6 Uses of Loyalty Program Data

Posted on

If your business has a loyalty program, you are probably sitting on a gold mine of customer data. Are you using those data to gain insight into your customers and improve your marketing effectiveness? A survey of retailers in the Netherlands shows that gaining customer knowledge through loyalty program data is crucial to realizing the loyalty enhancement potential of such programs. So if you have not been leveraging your program data, it is important that you start right away. In this article, I will describe six sample uses of loyalty program data.

Use #1: Customer Lifetime Value Analysis

The beginning of loyalty programs is often to make the best customers feel appreciated. But who are these best customers? Loyalty program data can help you answer that question. Based on each customer’s transaction frequency and amount, it is possible to calculate the expected lifetime value for the customer. Refer to this article for how to calculate customer lifetime value. Once you are able to assign a lifetime value to each customer, you can design offers and campaigns to ensure that your best customers’ needs are satisfied.

Use #2: Customer Attrition Risk

Related to customer lifetime value analysis, your loyalty program can also tell you if some of your customers are at risk of leaving you. This knowledge gives you precious lead time to proactively address the problem and retain customers.There are different ways of identifying such risk levels. One popular approach to predicting customer churn (the BG/NBD model) uses simply the number of transactions a customer has made, when the last transaction happened, and how long the customer was observed. This model can be implemented as an EXCEL spreadsheet and through the BTYD package in R. Continue reading “6 Uses of Loyalty Program Data”

Customer Loyalty Dashboard in Google Analytics

Posted on

How loyal are your customers? If you business is like most brands, your answer is probably going to be complex and constant in flux. To accurately gauge customer loyalty, you need data from a variety of sources such as customer transaction data, social media data, and customer survey data. But what If you don’t have such data readily available or if you don’t have the analytic capabilities to tackle such data? It is still possible to use common tools to form a crude picture of your customers’ loyalty levels. In this article, I would like to talk about creating a customer loyalty dashboard in Google Analytics.

This article assumes that your website already uses Google Analytics. If you use one of the other web analytics tools instead, the basic ideas should still carry, although the exact terminologies and metric definitions may be different. This recommended dashboard should be applicable to most businesses. But it is particularly relevant to businesses where visits to the website is an important part of how your existing customers interact with you. This may apply, for example, to an online store or an online content provider (e.g., a blog).

Google Analytics Dashboard Brief Overview

(Note: I am keeping this general introduction very brief as I assume that you are more or less familiar with Google Analytics already and may even use the dashboard function. If you are not, a great resource for learning more about Google Analytics is the Google Analytics Academy. If you want to learn about dashboards specifically, check out the “About dashboards” section in Google Analytics Help.)

Google Analytics dashboards allow you to assemble several widgets to create a quick overview of how your website is doing. Since multiple dashboards are possible, you can create individual dashboards around certain themes such as customer loyalty or business growth. To access Google Analytics dashboards, click “CUSTOMIZATION” then “Dashboards” in the left panel. (If you only see a list of icons instead of actual links on the left side of your Google Analytics screen, click on any of the icons will expand to the full menu.) Click the “CREATE” button to create a new dashboard. Select “Blank Canvas” and enter a name for the dashboard in the small window, and click “Create Dashboard”. This creates a blank canvas that you can add different widgets to. Continue reading “Customer Loyalty Dashboard in Google Analytics”

Should You Shorten Your Loyalty Program Expiration Policy?

Posted on

For many loyalty program providers, program financial liability is a serious concern. Since members can redeem their points for rewards anytime, the business carries liabilities toward these potential future obligations. Such liabilities can be quite large. For example, American Airlines’ 2017 10-K filing reports $420 million worth of loyalty program liability. For Hilton Hotels, the guest loyalty program liabilities are valued at $889 million, according to the company’s form 10-K. With new accounting guidelines for loyalty programs about to take effect, liabilities will become an even more salient issue for loyalty program providers.

One common way of limiting liabilities is to set a point expiration policy so that points automatically expire after a set period of time (or a set period of inactivity). If your program points do not expire or expire after a longer period of time than you’d like, you may want to consider tightening up the expiration policy. But how will that affect your customers? Should you make the switch? Let’s look at the pros and cons for such a policy shift.

Pros of a Shorter Loyalty Program Expiration Policy

  • A shorter expiration time reduces the number of redeemable points in the long run and decreases program liabilities.
  • Because of the time pressure, a shorter expiration policy discourages your customers from shopping elsewhere. If they want to earn enough points for rewards before the points expire, they may need to put all their eggs in one basket.
  • According to motivation research, cutting the expiration time may motivate members to work harder, either because of the increased challenge level or because of their desire to regain control.

Continue reading “Should You Shorten Your Loyalty Program Expiration Policy?”