Loyalty Cannibalization Rate

Evaluate if your digital loyalty program is driving incremental revenue or just discounting existing sales.

Assumptions and Methodology

Determines whether a digital loyalty program is genuinely accretive (driving new visits) or simply dilutive (giving discounts to customers who would have paid full price anyway).

Variables such as localized taxation, specific hardware leasing agreements, and variable labour weighting are generalized. For a precise calculation tailored to your specific P&L structure, we build custom data models during our Audit Process.

Frequently Asked Questions

How frequently is this data benchmarked?

Our figures are updated quarterly. The last baseline adjustment was made in Q3 2024 based on our internal multi-site audit data.

Does this account for third-party aggregator costs?

Only where explicitly stated. Standard unit economics in these models assume direct-to-consumer sales unless a commission variable is present.

Why This Metric Matters

Many off-the-shelf loyalty apps look great in marketing decks but perform terribly in reality. If you give away 10% to capture an email address you never use, you are cannibalizing your own margin.

Common Mistakes

• Failing to segment 'power users' from 'incremental users' in the data warehouse.
• Running blanket discounts instead of targeted, behaviour-driven offers.
• Not factoring the SaaS cost of the loyalty platform into the overall ROI.