Loyalty & Membership Programs FAQs

• What is the most important metric when measuring loyalty/membership programs?

  The most important metric in loyalty programs is the percentage of members who are active.
  
  The ideal target is to have at least 80% of your members active (for example, spending at least $100 per month or making 10 purchases per month).
  
  The second most important metric is the average spending per member. The best way to measure this is by comparing the average spending over time and comparing it with the average spending of non-members.
  
  In addition to these two metrics, there are a few more that can be useful as well:
  
  Engagement
  Engagement is the number of times a member interacts with the program in a given period, typically a month. This can be measured in various ways, but the most common is through purchases or visits to locations, both online and offline. Engagement data helps companies understand how often customers interact with the program and if they use it as intended.
  
  Retention Rate
  Retention measures the percentage of members who continue to use the program over time. It's important because it helps companies see if they're retaining members they want to keep happy and engaged or losing them due to poor communication or other factors.
  
  A company that wants to improve its NPS should improve satisfaction and loyalty by focusing on customer experience. The best way to do this is by listening to your customers and asking them what they like, what they don't like, and why they are or aren't likely to recommend your brand. Then you can use this information to make changes that will improve loyalty and increase referrals among your customers.

• What's the best way to get members to sign up for my loyalty/membership program?

  Make it easy for people to join
  If you make it too complicated, your members won't be happy — and they won't stay very long in the program. You want them to have a good experience from the moment they sign up until they leave.
  
  Use a referral program
  This is a great way to get your existing customers to share your brand with others, which in turn, helps you grow your membership. The best referral programs have a clear incentive for both parties — whether that's cash or points, discounts, or special offers — and are easy to use.
  
  Encourage referrals from existing customers
  Your existing customers already love your business and may be willing to spread the word about it if you give them an incentive — like free gift cards or coupons for referring friends and family members who join the program. If you have no way of tracking referrals, simply ask them how they heard about your business, so you can follow up with those who aren't yet customers but may be interested in becoming one.
  
  Set goals for the loyalty program
  Before you get started, think about what you want your loyalty program to achieve. Is it simply about increasing sales? Or is it about providing additional value to your customers and improving their experience?
  
  Use a landing page
  A landing page is a page on your website that's dedicated to driving conversions. It should have one simple purpose and one goal — getting people to sign up for your loyalty program. You want the page to be super simple and provide only the information that's relevant to what they're looking for. If they want more information, they can click through and read more.

• How does a membership program work?

  A membership program is a tool that allows your business to offer exclusive benefits to customers in exchange for their loyalty. Membership programs are often used by subscription-based businesses like gyms, coffee shops, and insurance companies.
  
  The idea behind it is that once you've paid your annual fee, you'll continue paying that fee every year until you cancel (or until the company changes its pricing). Membership programs usually offer special discounts or additional benefits as incentives to keep paying.
  
  Membership programs are growing in popularity because they offer businesses an opportunity to build deeper relationships with customers while also helping them generate more revenue.

• What are the benefits of customer loyalty programs?

  Higher Average Transactions
  A loyal customer is more likely to spend more money on average than a non-loyal customer. For example, they might buy more frequently or in larger quantities, but they might also be more willing to buy higher-margin items or pay higher prices for the same product.
  
  Shorter Customer Acquisition Costs
  Suppose a merchant has already established a relationship with its customers. In that case, those new customers are more likely to stick around and become repeat buyers — meaning the merchant doesn’t have to spend as much time or money getting them started.
  
  More Opportunities for Cross-Selling and Upselling
  Loyalty programs can encourage repeat business from existing customers by offering special deals and discounts on different products or services offered by the same merchant. This helps increase sales volume without requiring additional advertising spending or acquisition costs for new customers.
  
  Increased profits
  Customer retention and repeat purchases result in higher profits for your business. The longer a customer remains with your company, the more likely they are to spend more money with you over time.
  
  Lower marketing costs
  Loyal customers tend to spend less on marketing because they already know about your company and its products or services, so they don’t need as much advertising as new customers do. This can save money on everything from print ads to internet ads.
  
  Better reviews and word-of-mouth recommendations
  Loyal customers will likely be more willing than average customers to leave positive reviews online or recommend your business to friends and family members because they like what you offer enough that they want others to experience it.

• What kind of ROI can I expect to see from my loyalty or membership program?

  The answer depends on several factors. The most important is the type of loyalty program you're running. If it's just a one-off promotion or a temporary tiered discount, then there's no real reason to expect an ROI beyond the sales you make during that period. But if you have a longer-term program that offers ongoing rewards and benefits, then there are several ways to evaluate the return on investment (ROI) of your loyalty initiative.
  
  Your first step should be to calculate how much money you've spent on the program since it began (this includes any start-up costs associated with launching the initiative). That's your initial investment for this program. Now take note of how many new memberships were generated by this initiative (as well as any current members who renewed their membership). Divide that number by your total investment, and you'll have your ROI for this particular initiative.