Aydın Kement
September 27, 2022
Updated on December 13, 2023
Most Important Loyalty KPI’s 👑
What extent do you succesfull on your loyalty program?
A visual depiction of what is being written about

Loyalty programs are very popular, but there isn't a lot of evidence that they work. Many businesses don't know if and how to use loyalty programs to make money. It's important, but not easy, to figure out how well a customer loyalty program works.

Loyalty programs have been around for a long time. The first loyalty programs were set up in the late 18th century. In 1981, American Airlines started its AAdvantage program with the goal of making more money. This was the first modern, data-driven customer reward program (customer development). In the decades that followed, almost all hotels, restaurants, and stores started giving customers some kind of reward to keep them coming back.

Loyalty KPI’s

Customer loyalty program key performance indicators allow comparisons between program management actions and, as a result, provide a basis for triggering relevant individual marketing measures (like changing the rule for earning and spending points) and prioritizing budget allocation and making it better.

Because of this, the loyalty KPIs make it clear what the company needs to measure and control to reach its long-term goals (e.g. retaining profitable customers). In an ideal situation, the KPIs should be compared to the target KPIs so that any gaps between "as is" and "to be" can be found and closed with the right steps. This post looks at the most important KPIs for measuring loyalty programs.

First of all, we may also ask these categorized questions in order to gather essential insights:

Launch Of Products And Services

In case of introduce a new product or service to the market.

  • What is the total cost of promotion campaigns?
  • Which touch points are most applicable to the customers?
  • What percentage of customers open the email about the new product?
  • Are there more questions about new products?
  • Customer Recovery
  • How many customers are acquired?
  • How many customers are blocked based on their business and history?
  • What is the cost per acquired customer?
  • Reduced cost of new customer acquisition?
  • What is the value of the acquired customer?
  • Customer Satisfaction
  • What is the Net Promotor Score?
  • What is the service level agreement?
  • How happy are the customers? (survey)
  • What is the reliability of the service?
  • What is the responsiveness of the service?
  • Cutomer Loyalty
  • Is the customer still active?
  • What is the monetary value of customer purchases?
  • What is the churn of the customers?
  • Upselling of products and services?
  • Cross-selling of products and services?
  • Number of purchases in the given period?
  • Time elapsed since the last purchase?
  • Campaign Management
  • What are the customer satisfaction levels?
  • What is the average customer tenure?
  • How many new customers are acquired?
  • What is the revenue growth?
  • What is the lead source?
  • What are the customer retention rates?
  • What are the customer acquisition costs?
  • Most Important 10 Loyalty KPI’s
  • Customer Lifetime Value: Reflects how much revenue members will create over the period of time in which they are enrolled in the program.
  • Member Lift in Spend: % increase in spend for active members versus non-members.
  • Incremental Revenue/Margin: Calculates the increase (or decrease) in contribution margin caused by the loyalty Program
  • Churn Rate: % of members that have left the program, and potentially the brand.
  • Repeat Purchase Rate: The proportion of customers that have shopped more than once with your company.
  • Engagement Rate: % of members that made at least one purchase and/or a non-transaction (e.g., a referral) last year or last 12 months.
  • Program Cost Rate: Share of total sales covering the annual cost of the program.
  • Growth Rate: Share of members enrolled last year (new members) in % of total program member base.
  • Activity Rate: % of members that made at least one purchase last year or in the last 12 months.
  • Redemption Rate: Share of points redeemed divided by total points issued in the same period (usually last year).
  • Thank you for your time and see you on the next post! 🤙

    Source: Alexander Meili- Loyalty Program Assessment: KPI-Based Evaluation of Customer Loyalty Programs

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