10 objectives for a successful loyalty program 

The most important loyalty program objectives

It’s important to define your measurable objectives upfront. Making your objectives SMART (specific, measurable, achievable, relevant, and time-bound) will help ensure that your loyalty program is successful. Here are our top 10 loyalty objectives for inspiration. 

1. Increase your customer base

For example: from 100,000 to 150,000. 

This is typically an objective for companies that don’t collect customer data as part of their business process. This shouldn’t be your only objective though. Ultimately base growth means you can potentially engage more people in your program – it’s the potential reach. You need to add other objectives to measure engagement and the financial impact. 

2. Reduce churn or increase customer retention

For example: retention +5%, or churn -5% 

Think of churn as the opposite of retention. A high churn rate indicates that your loyalty program isn’t doing its job properly. Ideally, you want to keep your churn rate as low as possible. To do this, you need to identify the main reasons why people are leaving your program and address those issues. Remember: proactive churn prevention is more effective than reactive churn. In other words, it’s easier to keep your members active than it is to win them back. Be sure to take advantage of the cues that customers give you, whether that’s from the AI in your loyalty software, or interactions on other channels. 

3. Grow customer lifetime value (CLV)

For example: increase CLV by 5%  

Increasing the lifetime value of a customer should always be an objective for any business, with or without a loyalty program. After all, it costs more to attract a new customer than it does to keep an existing one. You can increase CLV by driving more frequent purchases, bigger basket sizes, and more. Higher CLV is one of the main benefits of a loyalty program, so this is a long-term objective that you should keep in mind.

4. Improve customer satisfaction among members

For example: increase NPS from 7.5 to 8.  

You can measure customer satisfaction by applying customer experience metrics, such as NPS (Net Promoter Score), or through customer feedback surveys. This objective is important because it’s a leading indicator of behaviour. If people are satisfied with your loyalty program, they’re more likely to remain active and recommend it to others. 

5. Increase traffic or frequency

For example: +5% 

A common misconception is that transactions and conversions are the only objectives that matter. This isn’t the case for customer loyalty. Often you need to increase traffic and frequency first before other objectives become achievable. We recommend that you harness the power of social media and CRM to make your program more visible and share exciting promotions. You’ll soon see an increase in online traffic or in-store footfall, which will be good news for your bottom line. 

6. Increase customer engagement

For example: increase the number of interactions from 2 to 3 per week 

Engagement is about how active and involved people are with your program. The more engaged they are, the more value they’ll get from it, and the more likely they are to remain active and loyal in the long term. There are a few different ways to increase customer engagement, such as offering more personalised rewards, gamifying the loyalty experience, or sending targeted communications.   

7. Increase average basket size or spend

For example: +1% 

It can be difficult to change purchasing behaviour. That’s why it’s often easier to get someone to buy more of the same rather than getting them to buy a new product entirely. In other words: offering 3 for the price of 2 is usually simpler than cross-selling or upselling an innovative product that the customer has never purchased before. Driving this objective is mostly about convenience and ease of purchase.  

8. Encourage ambassadorship

For example: increase program sign-ups via referral codes by 10% 

It’s always good to think about how you can evoke brand ambassadorship among your members. You could incentivise your customers with rewards like points, badges, or a discount for sharing a referral code, leaving a review, or liking/sharing your social posts. After all, word-of-mouth (both online and offline) is one of the most powerful marketing tools available. And when it comes from a trusted source, it can be incredibly effective for your loyalty program. 

9. Boost incremental sales from members

For example: +5%  

Incremental sales are additional sales that you wouldn’t have generated without your loyalty program. In other words, it’s extra revenue that can help prove the ROI of your loyalty program. To generate incremental sales from your existing member base, you need to offer them something that they can’t get anywhere else. It could be exclusive deals, early access to new products/services, or member-only sales – to name just a few ideas. 

10. Migration of lower value customers to higher value customers

For example: +1% per month 

You should always aim to upgrade your lower-value customers to higher-value customers, as this will have a positive impact on your bottom line. It’s up to you to define what a high-value customer looks like for your business. Some common metrics to factor in include purchase frequency, average basket size, and membership/subscription tier level. 

And there you have the 10 most important objectives for a successful loyalty program. If you’re an m–wise Loyalty Cloud user, you already have the most important insights at your fingertips. Not a user yet? Get a demo to see what you’re missing.