Loyalty metrics are broke, you need to fix them

By Ko de Ruyter, Debbie Keeling and David Cox, the Loyalty Doctors

While B2B loyalty programs stand taller than ever, it is undeniable that there is increasing pressure to make the business case and prove the value of existing programs or new ones. We argue that a business case is only as strong as the metrics it is based on.

Most program managers resort to traditional measures, such as points earned and redeemed and other same old, same old parameters, like, dare we say it out loud, the Net Promotor Score. With C-suite executives being more analytically inclined and savvy, these metrics are not going to cut it anymore. Why? Because it really does not reveal much about why member views and decisions change, uniquely contribute to purchase decisions and how membership changes dynamically and contributes to member life-time value. Even the NPS is under fire for failing to be able to predict performance.

The coming year will see the rise of innovative loyalty programme dashboards that support dynamic, actionable, and personalised decision-making while not losing sight of that ROI needle. These new assessment tools include metrics that place referrals in the context of social channels to capture the wider effect of social networks, which make up such an essential part of most members’ lives. You want to know how your members publish their sales and learning achievements and how many of their peers are influenced by this.

Another example is the use of Random Forest metrics, which are helpful in predicting which promotional activity is likely to appeal to which individual members and what returns can be expected. Or, developing nudging redemption propensity scores to support re-engagement strategies of member segments in your program. A new year will come with new dashboards. They will be part of an emerging trend towards more innovative predictive analytics and will eventually also replace our crystal ball.