Program ROI is a critical measurement to understand how effective your Loyalty Program is at driving positive incremental revenue for your store. A loyalty program is successful only if it generates incremental cash flow well above and beyond the associated costs in rewards.

To calculate Program ROI, we compare the behavior of program members with non members to determine the incremental difference in spending attributable to the program.

First, we calculate the Average Revenue Per Users (ARPU) for Members and the ARPU of Non-Members. Next, we subtract the two to determine the incremental impact on ARPU for Members over Non-Members. Lastly, we divide that results by the average cost of rewards realized in the period per member to determine Program ROI.

Example Program ROI Calculation

Average Revenue Per Member (ARPM) = $24,121 revenue from members / 241 members = $101 ARPM

Average Revenue Per Non-Member (ARPNM) = $34,901 revenue from guests / 543 guests = $64.27 ARPNM

Average Cost of Rewards per Member Used In Last 90 Days = $12

Program ROI: (ARPM - ARPNM) / Avg Cost of Rewards per member * 100

= ($101 - $64) / $12 ) * 100 = 308%