3 Keys to Measuring the Success of Your Loyalty Program
Enter the Project Grow Challenge presented by Entrepreneur and Canon USA for a chance to win up to $25,000 in funding for your business. Deadline is Sept. 15 2015. Click here to enter.
Small-business owners across the country are starting to grasp just how important customer-loyalty programs are in cultivating and rewarding repeat customers -- the ones that are responsibile for more than half of SMB's total revenue.
But just launching a loyalty program isn't enough. To make it worth your while, you need to ensure you are getting the most out of it.
To gauge your program’s success, it’s time to start thinking about ROI measurements. Even if you’ve just rolled out your program, it’s never too early to start thinking about your goals and benchmarks and how they contribute to ROI. As a best practice you should begin the build-out of your loyalty program with measurable objectives in mind and structure it to be ROI positive from the onset.
Here are three measurements to help guide you in your quest for loyalty-program success.
Research customer relationship management programs. While paper punch cards and word-of-mouth loyalty programs are great, they can be impossible to track. Because of this, more and more people are moving towards online loyalty programs to measure ROI. But with only 29 percent of small-business owners use customer-relationship management (CRM) tools to keep track of customer information, it is still a work in progress. It’s well worth the time to research and trial a few CRM systems to see how they work. There are plenty of options out there -- Zoho, Batchbook and Nimble are just a few. Shop around until you find the perfect one for your business.
Benchmark against a control group. One easy way to measure the success of your loyalty program is to compare program members against a group that has not been exposed to the loyalty program. Ideally, you should compare members vs. non-members vs. a control group, a plan that will truly give you a solid understanding of the success of your loyalty program. (Often, brand new customers can be a good subset to serve as the control group.)
One way to ensure you have all three groups is to offer a limited or pilot version of your rewards program to a select group of customers. This gives you the opportunity to test your theories before rolling it out to all customers.
Experiment with different key indicators. After you roll out your loyalty program, the first six to 12 months are ideal for tweaking and experimenting with different key indicators.
For example, say your first six months are focused on tracking your repeat customers. That’s one way to start, but perhaps you should also track the value of their purchases at each visit. Whether you end up using one or both measurements, it’s important to continually revise and adjust your indicators of success and look at your ROI through different lenses.
Once you’ve fine-tuned your indicators and measurement process, remember that data collection is only step one of the measurement process. Next on the list comes analyzing and measuring your data in a variety of different ways. Several great applications such as Roambi, Qlik or Looker can help you tease out key insights from your data in real time (or close to real time). Data visualization tools aren’t only great for your internal reviews, but can be shared with others -- peers, consultants, or can even make for nice visual companions for a news story about your business.