💰How to convince a skeptical CFO to invest in a Loyalty Program💰

After more than 10 years of experience activating Loyalty Programs for leading retail enterprises worldwide, we understand how crucial financials are for success. That's why we challenged our CEO, Borja Sanfeliu, to address the most important topics that matter to a CFO.

Here we go: 👇

1. What metrics should a CFO prioritize when evaluating the success of a loyalty program?

There is a wide range of financial KPIs that the financial team can monitor in a loyalty program (such as CLTV, churn rate, ROI, redemption rate, etc.), but for a CFO, I would suggest focusing on three main topics:

• The ROI of each action included in the plan
• The incremental sales the program provides
• The investment needed, both from the company and third-parties 

2. What are some common objections CFOs have about loyalty programs, and how have your clients successfully addressed these?

The most common objection is the need of extra budget for personalized offers. Usually  there are 4 options to get this budget:

• Marketing budget: reallocate funds from other marketing activities—often focused on new business—to prioritize loyalty and personalization efforts - focused on increasing CLTV of current customers-
• Commercial/Product budget: there's an strategy agreement with the Commercial & Product departments to rebalance the budget dedicated to mass offers & personalized offers 
• Extra budget: he company decides to allocate new investment specifically for loyalty, in addition to existing budgets.
• Third-parties: establish win-win agreements with partners to share the cost on rewards

The most important think to address this debates is that launching a Loyalty Program is a company-wide strategy, not just a marketing or client project.

3. What advice would you give to a CFO who is skeptical about the financial benefits of a loyalty program?

I will tell him or her that we see a x5 in sales from personalized offers compared to mass offers. With a well-established database and a strong personalization strategy in place, it would be possible to utilize resources up to five times more effectively.

4. What is the typical ROI for companies using your loyalty platform, and how long does it take to see a return?

The key to ROI is personalization. Now that digital channels are sufficiently mature (e-commerce, apps, marketing cloud, social media), it is the perfect time to leverage them with a loyalty program.

Currently, the industry sees that for every €1 invested in personalized offers, the return can be x5 in incremental sales vs return with mass offers. With a solid strategy, this return can start from day one if the company already has a strong data foundation. If the company lacks a customer data set, this will be the starting point and may take longer to yield results, ranging from 3 months to a year, depending on the company's situation.

5. What are the common cost considerations (both initial and ongoing) that a CFO should be aware of when implementing a loyalty program?

We need to consider mainly four costs:

• Rewards Budget: The most significant cost is the budget allocated to rewards. To mitigate this, a good strategy is to establish win-win agreements with third parties who can share part of this cost.
• Time-to-Market: Another important initial cost is the time-to-market once the decision to proceed with the loyalty program is made. Ideally, there should be no more than 3 months between the decision and the program's activation.
• Technology: The cost of technology (platform, data, servers) is typically a minor expense compared to rewards but still needs to be accounted for.
• Team Involvement: Lastly, the team required to ensure a successful loyalty strategy and campaigns, including ongoing improvements, is essential.

6. How does your loyalty platform integrate with existing financial systems (e.g., ERP, CRM) to provide a holistic view of the program’s financial impact?

The Loyal Guru platform is already a financial control system that can be integrated with any ERP. One of our key differentiators is that the platform provides comprehensive financial accounting with a full audit trail. It functions as a ledger control system with an integrated accounting program that allows for simulating every action before its execution, offering complete control over financials for the company.

7. Can you share a case study where your platform helped a company build a compelling business case for a loyalty program that was CFO-approved?

We have served hundreds of retailers and grocers with success on this numbers and we have a wide range of use cases in MANGO, Desigual, DIA, SPAR... I invite you to discover in our website: 

🌟  success stories 🌟

💥 Do you need our CEO to talk with yours about the numbers of implementing a Loyalty Program? 💥

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Make the financial team your best ally in driving loyalty together! 🚀

Till next time,

Let's Rock! 🎸