Maybe it’s true that money can’t buy love. But when it comes to developing a loyalty plan that distinguishes one retailer from the rest, dollars are as important as passion.
Indeed, for a loyalty program to reach its fullest potential, a retailer requires buy-in from the entire C-suite. And achieving that takes a meeting of minds that think very differently: marketing and finance.
Imagine them as two explorers traveling vastly different paths toward the same goal. When it comes to developing and evaluating retail loyalty programs, financial people tend to focus on the costs and the bottom line. Marketing experts, meanwhile, inform their decisions through shopper data and qualitative ingredients that can’t be measured with a financial yardstick. Both approaches are necessary, yet they can trip each other up.
It is possible, though, to build a bridge of understanding between the two paths. With the right plan, tools and a dose of open-mindedness, finance and marketing can together map a course that encourages support of a successful loyalty program across the entire retail organization.
Need more evidence? Then consider this: On average, 30 percent of retail customers generate 75 percent of sales. On a per-customer basis, this can translate to very high incremental value with each positive behavioral change.
Seeing Through a New Lens
But for marketers, capturing such milestones can only be realized with backing of the financial team. This means exposing finance to a “new” way of thinking, and changing the lens it typically uses to quantify the impact of loyalty programs and marketing efforts.
Instead, provide finance with the refined lens of data, best supplied through a well-designed loyalty program. After all, developing a peerless marketing approach takes trial and error, and each attempt does cost money. The more controlled the process, the sooner finance and marketing will see how they benefit each other. Once they can focus together on identifying and then attaining desired behaviors, they can shape the dialogue around managing the risk.
But it is a two-way path. The financial team has much to bring to the table, often raising critical questions that marketers may never consider. It is important not to take these cross-examinations personally – both teams want the best results. Likewise, always be forthright about projections, because overselling forecasted benefits can lead to a world of woe.
Such collaboration is crucial to a successful program, because true loyalty does begin at “home,” with the merchant. For instance, while working with one retailer, the finance team began poking holes in my program assumptions, saying they did not make sense and that the behavior shifts I assumed could not be accountable. This candid discussion forced us to open our minds and build a model we both felt comfortable with.
The trick is using the tools of data – knowing who your customers are and the products they want to buy – to illustrate the benefits of loyalty. This will help the finance team to see how deeper customer relationships equate to long-term engagement, lifts in spending and a broader breadth of products in the basket.
To Know Them is to Win Them
In short, knowledge is power. Through loyalty-supplied data, merchants can improve their percentage of marketable customers, create real-time communications that are relevant, and redirect mass-marketing dollars for optimal results. They can actually anticipate future demand by gauging their customers’ life stages and values, all revealed through data.
Achieving these goals as an organization takes patience. Marketing must continually seek company-wide support – most importantly from finance. The two teams may think in different ways, but that doesn’t mean they can’t see eye-to-eye.
Neither department may be able to put a price on that, but the results – while immeasurable – are certainly something to love.
About the Author
Nicolle Scavuzzo is Director of Client Services at Precima, a shopper-driven insight and strategy firm operated by LoyaltyOne. She can be reached at firstname.lastname@example.org