loyalty program data

Loyalty Program Data: The Importance of Redemption Rate



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For more than a decade, it has been known that acquiring new customers is significantly more expensive than retaining existing customers. Plus, increasing your customer retention rate can increase your profits up to 95%, as found in this research published by Harvard Business Review.

Loyal customers play a crucial role in the success of your business. Therefore, an effective loyalty program should become the focus of your company as you can build a bond with your customers by providing them with special deals, discounts, and other benefits to reward their loyalty.

Big companies do not have a problem investing huge money in marketing, targeting new customers, and retaining the old ones to get them to repeat purchases. Small businesses should have the same opportunity to invest in customer loyalty programs tailored to their needs.

With digital loyalty software, like our PassKit, having a customer loyalty program and rewarding loyal customers has never been more convenient. It offers your business a chance to design loyalty programs easily. PassKit makes mobile marketing opportunities more affordable to companies with a limited budget since you don’t have to develop your app. 

PassKit integrates seamlessly with Google Pay and Apple Wallet, popular mobile wallets your customers already use and trust. What’s best is that we provide a 45-day free trial, so you can start immediately and check all available features.

If you are still unsure about starting a loyalty program for your business, continue reading to learn the benefits of loyalty program data that helps you increase customer loyalty and your ROI.

What is loyalty program data?

By examining customer data, you can determine how many people purchase your products or use your services.  It provides insights into customers’ purchase frequencies, demographics, interests, and behavioral patterns. 

In other words, you don’t have to use loyalty program data just to increase customer loyalty. It helps you get to know your customers better. You can provide tailored offers if you understand your customers’ needs.

Customer data collection represents the main difference between a loyalty program and a simple rewards program. A rewards program only allows customers to redeem rewards but does not provide insight into customer characteristics or behavioral data.

Why is loyalty program data important

leverage data to improve customer experience

Image source: P2P marketing

Data helps you see who your customers are and what they want, informing your business decisions regarding investing in customer loyalty. You can split them into groups if you attain data on customer demographics, spending habits, or even geographical location.

These groups can further help you provide a personalized experience for each customer and strengthen the bond you have. Consumers expect a unique approach and are not interested in products, services, or promotional messages that do not match their preferences.

Consumer data is essential because it helps you provide customers with the most relevant offers. It also reduces marketing costs by derailing you from investing in expensive generic marketing that will not necessarily bring you profits.

What can you learn from loyalty program data

Usually, customers, through their account profiles, share their demographic data. They provide you with information on their main characteristics. You can learn how old they are and their gender or nationality.

Aside from that, data acquired through loyalty programs can answer the following:

  • Where do your customers live 
  • What did they buy from your business
  • How often do they buy your products or pay for your services
  • For what purpose do they use your products or services
  • What kind of rewards they redeem the most

Existing customers are essential because of their repeated purchases and recommendations to potential customers. Data can also help you learn:

  • If customers recommend your service or product
  • If yes, what motivates them to make a referral
  • If not, how you can incentivize customers to make a referral

Limitations of loyalty program data

Even though successful loyalty programs increase customer loyalty and give you insight into valuable consumer data, there are some limitations you need to be aware of.

The most successful loyalty programs do not provide you with information on:

  1. Other brands or companies your loyalty program members spend money on
  2. Their general consumer habits
  3. If they are members of competitors’ loyalty programs 
  4. The strength of their loyalty to your business

Data you get through loyalty programs concerns only your products or services without including other businesses. Also, it does not give you insights into your customers’ overall consumer behavior. These insights are limited to your customers’ relationship with your business.

Loyalty concerns emotions, which are hard to measure. Some of your program members may be loyal because it is convenient for them (e.g., they live close to your shop). If they are only frequent customers and not loyal ones, you can quickly lose them to your competitors.

What is the loyalty program redemption rate?

purchasing behavior

Image source: P2P marketing

The redemption rate represents the percentage of your customers’ issued reward points. The higher the redemption rate is, the better. When the redemption rate increases, more customers spend their points.

We can calculate the redemption rate by:

  1. Calculating the total number of customers who have earned points/rewards
  2. Calculating the total number of customers who have used points/rewards
  3. Dividing the number of those who have spent points/rewards by the number of those who have earned them

Why is measuring the redemption rate so important?

Measuring redemption rates can show whether customers react to specific incentives and are engaged in your loyalty program. The sole purpose of a program concerning loyalty is customer retention and active involvement with your business.

Redemption rates can also show you which rewards are doing well with which customer segment, giving you further insights into customers’ desires and behaviors. 

For example, if your company gives different kinds of digital coupons, and customers can only use one of them, the redemption rates will show you the most successful type of coupon. You can see which coupons different customer segments like the most by combining redemption rates with demographic data.

What is a healthy redemption rate?

The average redemption rate is around 14%, which means that you are doing well if your redemption rate is above 15%. Aiming for a 20% redemption rate seems to be a way to success.

The causes of decreased redemption rate

Redeeming loyalty points helps customers feel valued by your brand. However, there are several reasons why people might not be redeeming their points.

Inadequate rewards

Customers will not redeem your rewards if you offer them something they are not interested in. Having a limited scope of possible incentives decreases personalization and narrows customers’ choices repelling them from engaging with your loyalty program.

Members are not aware that you offer rewards

Customers won’t discover or redeem rewards unless they know you provide them. You may prevent this by sending emails or notifications to your customers about available rewards.

Your rewards do not vary across time

Even though there are some positive sides to keeping a successful rewards program unchanged, your customers might get tired of constantly getting the same incentives. You should always add a new facet to keep your customers engaged and excited about your program.

Using loyalty program data for loyalty program optimization

You can leverage the data you get through loyalty programs to optimize them further and improve their effectiveness. These programs represent a part of the experience your company offers to customers.

With time, the customers have become much more demanding, and they will not judge your business solely on the product you offer but also on their overall customer experience.

Every aspect of your business needs to be optimized and tailored to customers’ needs. It is especially true for a program that wants to induce loyalty. These programs need to perfectly correspond with customers’ needs and strengthen the bond between them and your business.

How to get loyalty program data with PassKit

get loyalty program data with PassKit

PassKit is a digital loyalty platform that helps you manage and grow your customer loyalty programs through a single app without developing your own, making it cost-effective compared to other marketing options. 

It enables you to create digital passes such as digital loyalty cards, membership cards, and coupon cards. Many businesses such as airlines, hotels, restaurants, and retail stores use PassKit to create rewards programs, build customer loyalty, and increase sales.

Using PassKit, you can create customized rewards programs tailored to your customers’ preferences. In addition, you can easily track the performance of your reward programs and get insights into customer behavior. With PassKit, you can offer customers the convenience of contactless shopping and earning rewards on their mobile devices.

Once you sign up for PassKit, you will see that it offers you different options for managing your members. You can add custom fields to your loyalty program membership accounts and update individual member records as one of many features.

These custom fields help you collect custom data that can be valuable for all your future business decisions, especially those regarding customer retention. If you want to learn more, you can watch our instructions for adding custom fields.

How to increase the loyalty program redemption rate with PassKit

PassKit helps you increase your redemption rates. Aside from being fully integrated with Apple Wallet and Google Pay, PassKit has features that distinguish it from the competition and make your loyal members genuinely engaged with your company.

Once you visit the PassKit platform, you can create digital passes that blend with Apple Wallet and Google Pay design standards while appealing to your customers. 

Here are some examples of cards made with PassKit.

create enticing offers with PassKit

Once you get accustomed to all the features PassKit provides, you can make a list of possible rewards and coupons for your business. For example, you can offer your customers discounts, free samples, VIP experiences, or early access to limited edition products.

Think about how you will communicate your rewards. If no one sees that you are giving rewards, no one will redeem them. PassKit has features that help you distribute digital loyalty cards and coupons on multiple marketing channels.

You can send emails with personalized loyalty cards attached to your customer base. You can also place a QR code on receipts that customers can scan to sign up for your loyalty program and save their digital loyalty card directly in Google Pay or Apple Wallet.

In addition, your customers can receive location-based notifications when near your store to remind them about rewards they did not redeem and increase the foot traffic to your business location.

How to track your redemption rates with PassKit

PassKit redemption rates tracking

PassKit provides you with an easy-to-use and intuitive dashboard that helps you track data regarding your loyalty program success. 

track redemption rates with PassKit

PassKit gives you actionable insights to understand how your loyalty program resonates with your customers: 

  1. The number of enrolled members
  2. Installs or the number of digital cards your customers saved to Google Pay or Apple Wallet
  3. Uninstalls or the number of digital cards your customers removed from their mobile wallets
  4. The total number of cards you deleted via the API or through the web interface

You can even track your loyalty program performance by day, month, or year or set custom dates to get all the data you need.

track loyalty program performance with PassKit

In addition, you can see the charts showing what digital wallet providers your customers actively use.

PassKit tracking mobile wallets instalation

Finally, PassKit lets you know what distribution channel brings the most customers to your loyalty program. It shows you a breakdown of all passes installed on each distribution channel you might be using, such as email marketing, SMS marketing, social media, and similar. It helps you understand where to focus your efforts to get more customers to sign up for your loyalty program.

track installed sources with PassKit

Your loyalty program needs to be valuable for your target audience. As with everything in marketing, you need to make hype around it to be exciting and successful.

It is in your interest to have as many loyal members as possible. Creating a valuable program for your customers makes additional value for your business. 

Loyalty program data: Final words

You can use many different metrics to determine whether or not your loyalty program is successful. One of the most important metrics is the redemption rate. 

When customers redeem points or rewards through your loyalty program, they use them to buy something or get something for free. While some loyalty programs may not allow customers to redeem their points until they have accumulated a certain amount, most loyalty programs offer customers the ability to redeem their points any time they want. 

It makes redemption rates a critical metric because it tells businesses whether or not their customers are using the rewards they earn through the loyalty program. If customers redeem their points and rewards regularly, it can signify that the loyalty program is successful and that customers enjoy the benefits of being part of the program.

On the other hand, if customers are not redeeming their points and rewards, it could be a sign that there is something wrong with the loyalty program and that you need to address these issues. By tracking and analyzing redemption rates, you can better understand how customers use their rewards and what changes may be necessary to improve the program and make it more successful.

PassKit is an excellent digital loyalty solution you can use to create your loyalty program and track redemption rates. Advanced analytics will provide you with all the information you need to remove the guesswork and make smart business decisions. At each step of the way, you will know your loyalty program performance and make immediate improvements to achieve your business goals and increase customer loyalty and overall satisfaction.

Start your 45-day free trial now and enjoy all the benefits PassKit provides.

Loyalty program data: FAQ

What is loyalty program data?

Data collected through programs that aim to increase the customers’ loyalty represent first-party data that can give you insights into the frequency of customers’ purchases and their demographics or interests.

What is a KPI for a loyalty program?

The most important KPI for a loyalty program is the reward redemption rate. The redemption rate shows us what percent of offered rewards was redeemed by customers. Another important KPI is member acquisition, i.e., the number of new members. PassKit helps you track both metrics with its advanced analytics.

What data is collected on loyalty cards?

Aside from collecting general information that a customer needs to provide to sign up for a membership, you can add custom fields that can be filled in to get more nuanced data about customers. Data can range from locations and age to very detailed spending behavior, at least when it concerns your business. 

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