5 Tips to Jumpstart Measuring Your Customer Loyalty Offers

5 Tips to Jumpstart Measuring Your Customer Loyalty Offers

Pressures stemming from COVID-19 have made consumers more selective in where they shop, as they put greater value on personal safety and face tighter budgets. In today's economy, loyalty will be a major deciding factor, since a majority of consumers say they're more selective and more loyal to brands than they were just five years ago.

There's a new economic reality for brands, too: greater pressure on budgets and maintaining customer loyalty, combined with a need to ensure their marketing efforts contribute directly to the business bottom line. The best way to optimize marketing efforts, while growing sales and revenue, is to measure how your customer loyalty offers are performing. Then, you can experiment, test and be more flexible to the constantly changing environment. Because loyal customers purchase 31% more than new customers and are worth an estimated 10x more than their first purchase.

If your brand isn't already taking steps to measure offer performance, you can't afford to wait much longer. Here are five easy steps to help jumpstart your efforts:


Step #1. Define Your Use Case - Figure out what metrics you wish to improve. Perhaps you want customers to visit more often. Maybe cross-selling and upselling is more important. Or you might want customers to engage more through your app or encourage them to take actions that enable them to move up in loyalty tiers.

Step #2. Identify Your Audience - Determine which group(s) of customers you want to target. You may want to segment into cohorts, like first-time buyers, less-frequent buyers, or those who have not signed up for the mobile app. And have a sizable audience - at least 10,000 individuals - to achieve meaningful results.

Step #3. Develop Targeted Offers - Optimize offer creation by considering what preferred customer behavior you seek and what metrics you can use to measure engagement. Behaviors could include discounts or bonus points to unlock a new loyalty program level, while metrics could include frequency of visits or purchases.

Step #4. Test Your Campaigns - Send offers and promotions to the targeted audience, then measure the net incremental revenue (NIR), which is the change in net revenue earned by the campaign minus the costs associated with the offer, as your primary metric. Also consider secondary metrics, such as percent of customers visiting and average order value (AOV), weighing the test group vs. a control group, which may not receive any offer.

Step #5. Analyze and Learn - The metrics will enable you to uncover unexpected trends and determine which offers work best for which groups. Insights gained at this step lead to refined offers to further improve results. Then, rinse and repeat. Testing is not a one and done activity.


These steps are important, particularly if you want to move to more of a data-led approach to marketing. Results of your campaigns and the post-offer analysis will enable the use of data to drive future decision making, which is the key to improving customer loyalty at this critical juncture in the post-COVID-19 era.


If you'd like to learn more, download Formation's "Ultimate Guide to Measuring Customer Loyalty Offers."