Customer retention strategies and effectiveness KPIs

We talked about Loyalty strategies, customer retention strategies, we finally saw how the bulk of companies (about 80%), invest less than 1.5 percentage points of their revenues, allocating them to their customer loyalty programs.

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There is another data point that, in our opinion, is striking and can make us understand how what we have been saying, is unfortunately the bitter truth and, on the other hand, further corroborates all our work done so far, that is, what are the measures of effectiveness of the loyalty or retention strategy, according to the companies that have been interviewed.

As we can infer from this graph, placed only 8th (we repeat 8th) we see that the answer was ROI i.e. Return On Investment (ROI).

Eighth position for 44 percent of companies means that, only 4 out of 10 operators have as a key value to keep a close eye on, return on investment or ROI, the measure that makes you actually understand the effectiveness or otherwise of a strategy.

Le-misure-di-efficacia-della-strategia-di-loyalty

Instead, other answers are very general or too general and go to measure individual values such as “campaign response rate,” “aggregate sales measures,” “website statistics,” “frequency of visits to the site or our e-Commerce store, or “customer satisfaction”; that is, we are talking about things that it is right and sacrosanct to measure, but which should not be too general but instead should relate, in an extremely specific way, to our loyalty strategies.

Therefore, having the ability to measure the return on investment, having made a clear program, which really interacts with its users or customers, which engages them with constant and continuous initiatives, so as to lead them, more or less, in returning to our point of sale, to our eCommerce store, to carry out actions with added value for us.

If we go instead to measure extremely general things, such as those we just mentioned, like site visit frequency, campaign response rate, etc. … we might be misled.

We may have set up a strategy that has a high response rate to the promotional campaign but, because I am not fixed on concrete elements (products, which ones and how many, etc.) I may get to sell as much, but only of a particular product, which does not pay back my investment in the campaign and, perhaps, I have instead a very high response and a repetition or elevation of important visit frequencies.

The most important things then are: to increase the budgets available to loyalty programs (because we see how they are the only loophole to competition from the big marketplaces), and those budgets, must absolutely be measured on the main thing, which is return on investment.

So we need to set KPIs, monitoring indexes, which will have to become our bread and butter, so that they can let us know whether or not what we are doing, the efforts we are putting in, are in line or not with the goals set and the strategy outlined beforehand.

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