Assessing Performance and Setting Goals

In order to measure the success of your loyalty program, we recommend that you establish measurable KPIs to monitor progress as well as adjust and improve along the way.

• Number of new member recruitments.
• Frequency of visits for loyalty members.
• Average purchase for loyalty members.
• Measurement of feedback and guest reviews.

How to establish loyalty KPIs

To be able to set realistic goals, it is important to have an overview of the current situation, so that you can measure progress later. Goals for member recruitment can be set from the start and actively measured. Goals regarding frequency of visits and average purchases cannot be measured until the program has a sufficient basis.

The numbers used further are fictional to show how information from the current situation can be used to set realistic goals. 

Number of new member recruitments - Can be set and monitored.

To establish a realistic goal for new member recruitment, you must adjust the goal according to the hotel's potential. This is affected by the hotel's size, percentage occupancy and distribution of bookings through its own and external channels. 

Example:

• Average number of guests per year: 10.000. 
• Percentage of direct bookings through own website: 40%.
• Potential new member recruitments: 10.000 * 0,40 = 4.000. 
• Based on this information, a realistic goal for new loyalty members would be less than 4,000.
• We recommend setting a goal that is between 40%-50% of the potential member recruitments. 
• The hotel's goal for member recruitment: 60%.
• Targeted annual membership recruitment: 4.000*0,60 = 2.400.
• Targeted monthly membership recruitment: 2.400 / 12 = 200.
• Targeted daily member recruitment: 200 / 30 = 7.

In this case, with a goal of 60% member recruitment, one must recruit 2,400 new members a year. The goal can be divided into members per month and day to make it easier to follow the progress. If you offer special agreements to some groups, for example business customers, it will be appropriate to extract these from the total number of new member recruitments, when you follow up on the progress. This is because these groups often have special advantages and are therefore not representative of the entire membership group. 

How likely it is to achieve the goal will also depend on how accessible the loyalty program is, and the benefits it offers. 

Follow-up of KPI and tips:   

• Keep an eye on the statistics in the dashboard. 
  • Are 7 new members recruited for the loyalty program per day? 
• Increase potential by including more channels where guests can become members. 
  • For example, registration through reception or a restaurant. 
• Increase potential by improving content in the program.
  • For example through better offers and benefits.  
• Increase potential by improving training and increasing motivation among colleagues. 
  • For example through internal competitions.  

Visit frequency for loyalty programs

Many hotels do not have an overview of the frequency of visits for all their guests, but we know that the industry average is 1.3 overnight stays in hotels per year, and this is spread across all hotels. Although the industry average is distributed across all hotels, it is also based on the fact that some do not visit hotels at all. You can therefore use the industry average as an estimate for your own visit frequency for the current situation. 

Example:

• The industry's average annual visit frequency: 1.3 overnight stays.
• Based on the industry average, as an estimate for the current frequency of visits, you can set a target for how much more you want loyalty members to visit the hotel.
• We recommend a goal of between 30%-70% increase in visit frequency.  
• The hotel's goal of increased frequency of visits for loyalty members: 50%.
• Loyalty members' annual frequency of visits: 1,95 overnight stays.
• Increase in frequency of visits for loyalty members: 1.95 / 1.3 = 1.5 (equivalent to 50%).

Follow-up of KPI and tips: 

• Keep an eye on the frequency of visits in the dashboard.
  • Do loyalty members visit 50% more often than non-members? 
• Improve loyalty with better benefits. 
  • For example by offering more revisit benefits like bonus earnings. 

Average purchase for all loyalty members

In order to set a goal for how much more you want members to spend, compared to non-members, you need to know how much an average guest spends today. You can find this like this: Annual turnover from guests / Annual number of guests = Average purchase for the average guest.

Example:   

• Average purchase before implemented loyalty program: 800,-  
• We recommend setting a goal that says loyalty members should spend between 20%-30% more than non-members. 
• The hotel's goal of increased average purchases for loyalty members: 30% over non-members.  
• Based on these numbers, you can set a target for how much a loyalty member should buy on average.  
• Target average purchase for loyalty members: 800,- * 1,3 = 1.040,- 
• When measuring average purchases, you can create three different groups that can be compared:  
• Average purchase per guest before loyalty program: 800,-  
• New average per guest after loyalty program: 960,-  
• Average purchase for loyalty members: 1.040, - 
• To measure the change in average purchases, the different groups can be compared to find out how much more loyalty members spend than non-members.   
• Increase in average purchase before and after implementation: 960 / 800 = 1,2 (equivalent to 20%) 
• Increase in average purchases for loyalty members, compared to non-members: 1.040 / 800 = 1,3 (equivalent to 30%) 

Remember that if you do not have the opportunity to extract the average for loyalty members, the overall average will also increase as a result of the increased average for loyalty members.  

Follow-up of KPI and tips:  

• Keep an eye on average purchases in the dashboard. 
  • Do loyalty members buy on average 30% more than non-members? 
• Make it more attractive to shop more. 
  • For example by offering instant benefits such as gift cards or bonus earnings that make it easier for guests to spend more during their visit.