KPI, metrics, key performance indicators
KPIs can help prove a loyalty program’s success to stakeholders

In the highly competitive loyalty environment, seeing results is believing. You need to track key performance indicators (KPIs) that will showcase how the program is expanding your customer base, driving profit margin and delivering a solid return on your marketing investment.

So, which KPIs should you track? It depends. A newly launched program may have the initial goal of creating brand awareness among younger consumers, while a three-year-old program may be focused on driving member spending and in-store visits. Program goals must align with your business goals, so if your company’s overall goals change, be prepared to track a different set of KPIs.

5 Essential KPIs to Monitor

Marketing KPIs are not “one size fits all.” Your organization should pick indicators relevant to the business, define each one according to specific goals you are measuring and choose benchmarks for comparison.

Here are essential indicators you should track for starters. Define them within the context of your goals. Later, you can use more KPIs or combine them as you see fit.

#1 Customer acquisition and conversion – Everything starts with attracting the attention of a new member (acquisition). You want the consumer to respond positively to your call to action (for example, open an email, click on a link that leads to a member registration page). To maximize your marketing ROI, you should aim to recruit new members in addition to brand exposure. If you are looking for a reward that’s guaranteed to attract new members, consider offering fuel savings. According to our 2019 C-Store Shopper Report, many consumers in the US (55 percent) are compelled to join a loyalty program to earn rewards they can redeem for fuel savings.

Some marketers equate conversion with an app download, while others look for a consumer to start using the app to earn, track, or redeem rewards before counting it as a conversion. Just as the definition of “conversion” varies, the decision to look at acquisition and conversion numbers together or separately will depend on the goal – or goals – you are measuring.

#2 Loyalty program performance and longevity – While attracting new members is critical, your program must also have the right features and offers to keep members invested over time. You want as many members as possible to stay (retention rate) and as few as possible to leave (churn rate). How can you do that? Take a cue from research results, and adjust your program features if needed. Most loyalty members (59 percent) want rewards with everyday value, such as fuel savings, snacks and beverages. They also want a program that’s easy to use, with 52 percent saying they prefer to use a mobile app to track and redeem their rewards.

#3 Loyalty program engagement – You can track members’ engagement with your program through the number of points/rewards earned and redeemed. If you want members to stay, keep them engaged with relevant and timely offers. Your program’s goal should be to increase members’ in-store visits, which directly drives incremental sales. It’s a highly attainable goal, given that 39 percent of members say they visit a c-store because of its loyalty program —10 times more likely to visit than nonmembers.

Under this KPI, you may also want to measure digital engagement, such as email open rate, loyalty website traffic and open/clickthrough rate of push notifications. You can boost your engagement rate with the help of a unified loyalty marketing solution that targets consumers in real time through in-app messaging, geotargeting and push notifications.

#4 Sales performance – Measuring how often a member shops in-store and the average spend for each visit is critical to evaluating a program’s profitability. Our 2019 C-Store Shopper study shows loyalty members are worth the investment. They spend 29 percent more than nonmembers on the average — $11.17 per visit versus $8.66. To put sales performance in context, you need to calculate the marketing ROI for your program. And that calculation is straightforward, according to the Harvard Business Review. Take the incremental sales growth from a particular promotional campaign, subtract the marketing spend for that campaign and then divide it by the marketing spend. The higher the number the better.

#5 Promotion performance – Earning rewards is the foundation of a member’s relationship with your program, but you need different offers to nurture different relationships. Special promotions can change consumer behavior in a positive way and strengthen their affinity for your program and brand. You can test and measure the effectiveness of each promotion and across different customer segments for optimal results.

For example, PS We Love You Rewards, Folk Oil’s highly successful program, ran a general “welcome” campaign offering 20-cents-off-per-gallon to new members and a personalized campaign offering free coffee and fountain drinks for members to redeem on their birthday. Different KPIs were used to measure campaign effectiveness: email open rate, redemption rate and loyalty transaction retention rate. PDI’s robust Marketing Cloud Solutions powers the Folk Oil program and drives its promotional campaigns. PS We Love You Rewards boasts of 125,000 members and over $1 million in savings since its launch in 2018.

What’s Next? Focus on Your Goals

Now that you’ve learned about the five essential KPIs to monitor, focus on your goals, as they will help determine your specific KPIs and your personal monitoring needs for those KPIs. KPIs are helpful only if you have goals you are actively working on. Treat them as a tool, not a target, which means there are no right or wrong KPIs. In fact, low KPIs can help pinpoint your program’s weaknesses so you can improve them.

Perhaps a decline in redemption rate means you need a personalized campaign to encourage members to earn and redeem points. Maybe you need more diverse rewards that offer everyday value. In the end, your marketing efforts should focus not on KPIs but on what your loyalty program wants to achieve: better customer relationships, increased customer loyalty, and higher incremental sales.

Did You Know: Your Source for PDI News provided by PDI, the leader in enterprise management software for the convenience retail and petroleum wholesale markets.