What is Customer Stickiness: How to Measure & Increase it?

Although customer churn and retention are the most important metrics that help you assess the overall health of your business, they often fail to explain why customers leave or stay with you. This is precisely where customer stickiness can help you.

To answer the question “What is customer stickiness?” with ultimate precision, we must thoroughly explain to you its definition, and the way it’s measured, and compare it with other essential concepts like retention and loyalty. This is exactly what we are about to do in the following guide, so feel free to stay with us!

What Is Customer Stickiness?

Customer stickiness measures the possibility of your customer purchasing your product or service over an extended period of time as the market grows. Although the definition might sound similar to the ones for customer retention and customer loyalty, it is different on multiple levels, which we will cover a bit later.

Customer stickiness measures engagement and customer loyalty to assess the overall quality and strength of customer relationships.

Repeat customers, or sticky customers, have a huge impact on ROI and revenue, as they usually spend more than new customers. This is precisely why companies strive to increase customer stickiness, as it directly improves customer retention rates, customer lifetime value, reputation, and business success.

A sticky product, brand, or service comes with a certain value that is attractive to customers and keeps them coming back to it over and over. Various factors influence customer stickiness and sticky products, from customer service and customer experience to pricing and product quality.

Customer Stickiness Metrics to Track

Customer stickiness in SaaS is measured with the help of multiple metrics that include:

• Retention rate 
  • Retention rate measures the percentage of customers that continue using your product or service over a certain period. The higher the retention rate, the higher the customer stickiness.
• Churn rate
  • Churn rate is the metric that is the opposite of customer retention rate as it measures the percentage of customers who stopped using your services or products. The lower the churn rate, the higher the stickiness.
• Customer Lifetime Value 
  • CLV stands for the total revenue you can expect from a customer over their entire journey. High CLV equals high stickiness.
• The Net Promoter Score
  • NPS measures the likelihood of customers recommending your service or product to others. A high NPS reflects a great deal of loyalty among customers and a high level of engagement.
• Various engagement metrics
  • Such like frequency of visits, interactions, and average session duration, also help you assess customer stickiness.

How to Increase Customer Stickiness?

Customer loyalty, engagement, and satisfaction are imperative in SaaS, which can all be significantly improved by implementing effective customer stickiness strategies. Let’s see some of the most common and efficient ones:

• Deliver outstanding customer service
  • Make customer support and customer service a priority to strengthen the customer relationship. Offer a personalized approach and prompt service at all times.
• Offer loyalty programs
  • Repeat and existing customers should be rewarded for their loyalty and engagement. By offering various loyalty programs, you are motivating them to stick to your product. 
• Enhance product quality
  • A product that is high-quality and ready to meet and exceed customer expectations is more likely to retain customers.
• Leverage customer data to offer personalized experiences
  • Use data to understand your customers to the core and offer each a personalized experience. This is how customers feel valued and their time and trust are appreciated. With customer success software like Akita, you can centralize all your customer data into a single place, perform customer segmentation, get precise metrics, share data with the entire team, set automated or manual triggers, and many, many more.
• Offer valuable additional services
  • This includes discounts, exclusive content, access to special events, value propositions, etc.
• Gather and act on customer feedback
  • Make sure your customers are heard and their voices understood. Gather customer feedback and use it to improve your product and customer service based on the customer’s suggestions.
• Encourage customer advocacy
  • Word-of-mouth referrals can have a huge impact on stickiness. Motivate satisfied customers to share their positive experiences with others.
• Invest in customer success
  • Customer loyalty goes beyond providing customers with great support and service. You need to make sure that they complete all the steps in their customer journey seamlessly, from the initial onboarding, training, and interactions along the way, to building solid customer relationships and clearly defining roles in the business organization.  
• Analyze customer behavior frequently
  • Customer data can help you tailor personalized strategies but also predict churn and act timely.

How to Measure Customer Stickiness?

Besides the churn rate, retention rate, CLV, NPS, and other aforementioned metrics, there are a few more effective ways to measure customer stickiness.

For example, the Repeat Purchase Rate is a metric that calculates the percentage of customers who make repeat purchases. The higher the repeat purchase rate, the higher the customer stickiness.

The Customer Engagement Metric helps you indicate the level of involvement your customer has with your product or brand. If customers interact with a brand by providing comments, shares, reactions, direct messages, or likes, there is a greater possibility they’ll stick to it. 

Then, conducting surveys and collecting feedback from customers to evaluate their loyalty and satisfaction is always a great way to know how they feel about your product. You can use the given feedback to identify areas for improvement and make positive changes.

Customer segmentation can help you understand your customers better. Segment customers into cohorts to understand which ones are more likely to be sticky based on their behaviors and interactions.

Customer Stickiness Formula

To calculate the average customer stickiness level, use the formula below:

Customer stickiness level = repeat customers/all customers x 100. 

Now, let’s see an example. Let’s say you had 5,000 customers in the last three months and 2,000 of them made at least one repeat purchase. The result is 40%, which is your average stickiness level. Compare results from various periods to assess progress.

Customer Stickiness vs Retention

Although customer stickiness and customer retention are related and have the same focus, they differ in their approaches and spans.

Customer retention refers to the company’s ability to keep its customers for a specific period, while the customer’s stickiness encompasses retention, loyalty, and engagement. Customer retention is measured by the retention rate, churn rate, and repeat purchase rate, while customer stickiness includes NPS, CLV, and various engagement metrics. Customer retention shows how many customers you were able to retain over some time, and customer stickiness identifies the reasons that stand behind their stickiness – customer service, product quality, brand reputation, etc.

Customer Stickiness vs Loyalty

The main difference between customer stickiness and loyalty is that customer loyalty requires a deeper relationship, while customer stickiness is solely a transactional metric. If the customer is loyal, it means they have an emotional bond with the brand. They are ready to advocate for it and not consider switching to a competitor that easily. Customer loyalty goes beyond repeat purchases but instead reflects the customer’s motivation and willingness to choose your company over others and stick to it, even when there are multiple options available, like in SaaS. 

Customer stickiness is a stepping stone for loyalty. It focuses on aspects of customer retention, like offering convenience, value, and outstanding customer support. If you have sticky customers, you will retain them more easily and work on building trustworthy relationships with them to convert them into loyal customers and diminish the possibility of churn.

Conclusion

Customer stickiness is one of the most crucial factors for building long-term business success and sustainability. Although it mainly focuses on customer retention, the ultimate aim of customer stickiness is to build strong customer relationships that can last for years. In other words, customer stickiness encompasses all the factors and metrics that are related to its final goal, customer loyalty. This is why focusing on delivering personalized experiences, outstanding product value, and customer service can affect customer stickiness positively and drive more customer loyalty.

In the end, let us answer the question “What is customer stickiness?” in one sentence – customer stickiness is about creating meaningful relationships with customers and ensuring that they choose your company over competitors, over and over, year after year. The surest way to provide customers with personalized experiences is to get to know them. Use Akita to perform customer segmentation, analyze comprehensive data, and create effective customer stickiness strategies to drive more loyalty and success.