2022/05/16 by Alexander Meili · 3 citations
Business, Management and Accounting · #Corporate Governance and Management #Customer Service Quality and Loyalty
paper · doi:10.5281/zenodo.6521984
openalex publication_date 2022/05/16 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/03
Loyalty programs are booming, but the evidence of their effectiveness is controversial. Many companies are unsure whether and how to use loyalty programs profitably. Measuring the effectiveness of a customer loyalty program is important, but not easy. In contrast to the common practice of measuring loyalty programs based on the “outside-in” approach (competitor benchmark or customer surveys), this article suggests measuring them using the “inside-out” principle (i.e., from the company’s perspective and using key performance indicators [KPIs] based on available data and financial figures). This is the only reliable method, albeit a harsh and rigorous one, to determine whether a loyalty program is working or not. However, this principle imposes certain requirements: Assessing the success and health of a customer loyalty program requires continuous monitoring of KPIs. The challenge is <em>to know the relevant KPIs</em> (which is the focus of this paper) and to draw actionable insights from them in order to improve program performance. Both in research and in practice there are major deficits; this study closes this gap. The study presents a <em>compendium of relevant loyalty KPIs</em> for measuring loyalty programs. It is based on a literature review of the last 25 years and interviews with 12 leading international loyalty experts from business and academia. With its comprehensiveness, the compendium represents a novelty on the loyalty market. Following a final expert ranking of the compendium’s KPIs, the study concludes with <em>a list of the top 10 loyalty KPIs</em>. Through this independent and critical study, companies can learn how to measure the health of their customer loyalty programs and improve their performance in a sustainable and targeted manner. <em>Program management becomes more fact-based</em> and less driven by intuition or blind copying of competitors.