Sep 29, 2022
Written by: Drew Marquesen, Sr. Loyalty Strategist, Customer Engagement Group
(View Author Bio)
If your loyalty program is unique and has created differentiation in the marketplace, you already know which behaviors will motivate your customers. Here are 7 ways to monetize those actions at the individual-behavior and program-levels of your customer lifecycle.Scroll Down
And yet, loyalty is nebulous, especially today when there are so many poorly designed programs in the market. When you’re pressed to prove the value of your program, you should be ready with not only the impact you’ve generated motivating behaviors, but also the dollar value of those behaviors.
Monetizing the behaviors within your customer lifecycle will help determine the most profitable behaviors of your most profitable customers. Where possible, the value of each behavior needs to be higher than the cost of the reward or motivator necessary to drive the behavior. More importantly, the value of the overall program needs to be higher than the cost of the rewards required to drive the necessary engagement tied to loyalty.
For example, if you are looking to retain customers, you should know the behaviors that impact retention and what those behaviors are worth. Some tactics are simple to monetize. Sending a surprise and delight kit to members who are nearing the end of their purchase cycle prompting them to re-purchase has hard costs (e.g., the cost of the kit plus shipping) and is simple to measure (e.g., the retention rate post campaign). Other tactics can prove challenging to monetize, like how much it is worth for your customer to visit your website once a month instead of once a year.
In general, there are two ways to approach monetization: program-level impact and behavior-level impact. Program-level metrics are longer term in nature and require patience. In some cases, they can take up to a year for a first look and it can take several more years to see true impact. These are things like retention and lifetime value. Behavior-level impact can be monetized early so you can get some quick wins and identify leading indicators. These are things like downloading an app, driving continuity or social sharing.
So, how do you go about monetizing the behaviors of your customer lifecycle?
Does your member loyalty program motivate members to re-enroll annually? Monetizing this could be simple: the value of a member that stays vs. leaves, the cost of onboarding a new member or premium payment adherence. But often you can measure this annually. Once you’ve established how you’ll monetize retention, identify leading indicators that can give you a pulse check throughout the year, like self-service utilization or NPS.