Measuring Your Customer Loyalty Program
How to Measure the Success of Your Loyalty Rewards Program
Keeping customers coming back is key to your business. With customer loyalty programs, you can entice your customers to return to your store over and over again.
Customer loyalty programs help you to improve customer retention which is vital to any business' success.
According to research conducted by the Garnet Group, twenty percent of a company’s existing customers generate at least 80% of its revenue.
Once you have selected an enticing reward and gone through the process of setting up rules for your program, you'll want to measure it to ensure its success!
There are a few key measures that you'll want to examine when considering the success of your loyalty rewards program.
1. Customer Retention Rate
The customer retention rate tells you how long a customer will continue to shop with you. The longer the customer stays with you, the more profits your company will make.
There are many ways to break down the customer retention metrics, but I'll stick with the easiest one. Simply, compare the behavior of your customers enrolled in the loyalty program with those that are not.
Monitor how often the groups return to your shop and how much they spend.
This information will quickly let you know if the retention efforts were successful or not.
2. Customer Churn Rate
The customer churn rate gets in to the nitty gritty of retention metrics.
Customer churn rate is the rate at which customers stop shopping at your store. A negative churn rate is the rate at which customers upgrade or increase purchasing behavior.
If you are able to offset the customer churn and increase overall retention, you'll be in a good position to increase increase your profits by a whopping 95 percent.
3. Satisfaction Survey
To really know whether your loyalty program is a hit with your established, simply ask them! They really appreciate when you show that their opinion matters.
It is that simple!
Surveys will give you valuable insights about your customer's preferences. Pay attention to their favorite parts of the shopping process and the major pain points.
From there, you can fix the pain points and highlight the favorite parts.
The Customer Effort Score is a simple way to measure how easy or difficult it was for a customer to make a purchase.
It is essential to understand the pain points for customers and help to alleviate them. Nearly 50% of customers with a negative experience will tell ten or more people about that experience.
It is best to discover those pain points and nip them in the bud immediately! Keep in mind the following statistic:
- More than 50% of customers have switched brands due to poor customer service
Customer loyalty programs allow you to send surveys directly to your customers. You can also use special survey program software, such as SurveyMonkey to conduct a survey.
Focusing on the customer retention rate, customer churn rate and customer surveys will give you a good idea of whether or not the customer loyalty program that you designed is successful. If it isn't, make a few tweaks and retest it. You can alter the number of times a customer has to make a purchase before receiving a free item, you can switch up the reward and you can experiment with the number of emails and texts that you send customers to discover what works best for your target market.
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