9 KPIs to Measure the Performance of a Loyalty Program

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18.03.2021 research

Loyalty programs are powerful tactics included in a supermarket’s marketing strategy. By providing memorable shopping experiences, they help retailers engage with their customers both in-store and online. With the right features—theme, license, rewards, mechanics, etc.—loyalty programs have the power to connect retailers with consumers’ emotions, especially with families. And the payoff can be huge.

Defining and tracking the right Key Performance Indicators (KPIs) will enable you to measure the performance of a loyalty program. With these indicators, you will understand what works the best and how it impacts your sales and brand along with what needs to be optimized in your future campaigns.

Don’t worry, we’ve got you covered! We listed for you the essential indicators that you should keep a track of. Discover below 9 KPIs to take into account while evaluating the success of your loyalty program, which is also known as a loyalty campaign.

 

1. Loyalty campaign awareness

Brand awareness is key to driving consumers’ purchasing decisions, and loyalty campaigns help grocery retailers gain visibility among shoppers. Because they are designed based on the topics and values that retailers wish to communicate, they also contribute to brand equity.

After you’ve run a loyalty campaign, you can measure its level of awareness, in other words, the percentage of consumers who heard of it. More specifically, you can also gauge how many of your customers know about it and what they associate the campaign with to understand its impact on your brand equity.

Important to note: According to Nielsen, customers are 60% more likely to feel comfortable purchasing from a brand they have heard of before. A loyalty program with high awareness within the right audience can thus lead to more affinity with your brand.

 

2. Sales uplift or sales growth

Measuring the performance of your loyalty program also means monitoring your sales, which you need to do both during and after your loyalty campaign. During the campaign, it gives you the keys to optimize your campaign execution. Consecutively, measuring your sales uplift after the campaign allows you to compare it with other initiatives. You can thereby determine the types of promotions and mechanics that work best for your brand and your business.

When you run a loyalty program in your supermarkets, you must understand how this marketing tactic helps you reach your goals. In this sense, the sales uplift will show you how effective your short-term loyalty program is.

 

3. Trended market share

In a highly competitive industry such as grocery retail, market share matters. Retailers thus use loyalty campaigns as a way to win over key sales periods, and your trended market share during these programs shows the exact position you hold in the market compared to your competitors.

If your short-term loyalty program leads you to victory over specific periods, this gives you valuable insight into its performance.

 

4. Average basket size or ticket size

A central element of a loyalty program is the minimum spend threshold that customers need to reach to receive a reward. The average basket size or ticket size is, therefore, a KPI you should keep an eye on. It is the amount of money that your customers spend on average per visit.

During short-term programs, an increased average basket size and ticket size can be expected. Various tactics, such as cross-selling and supplier involvement, can help you get there.

 

5. Transactions reaching the threshold

In addition to the average basket size, another good metric to keep a track of is the percentage of transactions that reach the threshold. This percentage compares the total payments made during the campaign with the number of payments that achieved at least the minimum spend required to get a reward or more.

This percentage will tell you whether your shoppers were motivated enough to stretch their spend in order to get rewards.

 

6. Foot traffic

Tracking the number of visitors to your stores is a standard but revealing metric in short-term loyalty programs. Factors such as the communication and visibility of your campaign, the attractivity of its concept, and the perceived value of the rewards, have the power to attract both existing and new customers. Ultimately, the campaign can drive more foot traffic.

 

7. Frequency of visits

Analyzing the frequency of visits during the program is also interesting. Since loyalty campaigns allow customers to collect an entire line-up of rewards in a short period, shoppers are indeed likely to visit your stores more frequently.

 

8. Merchandise sell-through rate

During a loyalty program, most retailers offer their shoppers the opportunity to extend their reward collection with related merchandise items. This cross-selling tactic not only helps increase the hype around the campaign but also the playability

The merchandise sell-through rate is, therefore, useful to understand the relevance of the campaign and the merchandise itself to your audience. It refers to the percentage of sold products in a short period in comparison to the number of products available for sale.

Various factors can influence this KPI, but it can give you a good indication of how shoppers perceive your line of additional merchandise.

 

9. Customer satisfaction

Customer satisfaction is a very important metric in your post-campaign evaluation. More satisfied customers lead to higher chances of them building affinity towards your brand and returning to your stores. 

Moreover, there is a strong relationship between satisfied and loyal customers. Don’t forget that customer satisfaction is also a great indicator of what works or not with your audience and how to communicate with them.

 

Including KPIs in your loyalty campaign evaluation

As explained, many KPIs can be tracked to measure the performance of a loyalty program. The 9 indicators presented in this article already make a strong base for you to evaluate your promotion and make the right adjustments in your marketing strategy to grow your business. Of course, every campaign is different. Our team can guide you and help you define what additional KPIs you should keep an eye on depending on your campaign and its specific mechanics.

 

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