How to audit your current loyalty stack and cut costs without harming retention

When I first audited a client's loyalty stack, their tech bill made my eyes water: four different vendors doing overlapping tasks, a rewards wallet no one used, and an expensive points liability that barely moved the retention needle. I’ve since run audits for a dozen SMEs and learned that the best savings rarely come from chopping vendors at random — they come from understanding what actually drives behaviour, where duplication hides, and how to rebalance spend toward the levers that move retention and revenue.

Start with a clear objective: what does your loyalty stack need to achieve?

Before you touch contracts or export data, define the outcomes you care about. Are you trying to reduce churn among high-value customers? Increase purchase frequency for occasional buyers? Improve margin by increasing AOV? Your objective will determine which elements of the stack are essential and which are “nice to have.”

I usually write down 2–3 measurable goals, for example:

• Reduce 90-day churn among VIP cohort by 10%.
• Increase repeat purchase rate for new customers (0–6 months) from 18% to 25%.
• Reduce cost-per-acquisition through referral by 20% while maintaining conversion quality.

Map your current stack and ownership

Create a one-page inventory of technology, processes and people. Include every tool, whether it’s a full loyalty platform, a referral app, email provider, or an in-house script. Note who owns it, costs, contract terms, and primary function.

This simple table highlights overlap fast. I often spot loyalty platforms that include referral and tiering but sit alongside a separate referral app — a prime place to consolidate.

Measure what matters: the essential KPIs

Not every metric is equally useful. For a loyalty audit I focus on a short list tied to your objectives:

• Retention / churn by cohort — 30/90/180 day retention for members vs non-members.
• Repeat purchase rate — proportion of customers who buy again in a defined period.
• Average Order Value (AOV) lift for members.
• Redemption rate and liability turnover — points issued vs points redeemed over time.
• Cost per incremental purchase — loyalty spend divided by purchases attributed to loyalty.
• Engagement with loyalty communications — open/click rates of member emails, app opens.

Use these to create a baseline. If you don’t already capture them, you can usually extract them from your ecommerce platform + CRM in a few hours. If not, sample a few months manually to get directional answers.

Spot common inefficiencies

Across clients, I see the same four waste patterns:

• Feature duplication: Two vendors offering the same capability (referrals, coupons, tiering).
• Low-utility perks: Perks that cost money but have minimal impact (e.g., blanket free shipping for members who already buy infrequently).
• Underused integrations: Complex integrations that break — data flows fail, so expected automations don’t run.
• Points inflation: Generous earn rates without thoughtful redemption pricing create a ballooning liability.

When I audit, I tag each item in the inventory as Essential, Consolidate or Remove/Replace, with a short rationale linked to the KPIs above.

Questions to ask each vendor

Before cancelling anything, get the facts. Ask vendors:

• What exact feature set am I using, and what % of customers interact with it monthly?
• Can the feature be toggled off to save cost?
• What integrations are actually active and sending data?
• Are there cheaper pricing tiers for my usage pattern?
• How portable is my data if I migrate?

Most providers will propose a cheaper plan or remove unused modules if you ask — but you need to know what you use first.

Build a decision framework: keep, consolidate, or cut

I use a simple 2x2 decision grid: Impact vs Cost/Complexity. Tools that score high on impact and low on cost stay. High-cost/low-impact tools are first to go. High-impact/high-cost tools require optimisation (negotiate, reduce scope). Low-impact/low-cost tools can be removed if they add administrative overhead.

Example actions I’ve taken with clients:

• Consolidated a referral app into the loyalty platform and saved £250/month while keeping referral conversion the same.
• Turned off a blanket 5% member discount and replaced it with targeted offers for at-risk cohorts — reduced discounting by 1.8% of revenue but improved win-back rates.
• Removed unused loyalty tiers and simplified communications, which reduced support queries and increased perceived clarity of the program.

Apply quick technical checks

These checks take little time but reveal costly failures:

• Verify webhooks and API calls — are they failing? Use your platform logs.
• Check that earn/redemption rules are applied consistently across channels (website, app, POS).
• Audit scheduled emails and automations — are they still relevant? Remove or rework stale flows.
• Confirm data mapping for customer IDs — mismatches can create duplicate members and skew metrics.

Run small experiments before big cuts

When you plan to remove or reduce a feature, test the change on a subset of users. For example, deactivate a specific perk for 10% of new signups and compare churn and engagement over 8–12 weeks. This avoids surprising drops in retention and gives you evidence to scale the change.

Where to cut costs without damaging retention

Focus on three levers: simplify economics, reduce duplication, and shift spend to performance-based rewards.

• Simplify points economics: Lower earn rates for actions that drive low incremental value (e.g., sign-up points) and increase rewards for high-value behaviours (repeat purchase). Consider expiry rules that align liability with expected purchase frequency.
• Replace blanket discounts with targeted, conditional rewards: A targeted voucher for customers who are 60–90 days inactive is more effective (and cheaper) than a permanent member discount.
• Move to performance-based incentives: Use referral rewards that pay out only when the referred customer reaches a value threshold, or issue loyalty bonuses as vouchers that expire sooner — both reduce long-term liability.
• Consolidate vendors: Migrate to a single platform that covers your must-have features — you’ll often get pricing leverage and simpler analytics.

Quick checklist to start your audit (copy and adapt)

Auditing your loyalty stack isn’t a one-off cost-cutting exercise; it’s an opportunity to refocus your program on the moments that drive lifetime value. Be surgical, use data to back decisions, and always test changes before sweeping rollouts. If you’d like a checklist tailored to your tech stack or a short template to run a two-week audit, I can send one over.