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In our data-driven world, we have metrics for everything. From the number of steps we should take every day to likes on a social post, it seems easier and easier to quantify and measure success. If you’re a loyalty marketer, measuring the success of your program should be just as seamless. But, chances are, your current loyalty metrics are useless. Too many of us focus on program stats like new member acquisition, share of active members and mobile app downloads to determine success. In reality, these data points rarely correlate with a program’s ultimate goals. Read on to discover how to improve these metrics.
Step One: Remember & Re-Evaluate Your Goals
Think back – why was your program launched? What specific need was trying to be met? Intentions will differ from program to program, but common goals are to increase overall spending, increase basket size, increase shopping frequency, or attract new customers. It’s also possible that your business goal has changed since the program’s launch, and that’s okay.
Let’s say you kicked off your loyalty program to drive in-store engagement and increase shopping frequency. Members started off being rewarded with exclusive, in-store promotions and can earn extra points through
purchase validation. However, you’ve since introduced a new mobile app that enhances the online shopping experience. Your primary goal now is to increase the basket size of online orders. Chances are, you need to establish new metrics that put you on the path to achieving your new goal.
Consider what the most important things are for your program to do now, and build your metrics around those goals.
Step Two: Dive into the Data
Once you’ve established short-term goals, consider where you’d like to be in six months, a year, or even three years from now. Knowing what success looks like is key, so you must establish a realistic Critical Success Factor for each goal.
Each CSF will combine a measurable activity and a specific timeframe, and should be informed by historical data to make sure it’s realistic. So, if we want to increase basket size over the course of a year, look at what current basket sizes are and how they’ve grown over time. If basket sizes have remained steady for the last several months or years, it’s unlikely you can triple this in 12 months. But perhaps certain products are frequently bought together or just inherently complementary. One way you can increase the number of items per cart is by offering special discounts for bundles.
You also need to develop specific KPIs to track your progress for each CSF. Pay close attention to both the growth of basket sizes month-over-month and the frequency of particular items that are purchased together to measure success. You should identify KPIs that deliver clarity on the drivers of growth, rather than surface-level metrics, such as total app downloads, that have no correlation to business success.
Going one level deeper, compare the average basket size and growth between loyalty program members and non-members. Are members building bigger baskets than non-members? Is there a lift across the entire shopping base that can be attributed to the loyalty program? Look at it from every angle and make sure you can find areas where the program is impacting your business, even if it’s in unexpected places. It can be helpful to enlist the help of analysts who specialize in strategic insights and can translate your data into actionable opportunities.
Step 3: Take Action!
Finally, once you’ve aligned your goals and your reporting, make a plan to leverage your insights. You’ll be empowered to identify business critical insights and uncover key information that needs to be shared broadly. You might find your program is driving an increase in basket size across your entire customer base, and that loyalty program members are even more engaged than non-members. If so, your company will want to invest more into the program and it will help cement the program as a key initiative across the team. And, if you find that your program isn’t driving the results you want, it immediately highlights areas to optimize and add strategic focus.
While data points like new member acquisition, active member rate, redemption rate, and other metrics are good performance measures for a loyalty marketer, you must quantify why it’s important for the program to be successful in the first place. And, if you can prove that your program is delivering results for the company, getting support to help drive your loyalty initiatives becomes a no brainer.