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Loyalty Programs

How Do You Measure the Success of a Customer Loyalty Program in Your Small Business

Written by 
Guest Writer
May 20, 2019

According to recent reports, attracting new customers is five to twenty-five times more expensive than retaining current ones.

With that said, it’s obvious that your business needs to focus on building a base of customers who keep coming back. And one of the best ways to do this is to start a customer loyalty program. However, you can’t just implement a program and expect it to work well from day one.

Instead, it’s critical that you measure its success and keep tweaking it until you find the winning formula. But how do you measure the success of a customer loyalty program?

Read on to find out...

Participation Rate

Once you create your customer loyalty program, it’s time to start using it to turn one-time customers into loyal followers of your brand.

One of the most important metrics to keep an eye on here is the participation rate. It shows how many of your customers are actively participating in your customer loyalty program.

Customer participation

And to calculate it, all you need to do is divide the number of your overall customers by the number of your program members.

Obviously, the higher the participation rate is, the better. If you feel like your participation rate isn’t high enough, it means you should look for new ways to introduce your customers to the program. What you can do is invite them through email and share information about your program on social media. Giving every current customer a brochure that explains how your customer loyalty program works is also a fantastic idea.


Happy customers are always likely to come back.

The only problem is, you can’t know how satisfied a customer is with your loyalty program unless you ask them.

Collecting this info is extremely important as it shows how effective your program is.

Engaging with customers

Moreover, there’s also a chance that a satisfied customer will recommend your business to their friends or family, which only helps your business do better.

So, how do you measure customer advocacy?

One of the best ways to do this is to ask every customer how they found out about your business. Another good idea is to keep an eye on the number of customers who use a prepaid visa card to pay for your product. The reason why this works is that people who give these cards as gifts usually also make suggestions about where to use them.

Customer engagement numbers

Another important thing to keep an eye on is how active are customers who participate in your program.

This includes keeping track of how many times they bought your product or service in order to get a reward.

Also, it includes the number of points they’ve spent and the rewards they’ve redeemed. This metric shows how interested your customers are in your program and helps you identify ways for improving it.

Customer engagement

Moreover, you can use the stats you get to see which of the rewards your company offers are gaining most attention and see if there are ways to gain even more out of it.

For example, you can keep a count of how many customers accessed the rewards page on your website and identify the rewards that got most views. If you use social media, you can easily keep track of which rewards are most popular by keeping an eye on the number of likes and shares they get.


The reason why you’re starting a customer loyalty program in the first place is to get your customers to keep buying from you.

Therefore, it’s obvious that one of the best ways to measure the success of your program is to keep track of customers who come back and buy the same or similar product or service they’ve bought before.

Repeat purchases

The best thing about this metric is that it’s extremely easy to calculate. All you need to do is keep an eye on customers whose personal information you already have and new purchases they make. This allows you to clearly see how many customers are satisfied with your product and happy to be a part of your loyalty program.

Over to you...

All the four things I covered in this post will help you gain an insight into how effective your customer loyalty program is. Next up, it’s up to you to make use of the data you collect and keep improving your program.

Just bear in mind that negative responses you get are equally important as the positive ones. You can use the negative comments you get to see which aspects of your program can you improve and how.

Also, don’t forget that trends in the business world are constantly changing and what worked before may not always work in the future. So, even once you believe your loyalty program is at its finest, it’s still critical to measure its success on a regular basis.


Jacob Wilson is a business consultant, and an organizational psychologist, based in Brisbane. Passionate about marketing, social networks, and business in general. In his spare time, he writes a lot about new business strategies and digital marketing for

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