One of the most refined aspects of loyalty marketing is the unique ability to measure everything.
By offering reward and recognition in return for tracking behaviors — both transactional and social activities — loyalty programs have a distinct advantage versus many other marketing strategies. Essentially, the loyalty program is saying “Hi, here I am. You have my permission to measure what I do regarding your brand as long as you give me something in return.”
By: Colin Samson, CLMP
Hence, the loyalty program creates data, lots of data, with a few key metrics highlighted below:
- How many program members? — status regarding activity, tier, and tenure et al.
- How many transactions by members? — recency, frequency and monetary value measures including basket components.
- How much advocacy? — referrals, posts, likes, compliments, NPS scores and an assortment of social behaviors.
- What is the year over year retention rate?
- What are the rates of engagement, especially regarding loyalty communications and online activities?
- Who is redeeming for what?
- All possible financial metrics including ROI, cost per member, liability, breakage, and everything else the CFO requests.
Which metric is most important to you and your program will vary by brand, category and enterprise inclination/objectives. It is extremely important to have these “measures of success” clearly defined and quantified prior to the launch of your program or refresh. Such an approach is basic to the loyalty discipline and is best viewed as measurement planning. Unfortunately, it is often ignored as a pre-launch step in the implementation process — especially in B2B environments!
Whichever set of metrics go into your measurement plan each must carry a specific key performance indicator (KPI) tied to the financial model which forecasts the outcome of the program over time. The KPIs need to be vetted across the enterprise, agreed upon, and measured as the loyalty program unfolds. We must have a definition of what is successful before we start; we must know what level constitutes success; we must be able to glance at a short list of KPIs and easily answer the question “is this loyalty program working?” When results are not materializing, we must be able to recalibrate, reload and fire again. Without measurement planning and KPIs, we will continue to shoot in the dark, waste ammunition, and miss the targets we didn’t know existed!
Enter the elusive loyalty dashboard
Every loyalty marketing program I have ever been involved with has had a series of reports by which the program could be assessed. Often, too many reports. Often, too detailed reports — operational vs strategic. Often, the reporting mechanisms do not resonate with C-level officers who need to understand how well the program is delivering (or failing to deliver) in the shortest amount of time. You need to bring it all together on a regular interval with the simplicity of reporting and graphics found in any dashboard tool. We like to customize our loyalty program dashboards based upon the client, the KPIs and the measurement plan. We like two pages or less.
Of course, if you had no measurement plan and/or no KPIs, your dashboard would be blank and you would be driving blind — maybe headed for an accident, if not an outright crash.
Join us for a webinar on this topic on March 30 at 3:00 pm EST where we will present an overview of the measurement planning process and give specific examples of what a dashboard could look like. While our examples come from the world of B2B loyalty, they are equally applicable to consumer reward programs, sales and channel incentive plans and employee recognition programs.
Colin Samson is the CEO of B2B loyalty specialist Reward Paths (US, Canada, Caribbean) and parent company Incentive Solutions Ltd (Australia, New Zealand). He is a Certified Loyalty Marketing Professional™ (CLMP) and a frequent contributor to The Wise Marketer.