3 reasons to track ROI of customer loyalty

Measuring customer loyalty could help determine accurate sales forecasts

By Brian Thompson,

When reporting their performance each quarter, companies usually highlight their revenue, capital investments and future projects. However, they may be missing a crucial factor in their current and future net worth: customer loyalty. When customers are loyal, they are likely to stay with companies even during economic downturns, which cushion of blow recessions and other financial crises and allow them to bounce back even stronger. 

Here are three reasons to monitor return on investment connected to customer loyalty:

1. Fine -tune your marketing and sales campaigns
When you are crafting your market and sales campaigns, you're most likely thinking about how to target your ideal audience and capture more market share. While your sales strategy sounds good in theory, it might be different in practice. While companies often track sales effectiveness metrics when it comes to obtaining new customers, there are different measures needed when calculating customer loyalty.

The right marketing and sales promotions should maintain your hard-earned brand followers while still aiming to convert leads into customers. Managers should look at their repeat customer growth as well as churn rates to determine whether they are meeting both of these goals. 

2. Make better sales forecasts
As some firms struggle with creating sales forecasts, looking into the numbers behind customer loyalty could help improve the accuracy of these reports. In figuring out projected total revenue, evaluate the lifetime worth of loyal customers. Customer lifetime value is usually calculated by the profit earned per customer and could be tracked with sales performance software. Knowing the value of these customers could put into perspective the skills and other qualifications salespeople need to keep these consumers around for the long haul, such as good relationship-building skills.

3. Create more effective loyalty rewards programs
Rewards programs have surged in popularity and even small businesses have them to generate customer interest and - more importantly - loyalty. In analyzing ROI of customer loyalty, you could also use this insight to develop better loyalty rewards plans. Some customers would rather have opportunities to earn cash back or discounts as part of company's programs. Tracking this information might also allow companie to decide how to implement these rewards features, whether to launch more rewards on mobile platforms or not.

Whether you measure ROI on certain sales effectiveness metrics or simply on customer worth, it's important to continue to gather data to keep consumers satisfied and revenue growth steady.

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Brian Thompson