You can estimate the success or failure of a loyalty program by collecting your current metrics and inputting into ROI calculators.
Companies like Snipp can create a number of scenarios and project best-case, worst-case, and most probable outcomes. A priority is to recruit members and drive specific behaviors that increase in their Average Order Values and Purchase Frequency which can be measurable in short time periods. Snipp can estimate the program's costs, which can include a technology vendor, IT - internal or from an agency, rewards, program management, email volume increases, etc.
MEASURING SUCCESS OF YOUR LOYALTY PROGRAM
Comparing post-launch to pre-launch estimates is important. Is your program meeting/exceeding industry standards? If you deploy a loyalty program today and in 1-year, your CFO asks if it's profitable; how do you answer that?
There are many metrics to measure the loyalty program over the short and long-term. You can start by comparing program members vs. non-members (a) Average Order Values and (b) Purchase Frequency over 6-month periods and increase both from 8% to 40% depending on your situation. Top-level revenue should increase by 5% to 15% based on the channels of your sell-through. You should differentiate purchases coming from each sales channel to analyze relevant data and make adjustments accordingly.
LOYALTY PROGRAM BACKEND & DASHBOARD
Managing your program members should be simple and as automated as possible. As members enroll and start using your program, lots of purchase and non-purchase data is collected and if interpreted correctly, can allow you to make improvements not only to your Loyalty program, but many of your marketing functions, and give you a competitive advantage. You should integrate with other systems via API or native integrations – ex: Ecommerce Platform, CRM, ERP, ESP, Physical Point-of-sale (POS), etc. Your system should have advanced segmentation, campaigns, messaging triggers, demographics and behavioral characteristics.
Margins/Liabilities are part of the formula for determining success. When designing a points-based program, those points must have value, so when your members redeem points, they are converted from points to a reward, and the amount gets deducted from their account. Points will have a specific value (penny, dime, nickel, dollar, etc.), so predicting and putting limits on how much your customers cash out is a balancing act since you should both protect your margins and give members enough value to be excited about the your program and its rewards/benefits.