Every company wants to gain and retain more customers. To do so, leaders must measure the cause and effects of long-term loyalty. To comprehensively measure customer loyalty, companies must capture customers’ overall satisfaction and, ultimately, their propensity to become repeat customers (i.e., to continue to do business or purchase products and services time and time again). Brand Integrity helps our clients achieve this goal using the Customer Loyalty Index (CLI) as a part of a Customer Engagement Program. CLI is comprised of four customer-centric questions:
- Satisfaction with Overall Performance: Customers are asked to evaluate whether their expectations were met during a specific or set of interactions. Since most customer expectations are often formed in advance of the interaction, customer satisfaction is the direct result of whether these expectations were met or not.
- Likelihood to Recommend to Others: Customers are asked to rate their tendency to recommend the company to friends or colleagues. Customers with high likelihood to recommend are the most committed to a company, tend to promote the company through positive word-of-mouth, and are less hesitant to switch to a competitor even if they encounter service disruptions, errors, product defects, or higher prices.
- Likelihood to Continue Buying: Customer are asked to evaluate their propensity to continue to do business with the company based on past experience gained over a specific time period. Although high likelihood to continue buying implies high satisfaction, that may not be true in many cases. Customers may continue to do business even when their satisfaction is low. For example, in the case of high switching costs that could involve costs associated with breaking existing contracts, replacing technological infrastructure, or having to restructure operations.
- Likelihood to Choose Again (as if for the first time): Customers are asked to evaluate their hypothetical propensity to choose the company if they had to make the decision for the first time. The specific question attempts to measure willingness to continue buying as if there were no switching costs involved (i.e., moving to a competitor would incur no costs at all).
Using a scale from 0 to 10, CLI is calculated as a straight average of responses. In today’s age, gathering massive amounts of data is easier than ever. Company leaders have access to a plethora of tools that enable inexpensive and fast customer feedback collection. What leaders need is information collected in ways that make insights easier to understand and act on. CLI is a proven and simple-to-execute method that helps leaders understand how loyal their customers are, while empowering them to confidently make strategic decisions to improve customer relationships.