Loyalty Marketing Metrics


Published: | By POWR

As many brands revamp their efforts to attract new customers via costly paid ads, it’s easy to overlook the potential success of loyalty marketing. However, it’s no secret that implementing a reward or loyalty program is an effective way to improve customer churn and retention rates, which is why many e-commerce brands continue making loyalty points a business staple.

Thus, if improving customer retention is your top priority, you must know how to assess the success of loyalty marketing strategies to ensure they’re yielding positive results. To guide you through this, we’ll discuss five loyalty marketing metrics to help you make sure your customers will be valuable to your brand throughout their lifetimes. If you’re looking to learn more about the loyalty program for e-commerce, click here. 

1. Customer Retention Rate


You’ll eventually want higher customer retention rates from your loyalty marketing efforts–your customer retention rate gauges how many of your existing customers continue returning to your business after a given period. This loyalty marketing metric can help you understand what keeps customers engaged with your brand and can also help you identify opportunities to improve customer support. After understanding how poorly or well your business retains customers, you can strive to improve this retention rate.

To determine your CRR, you need to know:

  • The number of clients at the beginning of a specific period
  • The number of clients at the end of that given period
  • The number of clients gained during that period

Next, subtract the number of customers gained during that period from the number of clients you have at the end of that period, divide your answer by the number of clients you had at the start of that period, and multiply that figure by 100. To learn how to use our contact form plugin, click here.

2. Churn Rate


While customer retention metrics track the number of customers who keep coming back, the churn rate measures the number of customers your brand has lost over a given period of time.

If your churn rate is high, your business is losing a large percentage of customers to its competitors. Tracking your churn rate can help you discover trends that may affect your business and take measures to reduce your losses.

To calculate your churn rate, you need to subtract your customer retention rate from 100, giving you your churn rate percentage. For instance, if your customer retention rate is 35.5%, your customer churn rate will be (100 - 35.5 = 64.5%). 

Alternatively, divide the number of customers you’ve lost by your total number of customers, and then multiply the result by 100.

To improve your churn rate, you must understand why your customers are abandoning your brand and how to offer a better customer experience. 

3. Lifetime Value


This is a fantastic metric to measure the success of your loyalty marketing initiatives, because it analyzes how much existing customers are spending, how often they’re purchasing, and how long they’ve been your customer. Thus, the lifetime value of every existing customer is a crucial metric that you can monitor to improve your loyalty marketing methods.

Knowing your customer lifetime value can also help to identify valuable customer segments, and can help you adjust business decisions about marketing, sales, customer support, and product development.

4. Customer Loyalty Index


This is a standardized tool used to track customer loyalty over a specific period of time. It focuses on three fundamental questions:

  • How likely are you to refer our products or services to your colleagues, friends, and family?
  • How likely are you to buy from us again in the future?
  • How likely are you to try our other services or products?

Your customer loyalty index is the average score of these three questions. This metric can help you forecast your future customer retention rates, while also making it easier to build overall customer loyalty. 

Final Thoughts

Repeat customers are more crucial than ever–they’re the ones that’ll continue to offer value to your brand for a long time, helping you to achieve your business goals. Effective loyalty marketing initiatives that actively engage existing customers will earn you higher retention rates and more brand loyalists who’ll stay committed to your brand for the long haul.

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