Doing business in such a competitive e-commerce market, loyal customers will be the backbone of your success. Research claims that acquiring new customers is five times more expensive than retaining ones. This is why more businesses are striving to optimise their customer retention techniques through rewards and loyalty programmes.
No matter how well-intentioned these customer loyalty programmes may be however, many companies still fail because of their inability to track the overall effectiveness of their loyalty schemes. To ensure you’re truly maximising your investment and keeping customers engaged, we discuss the metrics you should be aware of so you can measure the success of your rewards programme.
3 customer loyalty metrics to measure
The success of your customer loyalty programme is heavily dependent on customer experiences. You can calculate how your customers feel about your loyalty programme using the following metrics:
1. Participation Rate
One way to gauge the quality of your rewards programme is to calculate the overall participation rate. This will help you determine whether customers are involved in your loyalty scheme.
To calculate the participation rate, all you need to do is divide the total number of customers by the number of members in your loyalty programme. The higher the percentage, the better.
2. Repeat Purchase Rate
The repeat purchase rate, or RPR, is the percentage of customers who revisit your website to make another purchase. RPR gives you an idea of how many repeat customers you have. This is important as statistics show that repeat customers convert at 12 times the rate of new ones.
To get the RPR, you need to obtain the total number of customers and the total number of repeat customers. Divide the number of repeat customers by the total number of customers and multiply the answer by 100 to get a percentage. An average 20-40% is what businesses should aim for when it comes to a successful RPR.
3. Redemption Rate
Redemption rates measure how many people are redeeming the rewards from your programme. If more customers are actively redeeming the rewards you offer, it means your business is reaching a high redemption rate. This is a clear sign that your loyalty programme is effective.
For example, if your company issues points, your redemption rate will be the number of points redeemed divided by the number of points issued. The ideal percentage should be no lower than 20%.
How to improve low customer loyalty programme participation
When your numbers are low, you will have a better idea of which areas of your program to target. There are several ways to improve your KPIs:
- Incentives – If few customers are coming back, it may be time to tweak aspects of your loyalty programme and offer incentives that will more persuasively encourage them to make repeat purchases. Consider a one-day free shipping benefit or double the points for a maximum volume of orders. Whatever package you come up with, it needs to motivate them to spend and make purchases willingly.
- Email campaigns – You can boost your email marketing with targeted email campaigns that spotlight special offers your customers wouldn’t have otherwise known. This can help boost repeat purchases on your website and encourage them to sign up for your rewards programme.
- Create a seamless shopping experience – Review your overall website and see which areas you can improve to simplify your customers’ shopping experience. Create a user-friendly website with simple navigation so customers can browse, shop, and redeem rewards with ease.
- Personalise – There are numerous ways you can personalise your loyalty programme. Offering customers what they truly desire and not just what you think they like can help your loyalty scheme succeed. Offer them redemption options so they can have the freedom to choose how to spend their points. Remember, personalising your rewards programme can help enhance customer relations, build trust, and increase chances for repeat sales.
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