| | 9CIOReviewFEBRUARY 2021The loyalty goal is always to convert a non-member into a member. The program should be able to clearly explain a delineation between the two and maintain that delineation as they recruit non-members and new customers into the membership base.2. Member Behavior Change Contribution ­ this value should be measured by analyzing "look-alike audiences" or segments based on purchasing behavior within the member group. Most programs use tiers to segment their members based on the financial value to the business. · Base Members: normally represent about 75-80% of your member population and have spending patterns that should be higher than non-members. Normally this higher spending is due to tailored communication and the value the member sees in the rewards offered. · Tiered Members: the remaining 20-25% represent the best members/customers to the organization who's spending patterns and frequency are higher than base and non-members. This group of members remains loyal to your brand because of your exclusive benefits, value proposition, and dedication to ensuring they feel rewarded.Now, simply saying that higher spending is attributed to your loyalty program would be false. Instead, loyalty best practice would recommend a closer look by analyzing the member segments and their behavior over time. For instance, if the loyalty team implements a new program benefit, then the team has the opportunity to analyze the segment behaviors pre and post the launch. Did the new benefit truly influence members (or a segment of members) to follow the desired action that drives incremental financial benefit? For example, did the member make one more purchase or add more to their cart in comparison with their previous sales cycle? For the skeptics out there, this is a key metric to probe on when the loyalty team deems a new benefit a success. If they say more people "engaged" or became "satisfied" because of the benefit, then they should be pressed to explain how much more in terms of incremental revenue post the launch.3. Partner Funding ­ for many industries, outside partners are crucial to the success of a loyalty program. Most companies would see partners as an added value proposition to enhance their benefits by offering transactional point earning or exclusive discounts with partners. This, in turn, would influence consumers to engage more with the loyalty program and, as a result, spend more with them over time. From an additional financial standpoint, these partners can also deliver added revenue streams to the loyalty program if the program monetizes the marketing/placement of the partner brands in the loyalty member communications. In the retail industry, for example, a merchant can offer pay-to-play programs to brands in order to participate in a loyalty campaign. Let's take a retailer double points campaign as an example. The retailer could offer a handful of brands the opportunity to participate in this exclusive marketing campaign. They would look to the brand partner to monetarily fund a few aspects of the campaign, such as the following:· The additional point liability, i.e., that extra point per dollar on the purchase· The marketing effort around the campaign, such as creative/copy, etc. · The beneficial placement across the marketing channels, such as email placement fees, website banners, in-store signing, paid media assets, etc. · Any other unique logistical fees, such as technical set-up requirementsAlthough loyalty programs can see financial success without partner funding, the addition of such funding will boost your incremental impact significantly. For advanced loyalty programs, this partner income can be monumental. 4. Increased Customer Journey Touchpoints ­ for any company, a robust customer journey must be part of their retention strategy. A loyalty program should layer cohesively to this customer journey. Loyalty touchpoints should be used as an enhancement to communicate personally and authentically to the consumer, nurturing a long-term relationship. These added touchpoints should range from communication, welcoming them into the program to congratulating them for redeeming their rewards to celebrating special moments in their life like a birthday. If these communications are strategically developed with a conversion to purchase in mind, they can add massive value to the bottom line. On the flip side, if they are basic and amateur, you could see higher opt out rates and a decline in member value. Hence, another reason why I highly advocate for employing dedicated loyalty analysts in your team of problem solvers.At the end of the day, customer loyalty is complex and unique to each company. But that's what also makes it fun. Every business strives for a loyal customer base that contributes to financial success. A strong loyalty program is crucial in growing that base. An effective loyalty program should allow you to personally communicate with members (Increased Customer Journey Touchpoints), find out who members are and what motivates them (Member Behavior Change Contribution), reward desired behaviors that drive incremental value for you (Member Versus Non-Member Value), and even a way to include partners in the customer experience (Partner Funding). Whether you are currently on the road to developing a new program or have been managing a loyalty program for years, I hope these four measurements can be of aid or act as validation that your program can drive financial value. Although loyalty programs can see financial success without partner funding, the addition of such funding will boost your incremental impact significantly. For advanced loyalty programs, this partner income can be monumental
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