impacted by competitors or prices.
• A customer that is subscribed to contact with your brand.


KPI’s to measure customer loyalty?


Now that we’ve established what loyalty means to businesses and what to look for when trying to spot a loyal customer how can we identify our most loyal customers using your loyalty software.



If you have a loyalty program in place this is a great place to start. Integrated loyalty software can capture customer data from numerous customer touchpoints and relay it back to you through reporting. Reports or business analytics to pinpoint your most loyal customers are Recency, Frequency, Monetary.



• KPI’s to measure Recency, Frequency, Monetary.
• Active customers in the last 30 days.
• Average transaction value.
• Average purchase frequency.
• Spend per visit.



Another measure of loyalty is to measure engagement. KPI’s to measure customer engagement are;



• Subscribers to brand communications, email, SMS, in-app messaging.
• Actively redeems offers and promotions.
• Writes reviews online about your store, service, product.
• Participates in surveys.



Identifying your loyal customers does many things for a business. By knowing your loyal customer’s brands have a better understanding of their customers’ needs and expectations. This allows businesses to tailor their customer experience and increase customer retention.


This retention has a knock-on effect as loyal customers become business best advertisers and attract new business through their brand advocacy. Understanding comes from measurement and analytics.


Having a source of data capture across multiple touchpoints will ensure businesses are getting a clear view of their customer activity and applying the right metrics to measure customer loyalty will provide users with the valuable insights to make imperative decisions for your business.

Read more: Why are loyalty programs key to marketing Strategies 

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