To measure your program's success, we recommend establishing KPI's. This allows you to assess progress, while adjusting and improving your program's structure. 

• Members recruited per day.
• Purchase frequency for loyalty members.
• Average purchase for loyalty members.

3.2. Establishing loyalty-KPI's:

To set realistic goals, it's important to have an overview of the current situation so that you can later measure progress in point 8 (Analyze results and adjust as needed). Goals for member recruitment (point 3.2.1) can be set from the beginning and actively monitored. Goals for purchase frequency (point 3.2.2) and average purchase (point 3.2.3) cannot be measured until the program has a sufficient foundation (estimated for point 8).

The figures used here are fictional to demonstrate how information from the current situation can be used to set realistic goals.

3.2.1. Member recruitment - Can be continuously measured

To establish a realistic goal for new member recruitments, you need to adjust the goal based on the store's potential. This is influenced by the store's customer base, in addition to the content of the loyalty program.

Example:

• Store's customer base: 10,000.
• Recommended goals for new member recruitments: 30% - 50% of the customer base.
• Store's goal for member recruitment: 50%.
• Target annual member recruitment: 10,000 * 0.5 = 5,000.
• Target monthly member recruitment: 5,000 / 12 = 417.
• Target daily member recruitment: 417 / 30 = 14.

In this case, with a goal of 50% member recruitment, the aim is to recruit 5,000 new members per year. The goal can be broken down into monthly and daily targets to make progress tracking more manageable. If special deals are offered to specific groups, such as corporate customers, it would be appropriate to exclude them from the total number of new member recruitments when tracking progress toward the goal. This is because these groups typically have special benefits and are not representative of the entire membership.

• Keep an eye on the Loyalty+ dashboard. 
  • Is an average of 14 new members recruited daily?
• Increase potential by including more channels through which customers can become members.
  
  •  For example by registering at check-out or your store's website
• Increase potential by improving the program's content.  
  • For example through better offers and benefits. 
• Increase potential by further training and motivation of employees.   

• • For example through internal competitions. 

3.2.2. Purchase frequency for loyalty members - The current situation can be recorded, and results can be followed up in point 8.

Often, stores may not have an overview of the purchase frequency of their customers, but it can be useful to estimate it so that you have something to measure against in point 8.

Example:

• If it's estimated that customers buy clothes 5 times a year, spread across five different stores, the store's purchase frequency can be estimated.
• Estimated annual purchase frequency: 5 / 5 = 1.0 purchase.
• Based on the estimate for the current purchase frequency, set a goal for how much more you want loyalty members to shop at the store.
• We recommend a goal ranging between a 30%-70% increase in purchase frequency.
• Store's goal for an increase in purchase frequency for loyalty members: 50%.
• Loyalty members' annual purchase frequency: 1.5 purchases.
• Increase in purchase frequency for loyalty members: 1.5 / 1.0 = 1.5 (equivalent to 50%).
  
  Tracking KPI and tips:

• Keep an eye on purchase frequency in the Loyalty+ dashboard.  
  • Are loyalty members shopping 50% more often than non-members?
• Strengthen loyalty by improving members' benefits
  • For example by offering revisit benefits such as bonus accumulation.   

3.2.3. Average purchase for loyalty members - The current situation can be recorded, and results can be followed up in point 8.

To set goals on how much more you want members to spend, compared to non-members, you need to know how much an average customer spends today. You can find this as follows: Annual revenue from customers / Annual number of customers = Average purchase for the average customer.

Example:  

• Average purchase before implementing the loyalty program: 800,-
• We recommend setting a goal stating that loyalty members should spend between 30% - 40% more than non-members.
• Store's goal for increased average purchase for loyalty members: 30% above non-members.
• Based on these numbers, you can set a goal for the average purchase of a loyalty member.
• Target average purchase for loyalty members: 800,- * 1.3 = 1,040,-
• When measuring average purchases, you can create three different groups for comparison:
• Average purchase per customer before the loyalty program: 800,-
• New average per customer after the loyalty program: 960,-
• Average purchase for loyalty members: 1,040,-
• To measure the change in average purchases, compare the different groups to determine how much more loyalty members spend than non-members.
• Increase in average purchase before and after implementation: 960 / 800 = 1.2 (equivalent to 20%).
• Increase in average purchase for loyalty members compared to non-members: 1,040 / 800 = 1.3 (equivalent to 30%).

Note that if you are unable to separate the average for loyalty members, the overall average will also increase due to the higher average for loyalty members.

Tracking KPI and tips: 

• Keep track of average purchases in the Loyalty+ dashboard.
  
  • Are loyalty members on average spending 30% more than non-members?  
• Make repeat purchases worthwhile.
  • For example by offering instant gift cards or bonus points which incentivize members to spend more.