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Other Metrics

In the wide world of customer metrics, only one thing is certain: there are many choices. Following is a brief description of some commonly used customer metrics with links to more information.

Conversion

Conversion is another key customer metric, especially online. E-businesses track conversions of site browsers to buyers; conversion of non-registered users to subscribers, and other conversion factors based on the type of site. To identify conversions to track for your company, draw a purchase funnel outlining the key stages in the purchase process and track customers as they move through the funnel. Resources regarding conversion metrics include Eric Peterson's book: "Web Analytics Demystified."

Customer Loyalty

Customer loyalty is one of the most frequently measured customer metrics, and one that is viewed from many different perspectives. In general, loyalty is defined as a customer’s tendency to choose a particular company, brand or product over the competition. Some organizations and consultants view loyalty as an end result. Others see loyalty as a means to increase sales and positively impact the bottom line. Loyalty is closely interrelated with other customer metrics. Satisfaction is often viewed as driving loyalty, while “word of mouth” marketing is often an outcome.

For a discussion of “The Four Types of Loyalty”, click here to listen to a 10-minute webcast.

Customer Value

Customer Value Analysis (CVA), pioneered by Bradley Gale, claims that "companies succeed by providing superior customer value." CVA provides a market view of how customers see the competitive space. Companies are pitted against each other on two basic dimensions -- quality and price -- on something called a 'value map'. Companies that perform better relative to the competition on price and quality are deemed to be in a better competitive position. The optimal ratio of price and quality is determined by something Gale calls "the fair value line". Armed with this information, a company can see if it is well-positioned in the marketplace. CVA builds in measurement of the competition, something that can be lacking in other customer-based studies.

Net Promoter®

A popular new concept from loyalty guru Fred Reichheld put forward in his book, The Ultimate Question: Driving Good Profits and True Growth. This metric requires that companies ask a single question – “Would you recommend this company and products to a friend or colleague?” From this answer, companies derive a Net Promoter® Score by subtracting “detractors” from “promoters” (hence the name).
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Word-of-Mouth

Of late, word of mouth marketing has become a hot concept. Today’s savvy consumers often trust word-of-mouth more than traditional advertising or other communication coming from a company. According to the Word of Mouth Marketing Association (WOMMA), two-thirds of all economic activity in the U.S. is influenced by shared opinions about a product, brand or service.