This article is part of our Ultimate Guide to Loyalty Programs.
Whether you already have a loyalty program, are considering revamping yours, or are launching one for the first time, you need to set clear goals from the start if you want it to be successful.
While it can be tempting to dive right in, without goals, it’s difficult to give focus and direction to your efforts – and it makes benchmarking impossible.
It goes without saying that the main goal of a loyalty program is customer retention, but there are many different smaller goals and outcomes in between. And they are different for every brand.
Here’s how to go about setting goals for your loyalty program and optimizing it over time.
1. Establish Short- and Long-Term Loyalty Program Goals
When you decide your brand wants to create or revamp a loyalty program, assuming you have company buy-in from top to bottom, the first item on your meeting agenda should answer the question:
What do we want from this loyalty program?
Figuring out why you want to create the program in the first place will help you define the short- and long-term goals that all future decisions made will be based on them.
Short-term goals that include increased AOV, increased purchase frequency, and elevated engagement are often the most talked about – And for good reason.
But other goals that aren’t purely monetary are just as important. For example, data collection continues to be one of the most important reasons brands are investing more in their loyalty programs.
Consider that 58% of consumers are “data pragmatists” who will gladly provide data as long as there is a clear benefit in doing so. As cookies soon sunset, this zero and first-party data becomes more important for personalization and optimization.
Long-term goals include building and strengthening customer relationships, and ultimately brand advocacy.
Seven in 10 Millennials said they’d made a large purchase due to a recommendation from a trusted friend or family member. And 88% of premium loyalty members say they’re likely to recommend a retailer with valuable premium loyalty benefits to a family member or friend.
So, when you’re designing your loyalty program, don’t just think about how to increase the transactional metrics with discounts and rewards in the short-term.
Think about how to reward your members for filling out data, social sharing, taking surveys, and more so that you can collect actionable data.
2. Make Sure Your KPIs Are Right for Your Program
Your second success metric is to establish clear-cut KPIs that will measure your results at achieving the goals you set. They will help you assess your program’s performance from the first day of launch.
Your loyalty program KPIs are critical when determining success. Define your program KPIs and make sure they are measurable.
KPIs will be a guide to the health and sustainability of your loyalty program and will tell you how often the program is used and what benefits members are using most and how often.
Each one is important and all of them are connected. If they’re moving in the right direction, that’s great. But just as important, if they are moving the wrong way, they can provide clues as to how to adjust and improve. For example:
Member acquisition: If this number starts to fall or is low from the get-go, ask yourself: Is my program easy to understand? Does the marketing around my program resonate? Do my customers find it easy to sign up?
Are my in-store associates educated about the program and are they getting customers excited about it?
Retention rate: If this is low, ask yourself: Does our program have a clear value proposition? Do consumers have any incentive to remain members after they join? Am I truly listening to my customers?
Churn rate: If this number is high, members aren’t getting value from the program, receiving the wrong types of benefits, or there’s not enough personalized communications.
Reward redemption rate: If this number is too high, members don’t see enough value in the program, the reward values are too high, or it takes too long to receive rewards.
Purchase Frequency: If you have a great loyalty program, members are likely to shop more frequently as they are acquired and engaged with. But if this number is flat, your members might not see enough value or differentiation to engage regularly.
Without goals attached to measurable KPIs, your loyalty program is doomed to fail. But the opposite extreme is also a recipe for disaster.
If you have too many KPIs, you have no KPIs because there is too much noise.
Brainstorming a list of important KPIs is important but break them into primary and secondary – the primary ones are your KPIs. The secondary ones are often related to the primary KPIs and can still be tracked and leveraged to gauge program success.
Your loyalty program KPIs rate its success now and in the future.
Related Content: The 9 Most Important Loyalty Program KPIs
3. Make Sure Your Platform Can Track the Most Important Data and Keep an Eye on It
After your program launches, optimization take priority. It’s a never-ending management process that keeps your loyalty program running smoothly and effectively.
To have and maintain a successful loyalty program, you always want to measure, monitor, and tweak it to enhance it through data.
Just make sure your loyalty platform can track the most important data points your loyalty program can collect. Just because you can track something doesn’t mean your program will be built to track that data point.
Or your program dashboard may be reporting on a metric that is being tracked slightly differently than how you believe it should be measured.
First, identify and define the data your program can track. this requires doing an audit to identify and define all the potential data your loyalty program can generate and then organize that around the strategic insight/benefit that data can provide.
Then, determine how you’re going to leverage that data to report on program performance (KPIs), optimize program experience, drive program cost efficiency, better convert visitors to members, and keep members engaged in the program.
Related Content: Looking for the Right Loyalty Management Software? Here are 8 Questions to Ask
Clear Loyalty Program Goals Lead to Success
To achieve success with your loyalty program, setting goals upfront is critical.
And just as critical are matching KPIs so you can track the health of your program and make updates and tweaks as needed.
From increased AOV to long-term brand advocacy, getting your company aligned on loyalty goals is the first step towards building more engagement with your best customers.
ebbo
ebbo helps brands achieve their customer loyalty goals with full-service, end-to-end solutions and also creates original educational content straight from the experts to help loyalty marketers stay on the cutting edge of customer engagement.