How to measure the success of your loyalty program?
It is not only the big brands who value and understand the importance of having a loyal customer base, but the small enterprises too. Every business owner, who aspires for customer loyalty, has gotten into designing, engaging customer loyalty programs.
Having said this, running a loyalty program isn’t enough for your brand’s growth and customer retention. You have to know your key indicators, and ensure that all your key marketing strategies are customer-driven.
So what are the key indicators that approve of the marketing strategies you have adopted to retain your existing customers? Putting it in simpler words, how do you measure the success of your loyalty program?
Here are 7 key measures that will help measure the success of your loyalty program:
1. Benchmarking against Non-members. Benchmarking against program non-members is an easy way to measure the success of your loyalty program. Compare the performance of loyalty program members with non-members in terms of revenue, profitability, repeat business, satisfaction levels, referrals, etc.
2. Contribution from Existing Members against Contribution from New-members: By comparing the two, you get to know if the loyalty program is doing enough to motivate the old/loyal/repeat customers to engage with the brand repeatedly and buy its products/services. The more the % of repeat customers against the % of new-members, the better your loyalty program is doing.
3. Churn Rate: Churn Rate will primarily reflect the number of customers who cut ties with your brand within a given period! Successful loyalty programs typically have much lower customer churn when compared to competitors.
4. Referrals: How many customers refer your products/services to their peers is reflective of how successful your loyalty program is. It is also a cost effective way of acquiring new customers.
5. Redemption Rate: Program members who redeem points regularly are more likely to stay with the brand for long, as compared to those who show least or no interest in redeeming.
6. App Retention of members versus non-members: If your brand has an app, this measure gives you a clear picture of how well your most important TG, your loyal customers, accept your innovations. App retention rates of members should ideally be higher when compared to non-members.
7. NPS: Net Promoter Score: As the name implies, this is a score that measures the willingness of your customers/members to recommend your company’s services or products to others.. The higher the score, the better it is for the brand. It might be worthwhile to examine how your customer loyalty program has enhanced your NPS scores.
In a nutshell, know your program’s key indicators, as they are a great way to assess and know your business ROI and at the same time gauge your program’s success through different perspectives.
As always would love to hear your thoughts. Please do post them in the comments section.