Retention rate, redemption rate and other loyalty metrics (with examples)

To know whether your loyalty programme is working, you only need to check 4 numbers each month: retention rate, visit frequency, redemption rate and inactive customers. Here’s the formula for each one, an example with figures from a neighbourhood business and what to do if any of them drops.

Why measure your loyalty programme

With a paper card it was impossible to know whether it was working: you didn’t know who had one, how many were completed or who had stopped coming. With a digital stamp card that data is on your phone. You just need to check it regularly and know what it means.

Metric 1: customer retention rate

What it measures: the percentage of your customers who keep coming back over a period.

Formula:

Retention rate = (customers at the end of the period − new customers in the period) ÷ customers at the start × 100

Example: a café starts the month with 120 active customers. During the month 25 new ones arrive and it ends with 130 active.

(130 − 25) ÷ 120 × 100 = 87.5%

Out of every 100 customers you had, almost 88 have kept coming.

If it drops: check whether the reward is still attractive and message the customers who have stopped coming (metric 4).

Metric 2: visit frequency

What it measures: how many times, on average, each active customer visits in a month.

Formula:

Frequency = visits in the month ÷ active customers in the month

Example: 900 visits across 150 active customers = 6 visits a month per customer.

If you want to raise it:

• Double stamps on your quiet days.
• Closer rewards, achievable in less than a month.
• A giveaway that rewards the people who visit most.

Metric 3: redemption rate

What it measures: how many of the cards that are started end in a redeemed reward.

Formula:

Redemption rate = rewards redeemed ÷ cards started × 100

Example: in a quarter 160 cards have been started and 40 rewards redeemed = 25%.

How to read it:

• Very low: the reward is too far away or doesn’t appeal. Lower the number of stamps or improve the prize. We explain how in how many stamps to put on a loyalty card.
• Very high: your card may be too short and you could be giving away more than you should. Check the cost of your rewards.

Look at it quarterly: in a single month many cards are still only half-full.

Metric 4: inactive customers

What it measures: how many customers have stopped coming.

Practical definition: a customer is inactive when they’ve gone more than twice their usual frequency without visiting. For example:

• someone who came every week and hasn’t been in for more than 2 weeks;
• someone who has a haircut every month and hasn’t been in for more than 2 months.

What to do: send them a notification with a concrete incentive: “we miss you: your next coffee earns a double stamp”. In Socios Plus you can see who hasn’t been in for a while.

Bonus: customer value

What it measures: how much a loyal customer brings in over time.

Simplified formula:

Customer value = average spend × visits per month × months they remain a customer

Example: a café customer with an average spend of €4, who visits 8 times a month for 18 months: 4 × 8 × 18 = €576.

This figure explains why a free coffee every 10 visits is a good investment. Work out your own case with the loyalty calculator.

Your monthly dashboard in 10 minutes

Copy this table and fill it in on the first day of each month:

Metric	Last month	This month	Has it dropped? What to do
Retention rate			Review the reward and message inactive customers
Visit frequency			Double stamps on quiet days
Redemption rate (quarterly)			Adjust the number of stamps or the prize
Inactive customers			Notification with an incentive

There’s no “magic number”

It’s tempting to look for what counts as a “good” retention rate, but it depends heavily on the sector, the neighbourhood and the type of customer. The most useful benchmark is your own progress: if your numbers improve month on month, your programme is working.

Frequently asked questions

How often should I check these metrics?

Once a month is enough for retention, frequency and inactive customers. The redemption rate is better looked at quarterly.

What is a good retention rate?

It depends on your business. Rather than comparing yourself with a general figure, compare yourself with yourself: what matters is that it holds steady or improves over time.

Where can I see this data?

In the Statistics section of Socios Plus: cards started and completed, your customers’ visit frequency and who hasn’t been in for a while. No spreadsheets needed.

Measure your loyalty without spreadsheets

With Socios Plus you have your loyalty programme data on your phone from day one. 14 days free, no credit card required. If you want to brush up on the concepts, see the loyalty glossary or the customer loyalty guide.