Five different ways to look at customer loyalty

August 29, 2023
Bart Muskala
Customer loyalty has always been important but when retailers find themselves in tough times, it becomes crucial. We have defined customer loyalty in five different ways to help you understand your customers and in turn improve your loyalty strategies.

We live in times where retailers increasingly face demanding customers who expect, among other things, an excellent in-store shopping experience and personalized advertising. This significant challenge makes customer loyalty necessary to remain successful. Some brands focus more on customer loyalty than others but for every brand the relevance of customer loyalty cannot be underestimated. Strong brands are after all brands with a loyal customer base. With this in mind, it makes sense that so many companies undertake marketing efforts concerning customer loyalty. But the question is whether these efforts truly achieve their desired effect. Accurat’s insights provide an answer to this question. In addition, the five different ways to define loyalty also provide other insights into the behaviour of your customers. The ultimate goal is for these insights to lead to improved loyalty strategies.  

Frequency

The first thing that comes to mind when considering  loyalty is that loyal customers are customers that frequently visit your brand. The more frequently they visit you in a certain time period, the better obviously. But to really know how you are performing you need to compare your frequency with the frequency of the market. This provides a more realistic view as this is the only correct benchmark. It is simple: if your competitors are doing better, you are underperforming. For example, if the average market frequency is 6 and the average frequency of your customers is 4, you need to take action! On Accurat’s dashboard you also find the distribution of visits per month for your brand and your competitors. This allows you to spot the differences in the amount of visits and to compare with your competitors.  

Share of visits 

There are several reasons why customers switch to another brand: a successful campaign, a new market entrant or market dynamics in general. By analyzing the share of visits over time, these shifts are immediately apparent. It is also possible to monitor the impact of your own marketing campaigns by analyzing the share of visits and in turn improve them. Next to share of visits over time we introduce share of visits per visit over a certain time period. This way you can find out for example how many of all the consumers that visit your category for the first time in a certain month, visit your brand. You have the same information for consumers' second, third et cetera category visit in a certain month. 

Primary and secondary loyal customers

Usually no distinction is made when talking about loyal customers but we believe that it is useful to make a distinction between primary and secondary loyal customers. Primary loyals visit your brand more than any other brand meaning that your brand has the majority (more than 50%) of their category visits that are longer than 15 minutes. Secondary loyals on the other hand often combine your brand with other brands since of all their category visits of more than 15 minutes only 25%-50% are at your brand. In addition to loyal customers, there are also occasional shoppers. Occasional shoppers are defined as customers that have 0%-25% of their category visits of more than 15 minutes at your brand or have short-term visits (shorter than 15 minutes). To gain more insight into these types of customers, Accurat allows you to compare your distribution of primary and secondary loyal customers between each other and with occasional shoppers. Moreover these percentages can/should again be compared with market benchmarks. 

Brands combined

It’s important that you know how often your brand is combined with other brands. Of course the less your brand is combined with other brands the better because this means your customers are more loyal. Again this should be compared with the average market value so the average number of brands that customers combine in your category. If your brand is combined more with other brands than on average in your category then it’s time to rethink your strategy. Additionally, Accurat provides an overview of the distribution of the number of brands that are combined for your brand and for your competitors. It is good to know how many brands you are combined with but even more interesting is to know which brands you are often combined with. Accurat also offers these insights on their dashboard.  

Visit transfers

Lastly, it is crucial to know the switching behaviour of your customers. Accurat provides this information using a visit transfer graph and table as shown in the figure below. They both illustrate how many visits were won or lost between a brand and its competitors in a certain period of time. The graph gives a visual overview of the net results that can be interpreted quickly and easily. The table on the other hand gives an overview for each brand how many visits are won and lost to the selected brand and the net result. It’s interesting to analyse this information for your brand but also to see the visit transfers of your competitors. Without a doubt, the more visits you or your competitor have the less loyal your customers or the customers of your competitor are. 

Summarized: loyal customers are crucial to remain successful. Make sure that you understand your (loyal) customers by analyzing them in a data driven way. The five ways to look at customer loyalty give you the proper insights to take action. Learn more about our solutions and get in contact with us for a free consultation to see exactly how we can help you.

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