When you put dedicated efforts in a rewards program, you would obviously want to know whether the efforts you are putting in are delivering results or not. The truth is finding out how much you are getting from your investment is the key point in calculating ROI. So the next time you are required to quantify the effect of a rewards program, you will be prepared to answer the question with the program’s participation and the redemption rates, and figure out where they stand with the averages.
Also, tracking the effectiveness of your program is the premier step to improve the program. One of the popular quotes state that you cannot manage if you cannot measure. However, with two insightful metrics on measuring rewards program, you are well equipped to manage and monitor your rewards program like a professional.
A successful rewards program has a participate rate of 40%
Participation rate is one of the simplest metrics to compute and could provide you valuable insights on how accessible, visible and desirable your program is. Calculating participation rate is pretty simple. Divide the total number of members of the rewards program by the total number of customers. The calculation shows what percent of your customers are participating in the rewards program.
It is no secret that repeat customers are really profitable and this is supported by various researches and stats. Converting a website visitor into a customer and converting that customer into a repeat buyer are two most important conversions a business could make. Fortunately, these are also two important conversions that a rewards program specializes in. However, there is a problem – any rewards program cannot do its job in case customers do not join it. This is why the participation rate is so important.
According to studies, successful rewards programs have a participation rate of 40% on average
Any rewards program that has a participation rate of 40 or more will yield better results. On the other hand, you could witness a big failure, if the participation rate is low.
What could you learn from the participation rate?
Firstly, it shows that your rewards program is easy to find and simple to join. In a nutshell, a high rate of participation indicates that your rewards program is desirable as well as accessible to your customers. Secondly, a high rate demonstrates that your program provides valuable proposition for customers. If your customers are not interested in your rewards, they won’t join it.
Tips on improving the participation rate
So what will you do in case the rate of participation is low? Well, with a couple of adjustments, you could turn many of your customers into rewards program members. Be sure that you are providing rewards your customers are looking for.
1. Promote the rewards program prominently on various places on your site. This can include the homepage, a dedicated explainer page and a navigation bar. Customers are more likely to join a program if you have a fantastic explainer page.
2. Draft an email campaign to introduce new as well as existing customers to the rewards program. Email messages should highlight the value the program has to provide and steer your customers for additional info on your store’s site.
A successful program has 13% points redemption rate (for rewards 75%)
A redemption rate is an important statistics that demonstrates how well the reward program is performing and delivering results. It works perfectly as it serves as a fantastic estimation about customer engagement, which is often hard to assess.
Although apparently complicated, the redemption rate is actually another simple metric to compute. To calculate the rate of redemption of the rewards program, divide the number of rewards/points your customers has redeemed by total number that you have issued.
Knowing the rate of redemption lets you sense the success of the program
Although a customer signing up for a rewards program is a great thing by itself, it is not close to the winning line. Once they signup, their behavior within the program will let you know how much value they are actually getting from it and just how likely they will remain engaged. Since effective engagement rate contributes to about two-third of the profits for a brand, redemption rate is something you would like to have in your favor.
Here, it is important to note that redemption rate analysis is based on rewards redemption and points redemption. Customers value rewards and points differently. Although all rewards programs are not points based, by splitting the analysis, you can find out the results of the redemption rate more accurately (if your program is based on points and rewards).
As usual, the points redemption rate tends to be lower because points actually represent the potency for a future reward. On the flip side, a reward is an offer that can be redeemed right away. As far as points redemption rate is concerned, any percentage in the range of 13 to 32 is considered desirable. Likewise, a rewards redemption rate in the range of 70 to 90 percent is desirable and enticing to get repeat customers as they find value in your rewards.
What can you learn from the redemption rate?
The results of the redemption rate on your program gives you an idea how engaged your customers are and how they value your program. If the redemption rate begins to fall, you need to take action. Low rate of redemption means fewer members are redeeming and this can impact your customer’s habits negatively.
Tips to improve the redemption rate
1. Offer more ways to customers to earn and redeem points. People have a tendency to redeem rewards if they get more opportunities to earn them.
2. Employ email marketing to engage your customers. Sending emails with available rewards, points balances, bonus points events and redemption campaigns will motivate your customers to redeem rewards as never before.
3. Capitalize on the psychology behind customer motivation. It plays a significant role in motivating your customers to stay engaged.
Make sure the rewards program is working over time
A rewards program is an essential part of a customer retention strategy that works constantly to keep your customers engaged and come back to you again and again. By paying heed to important metrics like rewards participation as well as redemption rates, you can improve your performance against successful rewards programs and have your program working over time. So, don’t be left behind – improve the metrics of your program and enjoy better results.
Try and design the reward program in a way that makes it easy for the customers to understand. It is a key important point to maintain an explainer page for the program that helps to understand what the program is about, how will it benefit the customer, how to earn rewards, etc. This is very important because your customer must understand the kind of value that you provide to the customer.
Visit Edenred Sinagapore – http://www.edenred.com.sg to find out more about how a good reward program will benefit your company in the long run.