Is your loyalty program as valuable as it could be?

Valuable’ in this context is the balance between two critical pivot points: profitable to the business AND meaningful to the member.

When either one is out of sync, the program will start to fade into insignificance, with many factors influencing each of these two points:

Investment in the program is impacted on – rewards too expensive, systems and infrastructure not productive, breakage too high …. amongst others

Members are not behaving as intended – low participation rate (no of members signed up vs customers), low AOV, low activity…. amongst others

These are often symptoms of a deeper cause and clearly need a review to revitalise a valuable asset.

Five steps to improve the value and viability of your program (with some questions to get you going):

Step 1: Purpose:
What is the vision of your program? Does it match your brand’s vision?

Step 2: Profit:
Is it profitable – “What’s your return on loyalty = revenue/investment”

  1. Influencers on revenue: volume of members x value of member spend (@profit) x velocity of spend (or frequency of purchase)
  2. Impacts on investment: rewards, offers, points breakage; operations (eg fulfillment), marketing, technology licensing if applicable and others

Step 3: Metrics of success:
What objectives did you set vs the current state of play – are you achieving them? What’s the gap?

  1. Number of members
  2. Revenue from members as a % of total revenue
  3. Profit from members as a % of profit
  4. Activity of members as per your definition as % of total membership
  5. Retention rate of members
  6. Advocacy score (as you define it)

Step 4: Alignment:
Are the leaders in the business aligned on why you really need a program? (A powerful question to ask once you have the data on the metrics of success)

Step 5. The Program:
What’s helping/hindering you achieve the metrics of success?
External impacts such as competitors, technology, social dynamics, economy etc vs internal inputs such as the program structure, member experience, data and reporting bottlenecks etc.

Assess the 3 pillars of a program:

  1. Members: Profile members from ‘active to advocates’ – who is proving their loyalty? Segment and profile.
  2. Program structure: How Simple, Personal and Valuable (SPV) is your program? Asses the SPV of your program.
  3. Team connection: Is you team in love with your program? Survey your teams commitment and understanding of the program.

Five steps. Each has a deeper layer. However as you review and revamp your program you are certain to improve is viability so that it is…

valuable = profitable to your business and meaningful to your members.


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