Understanding our new Loyalty Analytics update
In case you missed it, Stamped recently launched a Loyalty Analytics update to give merchants even more tools to measure the performance of their loyalty programs.
It sounds great in theory, sure, but what are we actually measuring? And how do those measurements create insights that can inform your loyalty strategy?
At Stamped, our core hypothesis is that user-generated content and loyalty programs generate more business impact as combined levers in a merchandising strategy than they do on their own. That's one of the main reasons we acquired Repeat: To be the engine that integrates the two, and does so in a personalized manner. We strongly believe in the power of personalization to drive profits by improving repurchase frequency and AOV from your existing customers.
Our latest Loyalty Analytics update was specifically designed to measure that impact. By adding VIP tier information and a cohort-based chart tracking value per customer over time, we created a more holistic depiction of the performance of your loyalty program. Some of this proprietary data will be brand new to ecommerce brands, and we hope it helps you fill in the gaps of your entire retention picture.
But even if we understand what we're measuring, what sort of actionable insights can we derive from the data?
Let's take a look at some of the best uses of our newest Loyalty Analytics features, and explore how you can use them to revolutionize your loyalty strategy.
1. Using VIP Tiers to delay the flattening of a cohort’s trajectory
One of the most exciting aspects of our update is the cumulative Revenue Per Customer By Acquisition Month graph. This chart groups your customers into cohorts based on the month they made their first purchase. It comes with two different views:
- 12 consecutive months: You can visualize 12 consecutive customer cohorts and track their cumulative revenue over the months since their first purchase. This helps you evaluate how customer behavior evolves over a year-long span.
- Year-over-year comparison: You can view the same acquisition month across different years, tracking the cumulative revenue per customer from their initial transaction. This allows you to see trends and changes in customer behavior over time.
We’ll get more into what insights you can extract from this data later, but first, let’s talk about action. As you’ll likely see in your own data, cohorts tend to flatten over time. The question, then, is how can we delay this flattening to see continuous revenue growth?
The answer—which might be shocking to some—is VIP tiers.
In our own research, about two-thirds of the brands we looked at saw improvements in purchase frequency and AOV from customers who redeemed points on purchases once in VIP tiers when compared to customers who didn’t redeem points on purchases once in VIP tiers.
You probably noticed that we didn’t compare redeemers to individuals not in the program, like most loyalty vendors do. The reason for this is the inherent selection bias in that approach. Instead, we used redemption as a proxy for whether someone actually participates in a loyalty program, since we’re trying to understand the impact of VIP tiers on customer behavior.
While it’s important to emphasize the disclaimer that not all brands saw this change in customer behavior, this is a big deal. If VIP tiers can slow the degrading value of your most valuable customers, it’s an immense lever to pull for retention efforts. Many brands never even consider a VIP tier. This data suggests that it should at least be considered as a merchandising lever.
Just make sure that you’re actively promoting your VIP program. Without the right merchandising and personalization efforts, you’ll have a higher rate of VIP member non-participants.
2. Using cohorts to ask the right questions about your loyalty program
Our Revenue Per Customer By Acquisition Month graph is, in short, a diagnostic tool. It might not give you the answers to your business, but it will report on how your strategy is working and tell you where to look for answers.
You want to find probing questions that get at the heart of what’s working and what’s not in the business. And that means you need to have a firm understanding of what sort of questions you should be asking.
Let’s look at an example chart and see what questions arise, then you can apply this line of thinking to your own data:
- This brand has done a good job of increasing AOV with new customers. What’s changed here in the last year? What new merchandising strategies have they employed?
- That initial revenue advantage has eroded over time. In fact, this cohort has flattened out faster than either the previous two cohorts. Did this brand get customers to overspend before they were sold on the product, leading to lesser retention rates?
- With softening month-over-month trends in the last two months, is that due to something within the brand’s control (Did they change their email/SMS strategy? Did they sell out of a key product?) or something outside of their control (Is consumer demand for this product softening?)
- Given the initial trajectory change differences between the three cohorts, how is discounting playing into this? Is the change we see more about AOV or purchase frequency? Is a higher initial AOV tied to a lower purchase frequency over time?
- Is what these cohorts are buying changing over time?
Merchandising, of course, is a lever that businesses pull to tackle many of the questions above; and Stamped is ready to help you find the answers
3. Creating segmentation based on VIP tiers
We now know that VIP tiers can delay the flattening of a cohort’s trajectory, but that’s far from their only capability. Your VIP members are your most important customers, and that’s why our updated VIP section comes with three new charts:
- Revenue Per Customer by VIP Tier: This graph shows loyalty attributed revenue per customer broken down by VIP tier for a given day or month.
- AOV by VIP Tier: This graph shows average order value for orders broken down by VIP tier for a given day or month.
- Basket Size by VIP Tier: This graph shows average basket size for orders broken down by VIP tier for a given day or month.
If you already have a VIP program, you know how important it is to segment out your best customers and drive increased behavior from them—and these charts are an excellent way to measure the impact of that strategy. But what actions can you take to boost loyalty attributed revenue, AOV, and basket size in your VIP members?
You can start by using Stamped as a segmentation engine. By creating segments for your VIP tiers, we can pass that information back to Shopify to create tags based on which VIP tier a specific customer is in.
You can then push those VIP tags into your CX system of choice—like Gorgias, for example—to make sure that your most important customers get faster replies. Exceptional CX experiences lead to higher customer satisfaction, increased loyalty, and more word-of-mouth referrals. It could be the difference-maker in ensuring that your highest value customers are happy.
We also pass segmentation data into Klaviyo, which opens up a variety of opportunities to reach your VIP members. For example, you could send special email offers to your highest VIP tier, or let the lower tiers know what they’re missing out on by teasing what rewards they unlock at the next level.
Segmentation allows you to create the personalization needed to drive increased revenue from your VIP members. So, if you’re reviewing your VIP data and wondering how to increase performance, consider the variety of ways that you can utilize segments.
4. Using VIP tier charts as a program health measurement
It’s not easy to measure the success of VIP tiers in a loyalty program. Certain factors, such as types of discounts offered, can produce wildly different results when looking at two similar brands. That doesn’t mean that the data is unreliable, though—it just means that you might need some help understanding it.
Another new graph in our latest Loyalty Analytics update is the VIP Tier Membership chart. This graph shows the number of customers within each VIP tier at the start of the respective day or at the end of the respective month. You want to see growth over time here, as it would mean that you have a larger number of high-quality customers.
Again, benchmarks can be a bit misleading, but you should typically expect to see 10% of VIP members in your highest tier, 30% in your middle tier, and 60% in your lowest tier. We strongly recommend adding no more than three tiers in your VIP program. If you put customers into too many different groups, your program becomes difficult to understand, and it becomes harder to communicate with your customers.
Now, let’s revisit some of the VIP charts that we’ve already discussed to see how they can help measure your program. With the Revenue Per Customer by VIP Tier chart, you should expect to see a correlation between tiers and revenue: the higher the tier, the higher the revenue driven. There are two factors behind this trend. One, customers in the highest tier are already your best customers, so you should expect them to be spending more. Two, your rewards should be driving higher spend.
The same idea applies to the AOV by VIP Tier chart, as revenue and AOV tend to correlate for the most part. Since you’re offering better rewards to customers in your highest tier, they should also have a higher AOV. A lot of it comes down to simple psychology. Let’s say you’re offering 10% off to customers in your middle tier, and 15% off to customers in your highest tier. Customers receiving the 15% discount are likely to spend more because the more they spend, the more they’re saving.
A possible alternative would be offering free gifts instead of a percentage-based discount. This method will naturally have a negative impact on AOV, as customers redeeming a free gift might have an order value of $0, but the positives show elsewhere. For example, you would expect to see a boost in purchase frequency and LTV.
Unlock in-depth analytics with Stamped Loyalty
Effective loyalty strategies go beyond simple metrics—they’re about understanding and maximizing the value of your customer relationships. With Stamped’s latest Loyalty Analytics update, you can harness the power of data-driven insights, VIP segmentation, and personalization to elevate your retention efforts and drive increased AOV and LTV.
Ready to take your loyalty program to the next level? Start utilizing Stamped’s industry leading analytics today. Book a demo with our team to see how these tools can transform your loyalty strategy and empower your brand’s growth.
