Almost every business slowed to crawl during the pandemic. The unprecedented economic event forced several companies to shut down forever.
Some firms are coming back on track. Their operational capacity is not yet back to pre-coronavirus levels due to new regulations. Thus, this is the best time to finetune the business model. Close non-profitable venues, and assess loyalty program performance.
What’s the need to conduct an assessment or introduce changes to loyalty initiatives?
The pandemic has affected everyone’s shopping behavior. Loyalty program members won’t spend the way they did before March 2020.
Accumulating points is no more a top priority for consumers. Most shoppers want convenience. So, membership renewals are not happening. Long-standing affinities need a re-evaluation due to such drastic changes.
Is your company witnessing such new world order? The time has come to pause the program and reassess the weaknesses and strengths in your loyalty initiative.
As a customer experience officer, CFO, CMO, or firm owner, you want to offer the most relevant loyalty programs.
Let’s look at factors that can pin-point your loyalty program’s success:
Enrollment, participation, and redemption rate
Loyalty program enrollment rate is different from participation percentage. The latter indicates how much percent of your program members prefer to engage and actively participate.
The redemption rate indicates how often your loyalty program members prefer redeeming points. Consumers can use rewards or discount points for making extra purchases.
The average redemption rate can be around 14 percent. Anything lower than 5 percent indicates you need to rethink your loyalty strategy.
Consumers response to tailored offers
Artificial intelligence technology and social CRM can help in tracking customer interests. AI and Machine Learning systems can create tailored offers based on who can buy what, when, where, and how.
Push notifications with tailored offers are capable of driving a considerable amount of purchases. You can use emails and texts along with push notifications.
Businesses use superbly timed offers to push their business further during slow periods. Customers who keep track of your loyalty programs will grab these exclusive offers and random rewards.
The consumer response should be good if your loyalty program offers a personalized shopping experience with tailored offers. Do you think your rewards are failing to appeal to audiences’ needs? If so, you need to take your loyalty programs back to the drawing board.
Repeat purchases ensure recurring revenue for the company. A well-designed loyalty program can boost the repeat buying rate for your firm.
Rewards and recognition promote repeat purchases and brand loyalty. Existing members start engaging with your incentives. New consumers find your brand, sign up for loyalty programs, then make repeat purchases. But, do keep in mind that loyalty programs need time to show results.
You can consider your loyalty program successful if the repeat buying rate remains between 20 to 40 percent.
Customer retention rate
Consumers must stay with your business for an extended period to help you recover the acquisition cost. One of the critical goals of loyalty programs is to urge them to opt for membership and stay with you longer.
Do you wish to know the best way to determine the impact of loyalty programs on retention? Measure the retention percentage between loyalty program members and nonmembers.
The CES-Customer Effort Score focuses on the amount of effort the consumer takes to get their problems resolved. It is one of the metrics used for measuring customer service based on experience.
Some loyalty programs focus on offering priority experiences or address expedited requests. These initiatives have a direct consequence on the CES. Thus, the score can guide you in measuring your loyalty program success as well.
As you are probably aware, the churn rate indicates the number of consumers who leave your business for someone else. The negative churn rate indicates the percentage of consumers who buy more and upgrade their membership.
A tiered loyalty program results in negative churn. Analytics software can help you track and attribute purchases of individual shoppers and measure the impact of loyalty programs on their buying decision.
Factors that show a need for loyalty program performance evaluation
Online and offline retailers use rewards and recognition programs to drive the business metrics profitability. Monthly, weekly, or daily reporting is crucial to track the program performance.
Business analytics tools in your loyalty management platform can help analyze the contribution of your rewards programs. Senior executives monitoring the loyalty program should opt for auditing if:
- There’s a crucial drop in loyalty program ROI without any clear root cause.
- There is a reduction in the (positive) gap between members and nonmembers percentage.
- New member enrollment slows down even faster than the projections in the financial model.
- Average member transaction value keeps on shrinking despite the program entering promotion excess.
- There’s a visible downtrend in member engagement metrics.
Data required for assessing possible issues
For loyalty program analysis, the organization must have the following data sets ready for audit:
- Sales trends
- Program metrics
- RFM analysis data
- Member “voice of the customer” research
- Consumer and vendor feedback for tools and supporting technology
- Possible gaps, weaknesses, and scope of improvement for the program’s performance
- Areas of improvement suggested by the core loyalty team
Give them a dedicated app for the loyalty program
You can ensure your loyalty app remains the most desirable platform by upgrading and introducing new features.
The app should let members check accumulated loyalty points, rewards at any time. Superb UI/UX, ease of registration, and login are essential in loyalty apps. The home screen dashboard should offer features that customers use the most.
Why worry? Why not use the slowdown as an opportunity to offer a better value proposition?
Do you plan to assess and redesign loyalty programs that can contribute towards organizational growth? Connect with LoyaltyXpert. Let us offer tailored apps that can work towards making your business future-proof.