Loyalty program metrics: Why a multi-pronged approach is key

If your brand was a band, how loyal would your following be?

Do you have fans who sing all the words to your hit songs and wait in line early, or do you attract casual listeners? Are your fans recommending your music to friends or are they no longer satisfied with your sound?

While you may not be touring the country with your band, fan emotional loyalty represents a small example of the challenges marketers face at a macro-level when trying to get a full view of loyalty to measure customer attachment to their brand.

To truly understand our customers—and to create meaningful loyalty programs for them—brands need a full picture. We’ve relied on the Net Promoter Score (NPS) and Customer Satisfaction Score (CSAT) to measure how loyal customers are to a brand. With emotional loyalty, we start to understand them on an even deeper level. Marketers need all three to make that picture complete.

Stronger consumer ties start with the heart

It’s no surprise that emotions impact not only the choices we make, but the preferences we have as well. Decision-making is informed by our emotional state, and this rings true in everything we do: From choosing to purchase concert tickets to buying a new pair of shoes.

That’s why personalization plays a critical role in loyalty marketing. For marketers to be effective at personalizing experiences, they must know customer preferences and emotions at a deeper level.

“Emotion plays a critical role in decision-making, and emotional decisions are often even stickier than rational ones,” said Tamara Oliverio, VP, strategic consulting at Epsilon. If brands strive for higher conversion rates, greater share of wallet, and advocation in both the long term and short term, they must acknowledge that customers want—no, expect—that they know how to speak to their full view of loyalty, including their emotional response.

Holistic measurement makes meaningful marketing

While most brands have started paying attention to consumer’s emotional ties, few compare, contrast and activate based on their observations around CSAT, NPS and emotional loyalty

• Customer Satisfaction Score (CSAT) shows how satisfied customers are with product, service, interaction, program or overall business. This usually asks the question, "How satisfied are you with your experience?”
• Net Promoter Score (NPT) measures customer loyalty by calculating the likelihood that a customer will recommend a brand to their friends. It's rooted in the logic that customers who are willing to recommend your brand to others are more likely to be loyal customers.
• Emotional loyalty measures the emotional connection a customer has with a brand and aims to understand the customer’s feelings about a brand outside of just their behavior.

These three combined give you a more varied understanding of the customer experience: Do they like you, and if so, why, and how deeply? Each have their unique strengths and weaknesses and all scores are essential to understand your member base.

CSAT

Strengths:

• Measures short-term satisfaction
• Great for identifying immediate areas of improvement
• High specificity: Focuses on specific product, service or interaction
• Correlates some past/future behaviors

Weaknesses:

• Not indicative of future retention
• Not reflective of overall customer experience

NPS

Strengths:

• Measures long-term satisfaction
• Clear and easily understandable metric
• Can compare loyalty across different brands and time

Weaknesses:

• No insights on actual customer experience
• Not inclusive of overall customer needs or preferences
• Can’t differentiate promoters (for ex. How loyal and/or satisfied a promoter is)

Emotional loyalty

Strengths:

• Measures emotional attachment
• Good retention indicator
• Evaluates overall purchase and engagement behaviors

Weaknesses:

• Emotions tell one story behind a relationship
• Better when used in tandem with CSAT and NPS

When we look at these strengths and weaknesses, we see how specific use cases might be better informed by a specific metrics. For example, if you’re looking to improve specific areas of your customer experience or loyalty program, you might turn to CSAT. If you’re looking to examine how your program has performed over a period of time, you might look at NPS. However, if you want to fully understand your member base, you need all three.

Putting metrics into action

By looking at these scores collectively, brands can start to understand the state of their customer experience and loyalty program management, and identify areas they want to improve and expand.

Let’s put this into action: Your brand polls your member base to gauge their connection to your brand. A significant amount of high-value members respond that they are "unsure" about how they fell about you. At Epsilon, we know that the "unsure" stage is where most people lapse because they might be questioning if your brand is for them, they feel it's no longer relevant or if they had a negative experience.

Next, you examine their average CSAT to determine which areas of your brand's customer experience could have caused them to feel unsure, and leverages NPS to understand their likelihood to recommend your brand. By doing this, you will have a more informed view and strategy on how to proactively prevent other members from lapsing in the future.

Each score tells an important story about the short term, long term, and emotional connection members have to a brand. And by understanding this, clients can activate to deepen it.

Americus Reed, an esteemed professor at Harvard University, explains that when this deep emotional connection is achieved, two things happen:

1. That person is extremely passionate about the brand.
2. They identify themselves with the brand and defend thhe brand the same way they would defend themselves.

These are your brand's most active, true fans. To cultivate them, brands must be able to see the full picture of customer loyalty: what satisfies them, what makes them recommend you, and how they feel about your brand.

eBook: Decoding popular loyalty metrics

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Doing loyalty right with Epsilon

The full measurement picture acts as the fast pass to conversion. Happy people beget more happy people. When your loyal customers are committed to you, they share that commitment and trust with others and defend it when confronted with an alternative. The true holy grail of marketing is when your truly loyal “fans” do the marketing to convert normal people to be advocates for your brand. And it starts with stepping back and looking at the full view of loyalty.

At Epsilon, we provide a flexible model to meet your strategic needs. We provide a more informed view on how you can retain members. Clients can use our proprietary emotional scores to drive strategy and deliver the right targeted offers. Epsilon’s PeopleCloud Loyalty solution is fueled by meaningful insights that provide you with the full scope of loyalty, so you can continue to scale your loyalty marketing strategy based on your customers' connection to your brand.