Evaluating a loyalty program

Any system you bring into a business should be checked to see how well it works. This shows which investments pay off and where the budget is simply wasted. A loyalty program is no exception. It may sound surprising, but evaluating a loyalty program starts even before it launches.

The foundation of a loyalty program is laid at the planning stage, when you set the key goals and tasks and the ways to reach them. All of this is discussed at the kickoff. So it's important to define every point very precisely and openly.

At this stage, you should decide how you will measure and evaluate the program's results. Which KPIs and what data do you need for this?

Later you will be able to analyze the data in your admin portal. But you need to define how you'll measure results so you can pick the key metrics to focus on.

There are three main ways to measure the impact of a loyalty program:

Comparing spending before and after joining the program.

This approach shows how a guest's buying activity changed after they joined the program

You can find this out by comparing a guest's average check before and after they joined the loyalty program. It's important to pick a realistic period for the comparison. Clearly, you can't compare these numbers a week after the person added the card.

Comparing revenue from members and non-members.

Do you know how much profit you get from the people in your loyalty program, and how much from those without a card? If not, it's worth calculating. This way you'll understand what to focus on: promoting your loyalty cards or investing in finding new guests.

You will also be able to understand and compare guest value.

Comparing churn among members and non-members.

It's believed that if a guest is in a loyalty program, they are much more likely to come back to your venue. Is that true?

You can find out with a small study. If the repeat rate among those who joined the loyalty program is high, it means the program has a strong effect on guest retention and works well.