Track the performance

Measure the impact of all your actions

People listen when the money talks. This simple truth determines the relations and rules in our organisations. Recourses are always limited, so running the business encompasses a constant decision on investing time and money.

You don’t need an MBA diploma to understand that these two factors determine most management decisions: money—what ROI we can expect from that investment—and time, ie. how fast we will get it. Growth gives resources, so the more we gain, the more we can spend.

For traditional companies, which have started their digital transformation, moving from conventional business models to data-driven ones, is often a struggle with the proper assessment of the situation. As these companies know their existing model as a back of your hand, the new one is dark unknown. Sometimes you can compare it to jumping into the swimming pool, while you can’t check if there is enough water. Shifting to the new models means letting go of something that is still working quite well to something unsure. What is more, you can’t change the organisation overnight, so you miss allies who genuinely know the cost and efforts required to drive the change. At the same time, people connected with the old business model (majority of your company) tend to protect the status quo.

The good news is that almost everything in Loyalty is countable. As you can argue about the cost of a TV ad production, it’s hard to negotiate with the facts and figures that come from your system. By using control groups, you can calculate the ROI with laser accuracy. Always provide reliable feedback to the organisation about the investment risk and potential—it makes all discussions easier to conduct, as you can focus on facts, not opinions.

Measuring your ROI metric helps you transform your loyalty activities as a cost to thinking about them as of an investment, which is the desired position. But the natural beauty comes from scaling—you can quickly test something on a small group of your customers to prove or disprove a hypothesis and lower the risk before you ask for serious money.

ROI is one side of the coin—it helps you compare the efficiency of your loyalty work with the traditional, legacy action in your company and build your credibility in the organisation. At the same time, it unlocks the minds for three main loyalty metrics:

  • Share of sales/sales concentration: the percentage of your turnover that is realised by your loyal customers, who you can identify and have direct contact to;
  • Incremental sales: how much of these sales are incremental and would not have happened without loyalty actions;
  • Customer lifetime value: what is the existing and potential future value of your best customers and prospects, and where does this value come from.

These commercial metrics provide the knowledge to your company that can impact and determine strategical decisions, starting with how you communicate with your customers (marketing investment), ending on the direction on how your company offer should evolve (R&D). Thanks to that, your loyalty plan may become the growth engine that fuels your brand with fact-based knowledge that enables data-driven decisions.

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