Margin per point is the most important health metric of any rewards program. Whether the goal of your program is to generate revenue, or to be a cost center geared towards building engagement and loyalty, margin per point lets you know exactly how much you are making per point in your program.
Do the math
Margin Per Point = Revenue Per Point (or) Cost Per Point – Value Per Point
The metric is conceptually very easy to set up. First, determine your respective program goals for Target Revenue Per Point (example: $0.50) or Target Cost Per Point (example: $1.00). The same goes for the overall Target Retail Value Per Point in your program (example: $1.50). The Margin Per Point is simply the difference between the Revenue or Cost Per Point and the Value Per Point in your program at any given time.
How to use it to improve your program
Once you have baseline goals for the overall program, you can determine the current values of the respective margin metrics at any time and benchmark them against the overall program targets.
Benchmarking against your program goals allows you to adjust the mix of rewards in the catalog, in addition to marketing messaging in order to reach your program’s overall margin goals.