In today’s competitive world, loyalty programs for customers are seen as an important factor contributing to the growth of the business. As a growing trend, a lot of companies are opting for various customer loyalty programs, however, not much is aware of how exactly these programs are working for them.
It is important to have the best customer loyalty program for your company, however, it is even more important to evaluate the performance of this program on a timely basis.
Here are some metrics that will serve as the perfect starting point to help you measure your customer loyalty program app.
- Repeat Purchase Rate
Calculating the repeat purchase rate is easy. Simply calculate the percentage of the customers coming back to you to make a repeated purchase. This number will also define the customer loyalty of your brand.
To calculate the repeat purchase rate, you need to divide the number of repeat customers by the number of your total customers. To convert the number into a percentage, multiply that number by 100. If the percentage ranges between 20 to 40%, then the Repeat Purchase Rate is good.
- Redemption Rate
Redemption rate indicates the number of customers who have redeemed their collected rewards. To get this number, you need to find out the number of customers that have redeemed their rewards. Once you get this number, you need to divide it to a number of customers who have earned them. If your loyalty program is doing good, this number should be not less than 20%.
- Revenue per customer
Revenue per customer shows the user conversion rate and the revenue generated by each customer. To calculate the revenue per customer rate you need to divide the total revenue by the total customers.
It gives you a fair idea of how much customer spending on your product or service. This is also called customer lifetime value if you calculate this for long period (actually for the period customer with you).
- Average Order Value
Average Order Value will help you analyze how much your customers like you and how much they actually spend with you. It gives you an average amount on what your customers are spending on individual orders.
To calculate this number, you need to divide your total revenue by the number of orders.
Measuring customer loyalty is not as difficult as seen by many business owners. Taking the necessary steps to evaluate the performance of your loyalty program can benefit your business in the long run. Implementing a loyalty program that looks good on papers can be a mere waste of your time. Regular evaluation of the loyalty program you have implemented will ensure your investment in such a plan is not a waste.