Customer loyalty refers to the “trust” and “attachment” that customers feel toward a brand or service. Loyalty comes from the English word Loyalty, which means “loyalty.”
“Trust” in customer loyalty is an objective evaluation of the price and quality of products and services. On the other hand, “attachment” is something like a fan’s psychology, such as “this brand suits me better than other products or services” or “this brand understands me.”
Increasing customer loyalty requires fostering both trust and love, not just one or the other.
Metrics for measuring customer loyalty
Net Promoter Score (NPS) is often used as a metric to quantify customer loyalty. NPS was announced in the United States in 2003 and quickly became popular as major companies such as Apple demonstrated its effectiveness. NPS is characterized by its simple and easy-to-understand calculation method.
To calculate NPS, we ask customers about a product or service, “How likely would you be to recommend 〇〇 to a close friend or family member?” On an 11-point scale from 0 to 10. I’ll ask you to answer. Depending on their answers, customers are categorized into three types: detractors (0-6), neutrals (7-8), and promoters (9-10). Then, find the difference between the percentage of promoters and the percentage of detractors. For example, if promoters account for 40% of the total and detractors account for 20%, the NPS value will be 40% – 20%, or 20. The higher the NPS value, the higher the customer loyalty.
As mentioned above, NPS scores respondents’ future behavior using the question “Will you recommend it to others in the future?” Therefore, unlike customer satisfaction, which does not necessarily correlate with business performance, NPS values are thought to be correlated with future profitability.
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