Customer Loyalty Resource for Customer Experience Professionals

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I have written on the topic of customer loyalty and related matters for many years. I organized many of these writings on customer loyalty and metrics below as a quick resource for people looking to learn about the concept of customer loyalty and its value to business. Be sure to bookmark this page as I will continually update it as I conduct more research on the topic.

Defining and Measuring Customer Loyalty

Turns out, there are many definitions of customer loyalty. Below are a few articles that help clarify the meaning of customer loyalty. Based on a review of several definitions of customer loyalty, I provide a unifying definition which encompasses both attitudinal and behavioral aspects of loyalty. Additionally, I present a measurement framework to help businesses identify the measures of customer loyalty that are best suited for their specific needs.

• What is Customer Loyalty?: Customer loyalty is the degree to which people have positive feelings for and engage in positive behaviors toward a company or brand.
• Customer Loyalty Measurement Framework: When measuring customer loyalty, you must consider the type of loyalty (i.e., retention, advocacy and purchasing) as well as the method of measurement (e.g., subjective and objective).
• Survey Questions that Measure Customer Loyalty: I offer several customer loyalty survey questions that measure different types of customer loyalty.

Dimensionality of Customer Loyalty

Read about the development of the RAPID Loyalty Approach. Click image to download the article.

Research shows that customer loyalty is a multidimensional construct. Rather than thinking of customer loyalty as a single question, consider a broader definition of customer loyalty that includes three types of customer loyalty: Retention, Advocacy and Purchasing.  This RAPID approach to measuring customer loyalty can give you insights to help you grow your business through new and existing customers.

• A mathematical picture of customer loyalty: A picture is worth a thousand words. Based on the results of a factor analysis of several different loyalty questions, I plotted a representation of customer loyalty that visually shows how customer loyalty boils down to three different types of customer loyalty.
• Problems with the Net Promoter Score® (NPS): The NPS is based on a single questions, “How likely are you to recommend COMPANY ABC to you friends and relatives.” The research behind this metric has been challenged by myself and other researchers. We have concluded that it is not the best predictor of business growth; overall satisfaction is just as good. Additionally, other measures of customer loyalty (e.g., retention, purchasing) predict other types of business growth.
• What customer feedback professionals think of the Net Promoter Score®: I surveyed customer feedback professionals to understand what they think about the NPS. Turns out, they do not believe the NPS claims.

Customer Loyalty Metrics

Companies use customer loyalty metrics to help track customer loyalty. These metrics are summaries that reflect the loyalty of their customer base (or a segment of them). Below are a couple of resources to illustrate the different ways companies summarize their loyalty metrics and the criteria that make up a good customer metric.

• Mean Scores versus Net Scores versus Top Box Scores: I like the recommend question. What I don’t like are net scores. It’s an arbitrary metric. The mean score and top box scores are better.
• Four Criteria for a Good Customer Metric: I offer these four questions you need to ask about your customer metrics: 1) How is it defined?, 2) How is the metric calculated? 3) What are the measurement properties of the metric (e.g., reliability and validity) and 4) How useful is the metric in predicting important business outcomes.

 Books on Customer Loyalty

Hayes, B. E. (2009). Beyond the ultimate question: A systematic approach to improve customer loyalty. Quality Press. Milwaukee, WI.

Beyond the Ultimate Question includes a comprehensive review of the Net Promoter® Score (NPS). The author challenges the claims of the NPS developers and presents a more comprehensive  method of measuring customer loyalty. It turns out that you need more than a single question to understand customer loyalty!

Improving customer loyalty relies on more than asking a single question. Customer experience management (CEM) programs have many moving parts, each contributing to the success of the program. The book includes best practices of CEM programs. Through a systematic study comparing loyalty leaders and loyalty laggards, I identified the steps companies need to undertake to create an effective CEM program.  You need to look beyond simple metrics and improve all aspects of your CEM program. Read how Oracle and Akamai structure their customer feedback programs. Buy book.

Hayes, B. E. (2008). Measuring customer satisfaction and loyalty: Survey design, use and statistical analysis methods (3rd ed.). Quality Press. Milwaukee, WI.

Book includes discussion of how to measure the customer experience, including customer satisfaction and customer loyalty. Examples of use of customer surveys are used, including driver analysis, KPIs, dashboards, and more. Buy book.