Know-How Exchange : Research/Metrics

Adoption rate (of new clients).
Cancellation rate (of existing clients).

Dear Jasginder,

To add to Jay's answer, you might also want to consider:

Frequency of message repetition prior to purchase. How long does it take you to acquire a new customer?

Frequency of message delivery after purchase. Howe often do you touch people's lives after they've paid their initial fee?

Frequency of value delivery between monthly charges. How much you're connecting with people in terms of their perceived value of the things you're offering?

Types of communication? E-mail newsletters and material, printed, mailed newsletters and material, audio (podcasts), video, and other methods of reaching customers such as webinars, teleseminars, direct mail, radio, and TV.

No single message delivery vehicle will ever do the job, you've got to hit people from several different angles and you've got to do this at the same time but not overdo it.

To create loyalty you've got to have something to be loyal for.
This means not dropping the ball on any customer service issue and it means giving more—WAY MORE—than you'd ever promised in your initial advertising. You do this by giving more but by adding it to your mix as a sort of "Oh, by the way, we've also go this first rate ABC, It's our gift to you, just for being such a great customer!"

The trick with this kind of add on is that it's never advertised, but it's always offered and it's offered on the quiet, as an extra piece of value.

These kinds of things get talked about and when people are talking about you as a result of this kind of thing you get extra street credit and your marketing dollars work even harder because someone else is doing the heavy lifting on your behalf.

I hope this helps.

Gary Bloomer
Wilmington, DE, USA

Gary, you got me wrong here I guess. Am not planning to develop a business model for loyalty, am only making a simple solution which will check the transactions done by a customer, give him/her rewards points based on that and allow customer to check the reward points online and redeem them from a shopping cart. Very similar to the one you would see for Membership Reward points in American Express and Thank You program for Citi Bank. But my solution has some specific features and I plan to target a niche.

To sell the business to my VC, I need to convince him with financial projections, that is where I need to show the costs and revenue numbers. I need the various kind of costs I would incur like fixed cost of development, customisation cost per customer, and marketing/sales cost. From revenue, I have used a single figure which I plan to charge my customers per annum.

I want to know what all kind of cost am I missing here. Am not taking the travel cost of my team in calculations.

@Jay: Thanks, will incorporate that

As to the core of your question, a good way to convince the VC is to run the program for 1 isolated store or geography. This will give you a much more realistic picture of all costs and benefits involved, before launching it full scale. Comparing the extra revenues and costs at that store to a matched one without the program will demonstrate its value clearly.

@Koen,
Am actually taking team from the people who have done it for a large financial company. But then the part they were doing was only a small one, so while we are going for complete implementation, we are wondering if we have taken all the costs or not.

Also is 40K USD per year enough for a dedicated sales guy?

Thanks people for your answers, am closing the question. One thing I had missed out totally was the cost of loyalty benefits, thanks ChrisB for pointing that out!!