#406: The Methods and Importance Of Measuring The Value of Loyalty Marketing Investment ( Short Summary Show)

Paula: Welcome to Let’s Talk Loyalty, an Industry podcast for loyalty marketing professionals. I’m Paula Thomas, the Founder of Let’s Talk Loyalty. Today’s episode is hosted by Tom Peace, Managing Director of The Loyalty People, a strategic consultancy with a laser focus on loyalty, CRM, and customer engagement.

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Tom: Hi, I’m Tom Peace, Managing Director of The Loyalty People and Presenter of Let’s Talk A Little Loyalty. Welcome to this week’s short summary show. In this week’s episode of Let’s Talk A Little Loyalty, I’m reviewing Paula’s original interview with Brad MacDonald, Epsilon’s, Vice President of Loyalty Strategy from back in May, 2022.

This is a really informative show where Brad talks about the methods and importance of measuring the value of loyalty marketing investment. Brad initially talks about how brands had to quickly adapt during the pandemic to generate as much business from existing customers as possible. Because we all reverted to a new style of purchasing and our favorite brands acquisition became extremely difficult and of course expensive.

And suddenly brands needed to justify why their loyalty program was in fact their best route to profit. Measuring the effect of loyalty has always been a major challenge for anyone trying to convince their C F O, that it really is a great idea to spend money on existing customers. Brad talks us through a number of key initiatives for measuring success.

There are two key challenges with board level discussions on loyalty investment. First of all, it’s very difficult to show the performance of non-members in any specific detail since you can’t identify their behaviors in the same way as members. Secondly, there is a big question of causality where program managers need to prove that investment in already loyal customers will generate greater uplifts rather than zero investment, and getting the same result since they’re already loyal.

The first technique Brad talks us through is measuring financial impact over a long time. The lifetime value of a customer is a great way to show that investment stops the general decline in loyalty that is natural, as we all look for new and exciting experiences. Brad also talks us through how Epsilon creates five year for loyalty that are split by segment and look at the financial impact of emotional connections and subsequent behavioral changes.

Emotional connections are an imperative in today’s loyalty strategy, and the way you measure this is through the behavior change that is derived from those connections. This does require some assumptions in terms of the value, frequency or advocacy that these emotional connections will create, but it absolutely can be modeled.

It is also vital that predictive modeling is done at a segment level. One size does not fit all, as we all know. So modeling must be done at the individual segment levels within your program based on how these segments behave within your scheme. Measurement of loyalty is difficult thing, but Brad has shared some excellent tools for doing just this.

Please do look up this excellent main show, which can be found at www dot Let’s talk loyalty.com. And first aired on the 25th of May, 2022. Episode number 227. Thanks for listening. I hope you enjoyed my summary show all the best and speak soon. Tom,

Paula: This show was sponsored by The Wise Marketer, the world’s most popular source of loyalty, marketing, news, insights, and research. The Wise Marketer also offers loyalty marketing training through its loyalty academy, which has already certified over 500 executives in 38 countries as certified loyalty marketing professionals.

For more information, check out, thewisemarketer.com and loyaltyacademy.org.

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