Metrics that Matter is a series of posts highlighting metrics that you should consider tracking to successfully monitor and manage the health of your loyalty program.

Until now, this series has involved loyalty metrics and what they mean for the performance of a program. In this post we highlight some marketing metrics that will enable you to determine if your loyalty initiative is successful from a marketing perspective.

Loyalty is like any other marketing initiative. In order to determine if it is successful or not, you have to have a way to measure it. The goal of any loyalty program is to increase retention by providing users a memorable and positive experience. These goals should be tracked, along with any other supporting metrics that provide insight to the performance of your loyalty initiative. Each program has different goals, and as a result, different metrics that are important to them. A few metrics that are quite common for new programs to track are:

  • Retention Rate
  • Negative Churn
  • Net Promoter Score

Retention Rate

This indicates how long customers stay with your business or app. With the addition of a loyalty program, this number should increase over time as the number of loyalty program members grows, especially compared to the retention rate before the loyalty program was implemented.

One way to determine the effectiveness of your program is to run A/B tests against program members and non-members. This will show you whether members or non-members are better retained, and more importantly, if your loyalty initiative is working.

Negative Churn

You might be familiar with “churn”, which is the rate at which customers leave your company or app. Negative Churn, on the other hand, is a measurement of customers who do the opposite — they upgrade or purchase additional services. These help to offset the natural churn that goes on in all businesses. Depending on the nature of your business and loyalty program, especially if you opt for a tiered loyalty program, this is an important metric to track.

Metrics that matter: Engagement metrics

The customers that upgrade help to offset the natural churn that takes place in all businesses. Depending on the nature of your business and loyalty program, especially if you opt for a tiered loyalty program, this is an important metric to track. You will want to play close attention to how the user experience effects churn and think through what can be done to increase upgrades amongst existing users.

Net Promoter Score

This is a customer satisfaction metric that measures the degree to which people would recommend your company to others on a scale of 1-10.

Net Promoter Score is calculated by:

% of Promoters (customers who would recommend) – % of Detractors (customers who would not recommend)

The fewer detractors, the better (obviously). The net promoter score is one way to establish benchmarks and measure customer loyalty over time, in order to calculate the effects of your loyalty program. Lean on your program to improve your NPS and improve customer satisfaction.

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