Checklist: Is your customer loyalty program working?

You’re a retention marketing superstar — which is why you’ve invested part of your marketing budget towards keeping your loyal customers happy with rewards, personalized communication, and VIP treatment. But it doesn’t stop there — not even close. Here are three ways great businesses keep their finger on the pulse of their customer loyalty program.

Want to know your customer loyalty program’s dirty secret? It’s probably underperforming.

Most businesses make this crucial error when it comes to loyalty programs: they pick something, implement it… and then they leave it alone. However, just like anything else a business spends money on, a loyalty program is at its best when operators can see exactly how it’s working and make data-driven decisions about how to continue optimizing and growing it.

A loyalty program worth its investment will be able to show you exactly the type of return it’s generating, how often customers are using it, and how much customers like it. These metrics empower restaurants to make sure their loyalty program is operating at its absolute best — anything less is unacceptable! Here are 3 things business operators must be able to identify in order to gauge the effectiveness of their customer loyalty program.


1. Are customers measurably happy with the mobile experience?

If your mobile application is being rated poorly in the Apple Store, that means you’re serving your customers a poor experience every time they open your app. Customers who don’t enjoy their experience with your mobile app will ultimately stop engaging with it. It’s no shock that 58% of loyalty members disengage after just 6 months of being active — most loyalty apps are difficult to use, feature poor mobile technology, and ask customers to jump through hoops in order to be a member of the program. It’s for this reason that most loyalty apps have an average App Store rating of just 2.9 stars. If you’re a business owner, go check your app’s rating right now.

Ever hopeful, businesses with poorly performing apps try creating a second version of the app, thinking it might improve the customer experience (and the average star rating).  Here’s a quick tip: If after two versions, the average star rating in the app store is still low  — it’s time to give up (Wikipedia: sunk cost). In an industry where customer experience is everything, it’s unacceptable to have a mobile app your customers are publicly telling you doesn’t work or is not easy to use. You wouldn’t settle for a 2-star rating on Yelp, right? The same holds true for your mobile app.

2. Is the engagement rate increasing?

Are your customers engaging in your program? Are they staying engaged long-term? If your customers don’t want to use your loyalty program, what’s the point?

Businesses with great loyalty programs see engagement increase as time goes on and members continue to transact within the program. This is where plastic card-based loyalty programs and other high-touch programs often fail: they lose customer engagement faster than they can enroll new customers as guests forget their plastic cards, stop checking in on their phones, and don’t want to enter their phone numbers every time they transact.

Here’s a quick metric to test the engagement levels of your loyalty progam: Take all of the transactions made on your loyalty program — all revenue captured — and divide it by the total revenue in your business, this number should be at least at 20% (if not higher!). On top of that, you don’t want to plateau at a low number either because that also means engagement rates are low; loyalty should constantly be on the rise.

3. Do you know how much money the program is making you?

For loyalty programs, the ultimate question is this: Is your program making you money?

The concept of loyalty is useless if it is not driving your business a significant amount of revenue. If the answer to this question is “I don’t know”, then it might as well be a “no”.

Revenue generated from a service should be easily measured and the data made accessible if you are investing a significant portion of your budget into it.

My advice for a business owner who has invested in a loyalty program would be this:


Just because you’ve pulled the trigger on loyalty doesn’t mean it’s performing optimally. For the best results, consistently look at your data and make sure these three checkboxes are easily checked. Otherwise, it might be time to look into a better solution for your business. One that will ensure a positive mobile experience, keep your customers engaged, and drive significant revenue to the business.  Without that — you are what I like to call SOL.

To learn more, get the Ultimate Guide to Customer Engagement.