How to Measure Customer Loyalty KPIs in 2024?

In 2024, customer loyalty is more than just tracking sign-ups or repeat buys – it's about understanding the emotional bond customers have with your brand. So, how do you measure the success of your loyalty program? What metrics really matter? And how can you accurately track key indicators like retention rates and other loyalty metrics?

In this article, I’ll break down the key loyalty KPIs you need to know, giving you the insights to master customer loyalty in the coming year.

How to measure customer loyalty KPIs?

Key Performance Indicators (KPIs) are vital metrics that help organizations gauge their success in meeting specific objectives. When it comes to customer loyalty, KPIs are crucial for assessing how well a business is retaining and satisfying its customers. These metrics offer valuable insights into customer behaviors, satisfaction levels, and their overall engagement with your brand.

For example, companies with high Net Promoter Scores (NPS) are 60% more likely to experience growth in customer retention and can grow at twice the rate of their competitors (Bain & Company). Similarly, businesses that prioritize improving Customer Satisfaction Scores (CSAT) can achieve up to a 30% increase in customer loyalty (Zendesk).

By consistently tracking and analyzing these loyalty KPIs, businesses can gain a deeper understanding of their customers' loyalty, pinpoint areas that need improvement, and craft strategies to boost customer retention and satisfaction.

Loyalty metrics and how to calculate them?

The health of your loyalty program is crucial for understanding how well it engages members and drives value for your business. It's not just about the number of sign-ups; it's about measuring the quality of engagement and the financial impact these loyal customers have. 

To accurately assess your program's health, you need to analyze member behavior and key metrics more closely. This deeper insight will reveal not just who is participating but also the value they bring and any areas that require improvement.

To break it down further, here are the key loyalty metrics that will help you take care of your program effectiveness:

• Member involvement
• Financial impact
• Points and incentive engagement
• NPS – Net Prompter Score
• CSAT – Customer Satisfaction Score
• CLV – Customer Lifetime Value
• CCR – Customer Churn Rate
• CRR – Customer Retention Rate
• Loyalty program demographics
• Promotion revenue and penetration
• Communication effectiveness
• Mobile app usage
  

1. Member involvement

Understanding how engaged your customers are with your loyalty program is key to figuring out how well it’s really working. These metrics give you a clear view of how involved your members are and how much your program is actually influencing their behavior – and ultimately, your bottom line.

A) Total members

The number of people enrolled in your loyalty program gives you a sense of your program’s reach. However, don't just focus on the total – consider how this number is changing over time. Is your membership base steadily growing, or has it plateaued? Consistent growth suggests your program is attractive, while stagnation might signal the need for fresh strategies or offerings.

B) Active members

These are the participants who’ve made a purchase or engaged with your program in the last 12 months. This metric is vital because it shows how many members are truly interacting with your program, not just sitting on the sidelines. A high percentage of active members indicates that your program is resonating, while a lower number could suggest that you need to add more value to keep them engaged. It’s also useful to examine what drives this activity – are members responding to regular promotions, or do they only get involved during special events?

C) Percentage of base active

This tells you the proportion of your total membership that is actively engaged, providing a quick snapshot of your program’s overall performance. Having a large number of sign-ups is great, but if only a small portion are active, it might signal that your program isn’t compelling enough. This metric helps you evaluate how well your ongoing engagement strategies – like communication, rewards, or special events – are working.

D) Percentage of transaction penetration

This metric shows you how much of your total transactions are coming from loyalty program members. It’s a strong indicator of how effectively your program is driving sales and influencing customer behavior. 

2. Financial impact

These metrics give you a clear picture of how much your loyalty program members are contributing financially compared to those who aren’t part of the program. It’s all about understanding the real monetary value your program brings to your business and how it stacks up against regular customer behavior.

A) Member revenue and variance to non-members

This metric compares the revenue generated by loyalty program members with that of non-members. It's a strong indicator of your program's financial impact. 

B) Member average transaction value and variance to non-members

Here, you’re looking at how much, on average, your members are spending each time they make a purchase compared to non-members. It’s essential for determining if your loyalty program is encouraging higher spending per visit. If the spending is similar across both groups, you might need to boost the perceived value of your rewards through tiered incentives or exclusive discounts.

C) Member average transaction frequency and variance to non-members

This metric tracks how frequently members make purchases compared to non-members. A higher purchase frequency among members suggests your program is effectively driving repeat visits and keeping your brand top of mind. If purchase rates are similar, consider ways to better engage members, such as through regular promotions or personalized offers.

3. Point and incentive engagement

Tracking how your members interact with points and incentives is a bit like taking the pulse of your loyalty program. It’s essential to know how engaged your members are, but it’s also crucial to understand how much value they see in what you’re offering. While it might seem straightforward—just look at the numbers, right?—there’s more to the story. 

A) Points earned

This is the total number of points your members have accumulated. It gives you a sense of how active they are within your program. The more points earned, the more engaged your members likely are. But don’t just stop at the total – consider how these points are distributed among your members. Are a small percentage of members hoarding the points, or is engagement spread out evenly? This can help you identify whether your program is appealing across your entire customer base or just to a select few.

B) Points burned

Points burned, or redeemed, show how appealing your rewards are. A high burn rate suggests that members find the rewards valuable and are eager to use their points. However, if points are being accumulated faster than they’re redeemed, it might indicate that your rewards aren’t enticing enough. Conversely, a high burn rate with low overall engagement could mean that only a small group of members finds value in your rewards, potentially limiting your program’s reach.

C) Breakage

Breakage is the percentage of points earned but never redeemed. While some breakage is expected, a high rate can signal problems, such as members not finding the rewards worth redeeming or being unaware of how to do so. 

D) Birthday & welcome incentives claimed

Welcome incentives set the tone for new members, while birthday incentives add a personal touch, showing you value each member. High redemption rates for these offers indicate strong engagement. If rates are low, it may suggest the offers aren’t appealing enough or aren’t well-communicated. Improving the visibility and appeal of these incentives can boost engagement and reinforce your program’s value.

E) Burned points vouchers used

Tracking how often members use vouchers redeemed with points offers insight into the real-world value of your rewards. High usage indicates that members see significant value in what you’re offering. If vouchers go unused, it could mean the rewards don’t resonate, or there’s a disconnect in how they’re presented. Adjusting the rewards or how they’re delivered can help better meet members' needs.

4. Net Prompter Score (NPS)

NPS is an index ranging from -100 to 100 which measures how willing your customers are to recommend your products and services to others. This metric can show you customers’ overall satisfaction with a delivered experience and also their loyalty to the brand. 

The score is calculated by subtracting the percentage of detractors (those who score 0-6) from the percentage of promoters (those who score 9-10). To be sure your customers are satisfied with the delivered experience, your NPS should be above 60.


It's important to note that NPS is just a snapshot – a quick "temperature check" of how customers feel about your brand at a specific moment. While it's a useful metric, it doesn't fully capture customer loyalty.

5. Customer Satisfaction Score (CSAT)

The Customer Satisfaction Score (CSAT) is similar to the Net Promoter Score (NPS), so companies often choose to use one over the other. Measuring customer satisfaction is technically simple, as it involves conducting surveys after a purchase. These surveys can ask general or specific questions about aspects like price, delivery, or service. However, getting enough responses can be challenging, as many customers don’t leave feedback. To improve response rates, companies can integrate surveys into loyalty programs by offering points for participation. To calculate CSAT, companies define what constitutes a "satisfied" customer (e.g., a rating of 5 stars or above 7/10) and divide satisfied respondents by the total number of responses.

6. Customer Lifetime Value (CLV)

CLV estimates customer profitability by predicting how beneficial a long-term relationship with a customer will be. To calculate CLV, you need to define an approximate duration for the customer relationship, which can be challenging when first measuring CLV. 

While many algorithms can be used to determine CLV, we recommend starting with a simple model: calculate the average revenue per customer over a specific period and multiply it by the average customer lifespan. 

7. Customer Churn Rate (CRC)

To effectively manage your program, it's crucial to understand your customer churn rate, which tells you how many members are leaving the program. The churn rate is the flip side of retention, indicating how many participants you're losing over time. In a loyalty program context, a high churn rate could signal that your rewards or engagement strategies aren't hitting the mark. 

To calculate this rate, subtract the number of members at the end of the month from the number you had at the beginning, then divide by your initial member count. This will give you a clear percentage of how many members are dropping out of your program, helping you identify areas for improvement.

8. Customer Retention Rate (CRR)

Customer retention rate is one of the first loyalty index you should check, as it tells you how many customers have remained loyal to your business over a specific period. This rate is expressed as a percentage of customers who stayed with you compared to the total number of customers during that time. 

To calculate it, simply divide the number of loyal customers by the total number of customers in that period, then multiply the result by 100%. This gives you an overview of how well your program is maintaining customer loyalty.

9. Loyalty program demographics

Getting a clear picture of who your loyalty program members are is just the beginning. To really optimize your engagement strategies, you need to dig into how different demographic segments contribute to your program’s revenue growth. This deeper understanding allows you to tailor your marketing and rewards to better resonate with your members.

Consider checking revenue growth by:

• Age: Analyze how revenue grows across different age groups to identify which segments are not just engaged but also profitable. This insight helps you adjust your marketing efforts and rewards to better fit the preferences of specific age groups.
• Gender: Understand how revenue differs between genders. By pinpointing which gender segments bring in more value, you can develop strategies that resonate more deeply with each group, making your program more effective.
• Hobby/interest: Break down your members by hobbies or interests—like foodies or travel enthusiasts—to see how these passions drive spending within your program. This granular insight allows you to craft personalized and attractive rewards that boost engagement among specific interest groups.
• Travel segment: For members who love to travel, analyze revenue by travel segments, whether it’s short stays, holiday makers, or second-homers. This information helps you design targeted promotions and rewards that align perfectly with your members’ travel preferences.

10. Promotion revenue and penetration

Promotions are a powerful way to drive engagement and boost sales within your loyalty program, but to make sure they’re really delivering value, you need to measure their effectiveness carefully. By honing in on key metrics, you can see how well your promotions are performing compared to non-members and make data-driven tweaks to get the most out of them.

A) Promo revenue and comparison to non-members

Start by looking at the revenue your promotions generate and comparing it to the revenue from non-members during the same time frame. This helps you see how much of your promotional success is thanks to your loyalty program and whether it’s truly driving more spending among your members.

B) Promo revenue uplift and comparison to non-members

Next, measure the extra revenue that can be directly attributed to the promotion and compare this to the non-member baseline. This shows you just how much additional income the promotion is bringing in and whether it’s significantly boosting sales among your loyal customers.

C) Promo penetration and comparison to non-members

Look at how many of your members are participating in the promotion compared to non-members to gauge the reach and appeal of your promotion within your loyalty program.

D) Promo profit per transaction and comparison to non-members

Finally, it’s not just about revenue – you also need to check the profit generated per transaction during the promotion and compare it to non-members. This will ensure that your promotions aren’t just driving sales but are also profitable, providing more value than similar promotions to non-members.

11. Communication effectiveness

Effective communication is the backbone of engaging your loyalty program members and driving the actions you want, whether through emails or other channels. To make sure your messages are hitting the mark, it’s crucial to track key performance indicators that show how well your communications are being received and acted upon by your audience.

A) Open rate and click-through rate (CTR)

The open rate measures how many recipients open your emails, indicating that your subject lines and sender details are grabbing attention. A high open rate shows initial interest, but the click-through rate takes it further by revealing how many recipients engage with your content by clicking on links. Together, these metrics help you understand not only how well your emails are getting noticed but also how effectively they are driving the desired actions, such as visiting your site or redeeming an offer.

B) Conversion rate and uplift against control

The conversion rate shows how many recipients complete a desired action, like making a purchase or signing up for a promotion, after clicking through your email. To better gauge your campaign’s effectiveness, uplift against control compares your results with those of a group that didn’t receive the email. This comparison helps you clearly see if your emails are driving the desired outcomes or if other factors might be at play.

12. Mobile app usage

The effectiveness of your loyalty program's mobile app is vital for delivering a smooth and engaging experience to your members. As more customers interact with your program through the app, it’s important to track key metrics that show how well the app is performing and how it impacts customer engagement.

A) Push notification click rate

This metric measures the percentage of users who click on push notifications sent through the app. A high click rate means your notifications are relevant and engaging, encouraging users to take immediate action. 

B) Push notification conversion rate

This tracks the percentage of users who complete a desired action after clicking on a push notification, such as making a purchase or redeeming an offer. It’s a critical metric for understanding how well your push notifications drive meaningful engagement and contribute to your program’s overall success.

C) Star rating

The star rating represents the average rating users give your app in app stores. A higher star rating generally signals greater user satisfaction and a positive experience. Keeping tabs on this metric helps you understand how your app is perceived and highlights areas that might need improvement.

D) App feedback (anecdotal)

This includes user comments, reviews, and suggestions gathered from app stores or in-app surveys. Anecdotal feedback provides valuable qualitative insights into user experiences, revealing specific pain points or appreciated features. 

Measuring loyalty KPIs with Voucherify calculator

Voucherify loyalty calculator is fully equipped to measure the top loyalty and retention metrics of your audience and the performance of the loyalty rewards programs that have already been released. 

Check out the calculator >>>

Loyal customers and brand advocates constitute a small group of your target audience, yet they make a huge difference for your business. Loyal customers are far more likely to spend more on your products and come back to repeat a purchase. Launching a loyalty program can be a great way to first identify and then reward loyal customers which in hindsight leads to customer retention, an increase in customer referrals, recommendations, positive reviews and increased brand advocacy. 

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What loyalty KPI metrics can Voucherify calculator compute for you?

Regarding the performance of your loyalty program, Voucherify calculator will help you to compute the retention, redemption, participation, and engagement rates of your audience. All you need to know is how many customers officially enrolled in your rewards program, and how many out of issued loyalty points have been redeemed for rewards. Speaking of rewards, visit this article to explore the possibilities offered by stepping beyond traditional point-based loyalty models. 

But Voucherify loyalty calculator can do much more – fed with proper CRM data; it can calculate the general loyalty metrics of your customer base and help you plan future loyalty ventures taking into account rates such as CLV, CAC, churn or customer retention.

Learn more: Explore Voucherify's Open Source Loyalty Accelerator

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