When did you last health-check your programme?
August 20th 2021
Written by Tom Peace
You and your team have worked tirelessly to design and launch your loyalty program. But what’s next? How should you and your business track the success of your programme?
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Once a loyalty program is in market, there are 5 main KPIs that you should track to monitor its overall health. While it’s important to note that determining the correct KPI measurement varies based on industry and purchase cycle, the key areas of focus remain the same.
1. Member Acquisition
How many people are joining your scheme, is it advertised and known about enough amongst your customers?
If acquisition is lower than ideal, eliminate potential barriers by reducing the number of qualifications to join the programme, such as spend thresholds or how much data should be volunteered when enrolling.
2. Member Spend
Your loyalty program should increase overall member spend if you want to drive incremental revenue and increase profits. The two metrics you should track when calculating lift in spend are average trips and average transaction size.
Personalised, relevant and timely offers will have your customers
3. Redemption Rate
How many rewards are being redeemed? Are there patterns in redemption you could work to your advantage?
If redemption rate is low make sure that offers are relevant and delivered on the right medium for your audience whilst being easy enough to earn and claim. A short redemption period may also be the culprit of low redemption rates.
4. Churn Rate
Your churn rate is the percentage of “at-risk” members that you can save from leaving the programme, and potentially your brand. It’s vital to know this KPI because it directly impacts your total company revenue.
5. Incremental Margin
Is your loyalty scheme actually making more money than it's costing the business?
If your returns are negative, you can boost incremental margin by lowering program operating costs, such as the cost of rewards fulfilment, benefits and marketing costs. You can also consider developing a loyalty program that provides consumer value outside of monetary rewards.
Keeping on track with these key metrics, assessing the context and tweaking your offering could be the make or break of your programme.
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