On the Fourth Day of Loyalty Marketing Nirvana: Baseline Existing Performance
On the fourth day of loyalty marketing nirvana, we strive to determine our pre-nirvana state. After all, how can we truly know how successful our loyalty and customer retention efforts are unless we know where we’re starting?
Satisfied, loyal customers are worth their weight in gold to brands, but they don’t just show up on your doorstep. Not without a little effort, at least. In his Forbes article, “Building Customer Loyalty the Hard (And Only) Way,” author and speaker Micah Solomon outlines the “framework for building satisfied customers.” His framework includes a perfect product or service, caring and timely delivery and an effective problem/resolution process. Solomon makes it clear that a deep commitment is needed for a brand to foster customer loyalty.
Offering a loyalty program to your customers can be a hugely effective way to create satisfied customers. But before you embark, it’s important to evaluate just how satisfied your current customers are. You won’t be able to make progress unless you first understand where you’re succeeding and where you’re falling short.
To accurately baseline your existing performance, start by getting the best, segmented data you can find. Pay close attention to the key metrics that help you define customer segments. Next, determine how many customers fall into each specific segment. For each customer segment, analyze how much customers currently spend, how frequently they buy, average order size, gross margin, customer retention rate, conversion rate, attrition rate, and so on. If you have the data, measure it so you can establish a foundation for improvement. A loyalty platform can also help you pull insightful, relevant data you may not have access to. You may need to baseline existing performance early in the process in order to achieve step one (organize and commit stakeholders). Getting everyone on the same page is easier when all stakeholders agree on the key metrics that will be used to determine success. It’s also important to make sure everyone has the same, clear picture of the current situation.
- What loyalty initiatives have we performed before?
- How successful were they?
- What are the current loyalty initiatives?
- How well are they performing?
- Who are our brand advocates and how did they become brand advocates?
- What story is being told via online reviews?
- How are we engaging customers via social media?
If you do not already have a broad agreement on key metrics, taking time to establish a baseline before you perform step three (ideate and validate) can help ensure more of your ideas are geared toward improving the precise metrics that signal increased loyalty and customer retention.
Taking time to baseline existing performance may seem like a tedious task – especially when you’re eager to start creating and launching new initiatives – however it’s absolutely necessary to ensure you’re setting up all future programs for success from the outset. Plus, you’ll be elated when you can show improved results for a wide-range of key metrics that clearly show you’re rocking it as a loyalty marketer.