Incentive Program Performance Indicators

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Channel Program KPI's

Loyaltyworks aggregates data from its client base to understand emerging trends and to identify Key Performance Indicators for channel incentive programs.

This data represents the average Loyaltyworks client program, which has been in operation for 56 months and has 724 eligible participants. We excluded data from programs in operation less than 12 months.

Uptake & Participation


The energy, marketing strategy and weight of communications at launch of a channel incentive program will determine initial uptake and set the tone for future participation.

Two key performance barometers of uptake are:

  • Percent of potential participants who enroll
    in the program
  • Number of those enrolled who earn points

Done properly, a new program will see more than half of the potential participants formally enroll in the first six months. Similarly 66% of those enrolled should be earning points in the first six months with a steadily rising participation curve as the program matures.

 

Redemption Rates


The 80/20 rule generally applies to how participants redeem the points they earn. As a rule, more redemption is a sign of a well-crafted program. More active redeemers equal more intense and loyal program participants.

Because many participants bank their initial points, it generally takes 12 months for 26% of those enrolled in channel programs to make their first redemptions. Initial redemptions usually account for 36% of the total number of points issued at that time.

Subsequently the number of redeemers and the number of points redeemed advance at a steady and mostly predictable pace. The quality of merchandise and rewards offered can affect the rate at which points are redeemed. As programs mature, timeliness and frequency of communication and earning opportunities motivate people to repeat positive experiences. Participants getting great rewards tend to work harder to get more points and repeat the experience as frequently as possible.

Redemption rates are also influenced by the personas of the program participants. In short, some participants redeem their points more quickly than others for a variety of reasons.

Program Equity and Point Balances

How quickly participants earn the value of points allocated and budgeted is a function of how incentive programs are designed and the rates of active participation. In mature programs, generally half of those enrolled earn points equal to program equity while only 25% redeem as much as planned. In most programs there is a lag time between points budgeted and points earned or redeemed.

We define “program equity” as the amount of currency earned in any given year that is meaningful to participants. Typically this amount is $300-$500 in branded currency or the dollar equivalent of the most desired awards by participants at that time. Currently the cash equivalent is roughly $400 or the cost of a roundtrip domestic airline ticket.

Similarly, programs have definable lifecycles that begin with launch, enter into a growth phase after the first anniversary, hit maturity by month 30 and require rejuvenation or redesign and re-launching by the 4th year of operation.

The average eligible participant in our pool of programs has a cash equivalent of $948 in their account.

 

01. Understanding Channel management Managing a winning channel incentive program is challenging and requires patience. Find out what the building blocks of a successful program are.
02. Do Channel Incentive Programs Pay Off? Learn how channel programs can help you make the most out of your partnerships and yield lucrative ROIs
03. Channel Incentive Program Objectives and Applications Learn how your program goals and objectives will define your program design and guide you along the way.
04. Channel Incentive Program Application Examples These case studies showcase how companies are successfully using channel incentive programs.
05. The Psychology of Incentives and Motivation Get to know your audience and how do you go about designing a program that speaks to participants’ values?
06. Cash vs. Non-Cash Incentives Cash always seems like an attractive reward. But does it carry the same long-lasting trophy value?
07. Points-Based Incentive Programs Why choose a points-based program? It allows for a flexible structure, and, most importantly, it is measurable.
08. Point Program Participant Segments / Personas After enrolling in a program, participants assume different personas. Explore the various persona types.
09. Incentive Program Study and Benchmarks Compare your initiative program with industry benchmarks.
10. Incentive Program Performance Indicators A look at channel incentive program KPIs and redemption rates.
11. Channel Incentive Program Best Practices A list of best practices that will aid you in launching and maintaining a successful program.
12. Program Considerations and Conclusions Before embarking on a program take these final considerations into account.