Monitoring your loyalty program; analyzing, optimizing and interpreting success data

Monitoring your loyalty program


Jul 19, 2022

Sean McTiernan Editorial Content Writer Talon.One

Sean McTiernan

Editorial Content Writer

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6 minutes to read

eMetrics and measurement provide key insights into loyalty performance, showing where customers are providing the most value — and how to develop the program in the future. By keeping track of performance, data-driven loyalty programs can be tweaked to ensure they grow with your customer base. 

“Keep listening. Never become so self-important that you can't listen to other players.” - John Coltrane 

The usefulness of these KPIs also extends beyond your loyalty program. Just as these programs allow for a more nuanced and targeted way to interact with customers, collecting the right metrics also gives a more detailed, in-depth picture of customers’ motivation and behavior. Loyalty metrics will prove invaluable in tackling a whole host of issues impacting your sales — like cart abandonment, poor marketing or even brand stagnation.

The meaning of churn

Right from the start, it’s important to keep a close eye on enrollment, reward redemption and Churn, i.e. how many customers are dropping out of your program. Loyalty programs are designed to reduce customer churn overall but what does it mean when customers leave the loyalty program itself? Like all metrics, churn is more complex than it may initially appear.

Firstly, it’s much more useful to segment users while examining churn than treating them as a monolith. Is your loyalty program easier to use in-store and a pain to use online? Omnichannel marketing, providing a consistent experience across every way a customer can interact with your business, is a massive boost for customers but difficult to get right.  

A close look at churn could also reveal that you’re only attracting customers who buy a particular subset of your products. This is where personalized loyalty programs come into their own. By targeting the incentives for loyalty members based on their purchase history and interests you’ll never end up in a situation where one group feels excluded or ignored.  

As time passes and your loyalty program develops, it’s time to examine the average duration of membership before Churn occurs? Churn doesn’t necessarily indicate that the entire program is bad or fundamentally dissatisfying, it’s equally possible a customer has just gotten what they perceive to be the maximum value from the program. Examining the average number of purchases and redemption rate of customers who have left the program will give a good indication of the root cause. Perhaps your program is only worthwhile for customers who have a high Average Order Value (average spend per purchase) rate to begin with and doesn’t incentivize regular customers to raise their AOV. 

For those customers who do stay, Customer Lifetime Value projects how much value they will provide over time. If this value does not cover the costs represented by the loyalty program then you will know to take a serious look at your rewards structure. As we mentioned here, massive popularity with customers isn’t just bad for a poorly-budgeted loyal program, it’s dangerous for the entire company.

On the other end of the spectrum, if your loyalty program has a referral component, the effect a loyalty program has on your customer advocacy is a great indication of the initiative’s long-term potential. CLV is obviously the most important metric first and foremost but optimizing your loyalty program for customer evangelists can massively boost word of mouth, one of the most compelling marketing strategies. 

A holistic approach to metrics

Kitchen Nightmares is a reality show where celebrity chef Gordon Ramsey helps failing restaurants by screaming at them. Each episode follows the same pattern: delusional management, frustrated staff and at least one truly bizarre menu item like sushi pizza. A striking approach most of these businesses have in common is an absolute refusal to listen to customers, often going one step further into pure contempt. Ramsey often manages to find disillusioned regulars or former regulars, all of whom give great insight into the restaurant’s downward spiral. 

This lesson doesn’t just apply to deserted bistros in New Jersey. Loyalty programs are more than a promotional tool, they are a fundamental change to how you interact with your most engaged customers. A holistic approach to your loyalty campaign’s metrics can also provide the kind of transformative, Ramsey-esque understanding of what your customers are looking for in your business (albeit with much less swearing).

For instance: enrollment, the number of customers who sign up, is obviously a great metric for judging the success of your loyalty program, especially at launch. It can also demonstrate just how effectively you’re communicating with your customers, how easy they find your service to use and how much you really understand what motivates them.

If the low number of customers who sign up are engaging consistently with your program, it’s time to look at how they’re being funneled towards signing up and the clarity of your messaging. Conversely, if low enrollment coincides with higher cart abandonment rates, you could be pushing customers away by promoting loyalty sign-up too aggressively during your checkout process.

A high rate of enrollment but a low redemption rate, indicating that customers aren’t claiming their rewards could mean that you don’t have an understanding of what extra value customers are looking for, the rewards aren’t matching their expectations. Similarly, if customers are signed up to your loyalty program, have a low churn rate but also have a low redemption rate, this could indicate that the main attraction of your loyalty program is simply that it speeds up the checkout process or makes repeat purchases more convenient. These are insights you can use to improve your whole business. 

Loyalty metrics with Talon.One

Talon.One’s Campaign Insights gives you a full picture of how well your loyalty program is performing. As we’ve seen, there are many different facets to judging the success of a loyalty program, such as points collected vs points redeemed, accepted referrals and discount costs. All of these metrics and more are immediately available in Talon.One to make sure you’re getting the most out of your campaign. 

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