How customer loyalty programs are being transformed by analytics
Customer loyalty programs provide companies with a huge range of customer data and loyalty analytics. The companies benefit from growth and profits, but over time the deeper understanding of customer behaviour is the real reward.
Keep reading to find out how exactly customer loyalty programs are being transformed by analytics.
Understanding customer needs
With the rise of social media, being able to contact customers is easier than ever. So, rather than relying on underlying assumptions, it’s important to conduct research and use analytics to deliver the best possible program. Apps like Twitter and Instagram have direct message tools that allow companies to listen to their customer’s opinions – both good and bad. If companies are using the right social media platforms for their business, these platforms can be very beneficial in working out customer requirements.
Not all customers are the same, and not all rewards will lead to loyalty. Understanding what a customer needs is vital when figuring out a customer loyalty program. Being able to understand their needs will help to customise the program accordingly, and ensure it is a success.
Measuring customer loyalty
The redemption rate of your rewards is a great place to start when measuring customer loyalty. The higher the redemption rate, the higher the number of customers redeeming their rewards, and therefore the higher the number of loyal customers.
Measuring active engagement rate or participation rate works in a similar way by showing the percentage of customers that are actively engaging with the loyalty program. This will help you to measure if your current brand loyalty products are effective incentives or not.
Predictive analytics can help to fine-tune the overall design of loyalty programs and help companies to see how much their customers are spending and how important they are to the company. In turn, this provides an opportunity for companies to understand the loyalty of customers, which helps to make changes to the loyalty programs and gain more loyalty. Loyal customers are essentially brand advocates, so loyalty programmes should focus on increasing customer interaction as much as possible.
Calculating customer retention rate
Because there are such a variety of reasons why a customer may leave a company, it’s important to work out the customer retention rate and come up with tactics to prevent customers from leaving. If you wish to calculate your customer retention rate, there is a universal formula and various calculators widely available online.
To check success rates you can also measure your customer redemption rate, the clickthrough rate of your website, and customer survey feedback results, for example.
A higher customer retention rate is likely to guarantee a higher level of enrolment in a loyalty program. This would result in more customers being loyal to the brand, and therefore the customer loyalty program rewards would create strong bonds, allowing relationships to develop between those loyal customers and the brand, resulting in lifelong loyalty!
And there you have it – everything you need to know about how customer loyalty programs are being transformed by analytics. Now that you know who is likely to respond to customer loyalty programs, be sure to keep your customers engaged and coming back for more.