Loyalty programme lost efficiency? Start the audit

The loyalty programme developed by professionals is like the human body: all components are interconnected, complement each other and support. Disbalance or illness of one of the parts leads to failure of the entire system. It can be chronic or one-time. As you can see, one should look for reason of loyalty programme efficiency decrease from inside. Form this article you will learn about what the loyalty programme audit is, and the way to bring back the big efficiency with it.

What is the loyalty programme audit?

It is the complex expert analysis of loyalty programme. It is thorough research of system's inner algorithmes, and of dynamics of business-client interaction. it includes check-up, testing and diagnostics of the client win and retain main tool.

Regular audit is crucial for loyalty programmes of all types:

  • bonus
  • partner
  • discount
  • cashback
  • referral
  • co-branding

Aim of loyalty programme audit is to find the weak spots of client win and retain system; analyze the audience attitude to loyalty programme in general; find the disparities of loyalty programme operating and business-tasks; finally, to present the recommendations on how to fix the situation.

What important figures of loyalty programme we learn through audit?

Usually the standard data is analyzed, as the loyalty programmes have the same basic characteristics, whatever scale to type they are. The standard figures are:

  • client involvement (what percent of all clients participate in loyalty programme)
  • frequency of purchases made with loyalty cards
  • average bill of loyalty programme members; it is compared with the one of non-members
  • share of active cards
  • client outflow from the loyalty programme
  • figures on trade spots, their uniformity, static or dynamic
  • statistics per customer segments
  • share of bonus write-off
  • time span of programme participation in static, dynamic; per audience segments
  • average cost of 1 reward unit

Experts can add the individual figures, depending on loyalty programme and business specifics. As you may know, many companies actively implement the electronic bonus cards and transfer the loyalty programme on-line. In this case one should learn the rate of electronic and plastic cards usage. By the way, if you are interested in learning about on-line loyalty programme advantages, read this article below.

Figures are selected while preparing for loyalty programme audit. This process is not quick, as one should make research on current client loyalty, KPI analysis and list the desired indexes. Pay attention — sometimes marketing agencies consider too much audit indexes, and that is not always good. You would have to pay for every one of them. But it is not clear if these data benefits for loyalty programme effectiveness growth. If you are not sure, that you need all indexes, offered by third party analyst, consult with another agencies to make objective decision.

Does your loyalty programme need audit? Test for marketers and CEOs

Answer 5 questions and find out if your loyalty programme needs urgent audit.

What percentage of points is charged per target promotions?

Loyalty programme considers not only standard rewards for purchases with loyalty card, but also extra one, target ones and promotions with other conditions. For example: buying some make-up products by target promotion from brand Х, customer gets 2 times more points than for purchase without this promotion and with loyalty card.

How to identify this figure? Analyze the bonus issued by cards. E.g. client's points balance is 1000; 600 of them were issued for participation in target promotions and 400 — for ordinary purchase with loyalty card. Optimal rate should be around 50/50. Still, marketers allow the share of bonuses or points per target promotion from 30 to 60%. For more precise figuring, one needs to know the frequency and values of target promotions.

How big is the rate of points write-off?

Identify, how actively and regularly the loyalty programme members use the accumulated points. Good figure would be around 50-70%. Meaning that at least the point system stimulates to buy again. In case clients accumulate the points and do not spend them, this is the potent message that the motivating part of the system is problematic (no profitable and convenient offers to spend the points) or the algorithmes are too complicated (the usage rules of bonuses are unclear and deter the audience).

How often do clients make a purchase by loyalty card?

Small share of transactions by loyalty cards is the message that the loyalty programme is not mass one and does not attract the audience. If 40-50% of purchases were made by loyalty card, this is good level of customer involvement. Interesting loyalty programme, clear benefits and values together with convenient shopping influences directly on the share of purchases by loyalty card.

What percentage of clients does not fill in the blanks on receiving the bonus card?

You will agree, that nobody should force people to tell about their preferences of shopping and hobby. Therefore there is always the category of customers who fill in the name, phone number and e-mail only, among the loyalty programme members. Bigger is this category of these "small talkers", more difficult is to segment the audience, to create personal dispatches and launch effective promotions. Optimal amount of empty blanks is 10%. In case of larger one, you should pay attention to audience motivation or make the blank filling in the mandatory condition of registration in on-line loyalty programme. But such attitude can deter the person from participation, as this is indelicate.

How relevant are the contact data by loyalty cards?

Large share of shop-client communication in frame of loyalty programme is possible in case phone number or e-mail was filled in. If data in the base is incorrect, then the client will not be informed about bonuses to be written-off, about new promotions and personal gifts. If more than 20% of client contact data is incorrect, this is the reason to start big revision. Being unable to deliver the information to client derails the efforts to retain customers and increase their loyalty.

Did you answer "yes" to 3 questions or more? You should consider the complex loyalty programme audit, this issue must not be shelved. What the loyalty programme efficiency audit is like, read on!

The way to audit the loyalty programme

Loyalty programme audit can be divided in four stages. Data receiving can take few hours in case the report is unloaded from CRM-system. One can expect the process taking few days as well, and then the analytics would start only.

First stage of loyalty programme audit. Learning the basic elements

  • Loyalty programme rules from a legal point of view
  • Volume and kind of investment into loyalty programme, financial figures
  • Internal tools for loyalty programme quality control
  • Current methods of loyalty programme effectiveness evaluation
  • Communication strategy; customer reaction on interaction with company and loyalty programme

What aspects does the specialist analyze in loyalty programme rules? Data collection and storage, its security and transmission to others. Also one should pay to conditions of promotions, lotteries, discounts and rewards. Loyalty programmes mechanics and clients data processing must nor violate local law.

In client reaction analysis one investigates not only customer respond on information (for example, 30% of bonus card holder made a purchase after the dispatch about new promotion), but also feedbacks. The survey is done on trade spots and on-line shops. Communication strategy is not less important than the brand price policy.

Second stage of audit. Processing the current data

This has been already discussed before. We should add, these figures are to be compared with financial data — amount of investment and budget for brand promotion and loyalty programme maintaining.

Third stage of audit. Checking IT-infrastructure

To launch the simplest discount loyalty programme one needs special software. Small scale business often usually uses CRM-systems. But multi-level loyalty programmes for shop network demand something more profound than MS Excel table. What is to be checked on this stage:

  • work of website and personal account
  • work of mobile application for loyalty programme
  • usage of electronic bonus cards in the shop
  • systems of robocall and dispatch (even in case they are processed by external companies)
  • integration of services that are in charge of loyalty programme smooth running
  • level of launch automation and loyalty programme tools management

Fourth and final stage of audit. Recommendations

Recommendations do not consider "scold your marketer", but the advice on further loyalty programme processing and correct direction. Business is free to reject the recommendations and prefer its own way to increase the loyalty programme increase, relying on competitors' experience (who might make mistakes in work with clients as well, that being hidden). In case the company is ready to put the recommendations in action, one should be ready for long process of changes and monitoring, which demand time, money and efforts. Testing of new algorithms, personnel training, promotion mechanics rebuilding and the most important — evaluation of client reaction, as the clients pay. Recommendation implementation is not less responsible and thorough process than the expertise of loyalty programme efficiency.

How audit helps to increase the loyalty programme efficiency

Independent expertise result should not be treated as critics of business. It is just the objective evaluation, that aims to develop the company through loyalty programme. Professional audit helps to:

  • find the week spots of loyalty programme
  • forecasts the future client loyalty level considering the current figures
  • warn from typical mistakes, in case the certain tendency is detected in work of loyalty programme
  • offer the advice on mistakes correction and loyalty programme efficiency growth

Loyalty programme audit helps to find these very pools for business growth, that can be not obvious to brand manager. Usage of all loyalty programme opportunities and gradual fix of weak zones allows creating reliable tool for client loyalty increase and retain.

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