It’s a good thing you have a loyalty program for your retail business. But do you know how well the program is performing? This is where loyalty marketing analytics comes in.  

Data fetched from loyalty marketing analytics should answer questions about customer behavior to help brands understand why customers are loyal. The data can come from many sources but the goal is to find out what keeps them coming back for more. 

Stay tuned even as we explore the seven important buckets of loyalty marketing analytics.  

7 aspects that loyalty marketing analytics helps you monitor  

When you launch a loyalty program, seven factors need consistent monitoring. We’ll see what these factors are, why they are important, and interpret their quantitative data.  

1. Loyalty program registration 

Cool, you’ve launched your loyalty program. But are your customers signing up?  

If you already have a majority of your customer base enrolled in the loyalty program, it’s a good sign. On the flip side, if the loyalty marketing analytics show a low count, it could mean one or more of the following: 

• You have not promoted your loyalty program enough 

• The sign-up process is frustrating 

• The loyalty program structure is confusing  It has unimpressive rewards 

• The program rules make it too hard to earn the rewards 

Always remember that while a loyalty program can help you maintain and improve your customer retention rates, the ultimate goal of a loyalty program is to keep your customers engaged.  

The retention part is the byproduct of customer engagement. So, tweak your loyalty program in such a way that your customers get a delightful experience, without eating up your margin.  

Now, here are some of the strategies you can use to amplify the registration to your loyalty program: 

• Reward customers for signing up for your loyalty program 

• Incentivize customers for referring family or friends to the loyalty program 

• Keep the program structure simple and easy to get rewarded 

• Add a gamification element to keep the program fun and prevent it from going stale  

2. Program sign-up type 

Let me ask you something, first.  

Do you have a loyalty program app? If you do, do you know the proportion of customers who sign-up for your loyalty program on the app versus those who sign up at the point of sale?  

(In passing, but seriously: If you don’t have a mobile loyalty app, friend, please add that to your pipeline.) 

When customers sign-up at the POS, you can only collect minimal details from them—that would typically be their demographic and geographic information. Inevitably, it inhibits your ability to send timely offers.  

Moreover, customers would have to rely on you to remind them of the points they’ve accrued and when to redeem them. Say your sales representative fails to do so, you would make a foe of your loyal member. We don’t want that, do we?  

Therefore, first, have a mobile loyalty app in place. Then, encourage your customers to download the app and use it to participate in your loyalty program. Use loyalty marketing analytics in your CRM or loyalty software to measure where the sign-up happens.  

This way, while your customers can pay via the app, keep track of the points they’ve collected, and be aware of how sooner or later they are eligible to claim their reward, you can stay away from the trouble of constantly reminding customers to engage in the program.  

3. Points issued to customers 

Depending on the type and structure of the customer loyalty program, the way you issue points to your customers can differ.  

While you might translate points into cash or freebies, you might always want to take stock of how it’s impacting your ROI. With month-on-month loyalty marketing analytics tracking, you should see whether the points you’ve issued are a loss to you or lead to a profitable investment.  

Popular loyalty programs such as Tesla’s were hauled off because they were adding cost to the company rather than boost profits.  

So, be mindful of the points you issue to your customers and ensure that it keeps your business stable.  

4. Points redeemed by customers 

When a customer redeems his loyalty points, it refers to an engagement in your loyalty program. And if loyalty marketing analytics shows an increase in the average transaction value, it means you are running a successful campaign. After all, it's only in the n+1 transaction that the customer is able to redeem his rewards accumulated in the nth transaction, right? 

However, if you don’t see customers redeeming their points, it can mean any of the following:  

• The rewards aren’t exciting 

• Customers have forgotten to redeem their points 

• Shoppers don’t find the program engaging enough to earn and burn points 

• Your buyers are cascading towards churn  

Then what can you do to increase the points redemption?  

• Give multiple avenues to redeem points 

• Diversify your rewards to make them attractive 

• Remind your customers and give cues that they are a part of a beneficial loyalty program 

• Send out redemption campaign messages  

5. Points expired 

Around the time when your customers’ points are about to expire, they have a choice—to either make more purchases to redeem their reward or toss it away.  

When they do the latter, it means your customers are going into the realm of inactivity and that’s going to depress the ROI of your customer loyalty program in the long run. This is because, the more disengaged the customers are, the farther behind you are in their minds.   

While the brand recall is turning to be obsolete, it means that your customers are spending their money elsewhere.   

If your loyalty marketing analytics recognizes expiring points above the 5% level, that is a bad sign.   

So, how do you prevent points’ expiration?   Follow the steps below: 

• Remind customers that it’s time to redeem their points 

• Render an omnichannel experience for customers to redeem their points 

• Most importantly, make it as easy as possible to redeem points, don’t let customers go through hoops to earn their rewards  

6. Earn to burn ratio 

The loyalty marketing analytics covers yet another aspect called the earn to burn ratio. It typically tells you the frequency at which points accrual and redemption happens.  

So, earn is nothing but the number of points that your customers accrue. And burn, is the points they redeem.  

Do quick math as below and you get your earn to burn ratio. 

Earn to burn ratio = Points redeemed / Points earned 

"Ideally, a high ratio would signify active engagement on the customer’s side, and alternatively, a low ratio would mean something is amiss", says Munmun Das, my data scientist colleague. 

 7. Customer engagement  

When we speak of customer engagement in the loyalty program, the loyalty marketing analytics should relay the percentage loyalty transaction.   

You can calculate the loyalty transaction using the formula below:  

Loyalty transaction = Number of loyalty transactions / Total number of transactions   

The higher the percentage of loyalty transactions, the better is the performance of your customer loyalty program. It’s a telltale that your program is keeping customers engaged. That’s why they are earning points, and burning them for rewards by repeatedly purchasing from you.  

Nonetheless, there are three other levers that steer customer engagement—customer repeat rate, recency index, and the net promoter score (NPS). You might want to check out our free customer engagement score calculator to discover where you stand!  

Time to delve into loyalty marketing analytics! 

Customer loyalty is fickle. Right from the moment a customer signs up for your loyalty program to the moment he gets rewarded, there are a lot of transactions and events happening.  

While you might not be able to capture it in your memory, your CRM certainly can. It’s time you mined that data out of your CRM to make sense of what is working and what’s not, in your loyalty program.  

Basing your decisions on data can help you see a 126% profit improvement against those of your peers who don’t (McKinsey). So, take the time to look into your CRM and pull the data around the seven buckets we discussed in this blog.