Glossary Terms
The Loyalty Index (often referred to as the Customer Loyalty Index or CLI) is a concise, quantitative metric used to gauge a customer's willingness to repurchase from and recommend a company or product. It goes beyond simple satisfaction to measure the strength of the relationship, serving as a powerful predictor of future customer behavior.
What is the Customer Loyalty Index (CLI)?
The Customer Loyalty Index definition is a specific survey-based metric that measures the three core pillars of customer loyalty: Repurchase, Recommendation, and Upselling (or Cross-buying). It provides a quick, standardized score to track loyalty health over time.
What is the Customer Loyalty and Engagement Index?
A: The Customer Loyalty and Engagement Index (CLEI) is a more holistic metric that combines the core CLI score with data on customer behavior. It factors in not just what customers say (survey score) but also what they do (frequency of purchases, time spent on-site, participation in the loyalty program).
Why is loyalty index important for businesses?
A high Loyalty Index shows strong customer relationships and future stability. It helps brands understand if customers will stay, recommend, and keep spending.
· Predicts long-term revenue and repeat sales
· Shows risk of churn or customer loss
· Helps fine-tune loyalty programs and customer experience strategies
What is the Customer Loyalty Index formula?
The Customer Loyalty Index (CLI) combines different loyalty-related responses into one score. It calculates customer loyalty based on three key behaviours — satisfaction, recommendation, and repurchase intent.
· Formula:
Customer Loyalty Index (CLI) = (NPS Score + Repurchase Intent + Recommendation Likelihood) / 3
· Each factor is usually rated on a scale of 0–10 by the customer
· The average of all three gives the final Loyalty Index score
· Some businesses assign weights if one factor is more important than the others
What is included in the standard Customer Loyalty Index questionnaire?
A: A standard customer loyalty index questionnaire contains three essential questions, typically phrased as:
1. Repurchase: How likely are you to purchase again from us in the future?
2. Recommend: How likely are you to recommend our product/service to friends or colleagues?
3. Cross-buy: How likely are you to use our other products or services?
What is the significance of the CLI Customer Loyalty Index?
The CLI customer loyalty index is significant because it is a leading indicator of business success. A high CLI correlates directly with lower churn rates, higher customer lifetime value (CLV), and increased revenue through word-of-mouth marketing and retention.
What is the best way to utilize the Customer Loyalty Index calculation results?
Use the results of the customer loyalty index calculation to:
· Benchmark: Compare your score against industry competitors or historical company data.
· Segment: Identify customer groups with low scores to target with specific engagement campaigns.
· Validate: Tie changes in the CLI score to specific program updates or service improvements to validate ROI.
How is a loyalty index calculated?
It’s not based on a single question or survey. Instead, it blends scores from different metrics to create a more accurate loyalty score.
· Uses a mix of NPS, CSAT, and repurchase intent
· Scores are averaged or given weighted importance
· Final output is usually shown as a percentage or index value
How do you measure Customer Loyalty Index?
To how to measure customer loyalty index, you administer a short, three-question survey to your customers. The results are used to perform the customer loyalty index calculation, which yields a final score.
How does the Customer Loyalty Engagement Index differ from NPS?
While both are survey metrics, NPS focuses only on the recommendation question ("How likely are you to recommend?"). The customer loyalty index engagement index covers three
key loyalty questions (repurchase, recommend, and cross-buy) and often integrates behavioral data, providing a broader, more actionable view of loyalty than NPS alone.
