How-To Guide: 5 Ways to Measure the Business Impact of a Loyalty Program

Launching a loyalty program is an important initiative, but just activating one isn’t enough. To make the financial investment and resource allocation involved in such initiatives worthwhile, brands must ensure they are getting the most out of their efforts. Measurement is significantly different depending on the industry. Brands in industries that have direct customer relationships and sales—such as retail and travel—can more easily calculate and measure their Return on Investment (ROI) and conduct more analytical analysis because they have more transactional information at the Point-of-Sale (POS). Meanwhile, industries that have non-direct, disintermediated relationships—such as Consumer Packaged Goods (CPG) and entertainment—face additional challenges because they don’t sell directly to consumers. Yet there are many ways to measure behavior through third-party data asset providers.

Gauging the success of a loyalty program is part art and part science. It involves assessing and tracking a number of different metrics to ensure that members’ behavior—both purchase and engagement—increases over time. It’s important for brands to think about the business impact of their loyalty initiatives and determine what metrics can help them measure their Return on Investment (ROI). Further, brands should strive to understand true incrementality or revenue that would not have occurred without the program. The following guide illustrates five important trategies businesses should consider.