Some Important Metrics

Measuring loyalty
• Top metrics for measuring loyalty:

– CLV - Customer Lifetime Value

– RPR - Repeat Purchase Rate
– NPS - Net Promoter Score
– Churn
– CAC - Customer Acquisition Cost 
– CES - Customer Effort Score
 Significance of Customer Lifetime Value

• Customer lifetime value signifies the profit generated from a

customer throughout the lifetime of a relationship
• Cadillac customers spend on average $350,000 in their
lifetime. Hence, each lost customer represents thousands of
dollars of lost revenue.
• Some companies calculate the value of each individual while
others calculate it for each individual segment.
• Database marketing is an effective tool to calculate CLV.
• Cost for acquiring a new customer can be calculated by
dividing the total promotional expenditure by the number of
new customers.
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Customer Lifetime Value Analysis – Lilly
Fashions

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• How to measure CLV?
– AMT= Avg. number of monthly transaction
– AOV = Avg. Order volume
– AGM= Avg. gross margin
– ALT= Avg. Customer lifespan

• How to measure RPR?

Number of repeat customers / Total number of
customers
• NPS - NPS measures how willing your customers are
to recommend your products and services to others.
– How likely is your customers an email asking them “How
likely is it that you would recommend our
company/product/service to a friend or colleague?

• Promoters (score 9-10) are your loyal customers and advocates of

your brand.
• Passives (score 7-8) are satisfied with the purchase but the
experience was not good enough to instill loyalty.
• Detractors (score 0-6) are unsatisfied clients who can harm your
brand by spreading negative word-of-mouth.

(% of promoters - % of Detractors)
• Churn – Helps you to know how many customers
resigned from using your services.

• The easiest way to calculate churn rate is to detract

the number of customers at the end of the month
from the size of your audience at the beginning and
divide the result by the initial number of customers.

(customers at the beginning of the month- customers at the

end of the month)/ customers at the beginning of the month
• CAC- CAC is one of the most popular metrics
used to measure customer loyalty and
engagement. In short, it says how much
resources you need to invest to acquire a new
customer. 

(Total cost of sales and marketing / Total number of

customers)
• CES- CES shows how much effort customers had to put in
to have their problems solved. Why is it important? CES
is a very strong predictor of future customer loyalty -
customer with high effort scores are less likely to return. 

• The easiest way to measure your CES is to ask your

customers how easy it was for you to solve their problem
with three answers:
– Easy
– Neither
– Difficult

(“Difficult customers – “Easy” customers)