What are the KPIs used to evaluate rewards and loyalty programs?

If you are thinking of doing a rewards program in your store, these are the KPIs that are generally used. I suggest getting these figures before starting to use as a benchmark, then over time track and measure your progress against this benchmark.

The first point to note, is that such programs do involve a lot of work, and they can be risky. Once your customers get used to the benefits of your program, they will be upset if they lose these benefits.

1) How many customers are IN your program? As a rule, most reward programs are looking for about 30% of all customers to join although 10% to 40% are acceptable.

2) How many are USING your program? The greatest program that is not being used is useless. What you need to know is what is the ratio of (customers in your progam)/(customers outside your program)

3) Now compare that ratio of the (transaction in your program)/(Overall transactions) by value or profit.

For example, I would be happy if 15% of my customers use the reward program, and the transaction ratio was 30% by profit. I would be upset if it had 15% of my customers on the reward program, and the transaction ratio was 15% by profit as I am doing a lot of work for nothing.

4) The average basket value and/or profit of people in your program compared to the rest. Is there an increase?

5) How much does it cost you to run the program, including discounts, overheads, etc.? The (cost for the program)/(turnover) as a rule is less than 1%, although I have seen people go to 2% with suppliers help.

These KPIs will give you a clear idea of whether or not your loyalty program is working.