How to measure the value gap between loyalty members and non-members
The short answer
Compare members and non-members on three numbers over the same 12 months: average order value, purchase frequency and retention. Multiply order value by frequency to get annual value per customer, and the difference is the gap. Then check how members behaved before they joined, because part of that gap reflects who chooses to join.
Why it matters
Loyalty programs cost money in discounts, points and running costs. A raw member vs non-member comparison almost always flatters the program, because your best customers are the most likely to join. Measuring the gap properly tells you what the program earns and whether the cost is worth it.
The question to ask
Copy this into Lexi as written.
What the answer looks like
Illustrative output on sample data
Illustrative example: how Lexi answers this for a toy retailer. It compares members and non-members on order value, frequency and 12-month retention, then checks spend before joining.
- Members: $85 per order, 4.2 orders a year, about $357 each
- Non-members: $70 per order, 1.6 orders, about $112 each
- Raw gap: $245 per customer
What the data shows
Members spend more than three times as much as non-members.
What it means
Before joining, the same members already spent about $180 a year, against $100 for comparable non-members. The part of the gap the program plausibly creates is closer to $165.
What to do
Report the $165 figure as program value, and focus sign-ups on customers whose spend rises after joining.
Want me to show spend before and after joining by member tier?
Frequently asked questions
Do loyalty members spend more than non-members?
Usually yes, but a raw comparison overstates the program's effect. Your most engaged customers are the most likely to join, so members often spent more before they signed up. Compare spend before and after joining to separate the program's effect from who chose to join.
Which customers count as non-members?
Use customers who bought in the same months but never joined. Exclude anyone you cannot match to a customer record, such as anonymous store transactions, or the non-member group will look smaller and less frequent than it really is.
How long a period should I compare?
Twelve months covers a full trading cycle, including the holiday season and other seasonal peaks. For newer programs, compare members' first six months after joining with their six months before, then extend the window as more history builds up.