Customer loyalty is the leading indicator of business growth. In fact, a main reason why companies implement voice of the customer (VoC) initiatives is to improve customer loyalty. Based on a 2010 study by Gleanster, asking 276 companies about their customer feedback management initiative, a majority of the loyalty leading companies said they implemented their program to increase customer loyalty, increase customer retention and increase customer satisfaction.
There are many different ways customers can engage in loyalty behaviors toward your company or brand. They can remain a customer for a long time. They can recommend you to their colleagues and friends. They can even show their loyalty by purchasing additional products/services from you. These loyalty behaviors, in turn, drive different types of business growth: overall customer growth, new customer growth, and average revenue per customer.
Customer relationship surveys, the foundation of many VoC programs, are used to measure customer loyalty, along with other important customer variables (e.g., satisfaction with their experience). Including the right loyalty questions in your customer survey is essential to an effective VoC program. Companies use these surveys to understand and diagnose problem areas that, when fixed, will increase customer loyalty.
Not all Loyalty Questions are Created Equal
I have developed a set of customer loyalty questions that measure different types of customer loyalty. These loyalty questions have been shown to be predictive of different types of business growth and can be grouped into three sets of loyalty behaviors: retention, advocacy and purchasing. Each set of loyalty behaviors contains specific loyalty questions. Research shows that questions that fall into the same set are essentially interchangeable because they measure the same thing. Some of these customer loyalty questions appear below.
Retention Loyalty: the extent to which customers remain customers and/or do not use a competitor
- How likely are you to switch to another provider? (0 - Not at all likely to 10 - Extremely likely)
- How likely are you to renew your service contract? (0 - Not at all likely to 10 - Extremely likely)
Advocacy Loyalty: the extent to which customers advocate your product and/or brand
- How likely are you to recommend us to your friends/colleagues? (0 - Not at all likely to 10 - Extremely likely)
- Overall, how satisfied are you with our performance? (0 - Extremely dissatisfied to 10 - Extremely satisfied)
Purchasing Loyalty: the extent to which customers increase their purchasing behavior
- How likely are you to purchase different solutions from us in the future? (0 - Not at all likely to 10 - Extremely likely)
- How likely are you to expand the use of our products throughout company? (0 - Not at all likely to 10 - Extremely likely)
Using Different Types of Loyalty Questions
Selecting the right customer loyalty questions for your survey requires careful thought about your customers and your business. Think about how your customers are able to show their loyalty toward your company and include loyalty questions that reflect those loyalty behaviors you want to manage and change. Additionally, consider your business growth strategy and current business environment. Think about current business challenges and select loyalty questions that will help you address those challenges. For example, if you have a high churn rate, you might consider using a retention loyalty question to more effectively identify solutions to increase customer retention. Additionally, if you are interested in increasing ARPU (average revenue per customer), you might consider including a purchasing loyalty question.
Using a comprehensive set of loyalty questions will help you target solutions to optimize different types of customer loyalty of existing customers and, consequently, improve business growth. Including a "likelihood to quit" question and a "likelihood to buy different" question can help you understand why customer are leaving and identify ways to increase customers' purchasing behavior, respectively.
Customers can engage in a variety of loyalty behaviors. Companies need to think about customer loyalty more broadly and include different types of loyalty questions that meet their specific business needs and comprehensively capture important loyalty behaviors.