How to build a solid business case for your retail loyalty program

Launching or revamping a loyalty program can be a significant investment for an enterprise grocer, and it’s crucial to have a solid business case to convince the executive level.

What is a business case?

A business case is a document that makes a persuasive argument for a proposed business initiative or investment. It shows the expected benefits and costs of the proposed initiative, provides evidence and analysis to support the argument, and makes a recommendation for whether the initiative should be approved or not.

In the case of a loyalty program business case, it refers specifically to the benefits and costs of a new or revamped loyalty program.

What’s the difference between a business case and a business plan?

The key difference is that a business case is specific to a proposed initiative, whereas a business plan is focused on the entire business. While a business case focuses on a specific initiative, a business plan provides an overall roadmap for the entire business. A business case is typically developed to persuade decision-makers to approve or reject a specific initiative, while a business plan is typically developed to provide guidance and direction for the entire organization.

What are the benefits of preparing a business case?

Overall, preparing a business case can help increase the likelihood of a successful outcome for a proposed initiative or investment. It provides decision-makers with the information they need to make an informed decision, helps ensure that the proposed initiative is well-aligned with the overall strategy and goals of the organization, and provides a framework for accountability, risk management, and communication.

Here’s a breakdown of the benefits of preparing a business case for a proposed loyalty initiative or investment:

1. Decision-making:

A loyalty program business case provides decision-makers with the information they need to make an informed decision about whether to approve or reject the proposed loyalty initiative. It outlines the costs, benefits, risks, and potential ROI of the new or revamped loyalty program, making it easier for decision-makers to weigh the pros and cons and to make an informed decision.

2. Alignment:

Developing a business case helps ensure that the proposed initiative is aligned with the overall strategy and goals of the organization. It requires a thorough analysis of the organization’s goals, market trends, and competitive landscape, making ensure that the loyalty program initiative is well-aligned with the broader organizational context.

3. Accountability:

A loyalty program business case provides a clear and detailed plan for how the initiative will be executed, monitored, and evaluated. In this way, it help to hold stakeholders accountable for delivering the expected results, and provides a framework for measuring success and identifying areas for improvement.

4. Risk management:

Developing a loyalty program business case requires a thorough analysis of potential risks and challenges associated with the proposed initiative. Therefore, risks can be identified and managed proactively, reducing the likelihood of costly surprises down the line.

5. Communication:

A loyalty program business case provides a clear and concise summary of the proposed loyalty initiative, making it easier to communicate the proposal to stakeholders and decision-makers. It provides a common language and framework for discussing the proposed initiative, reducing confusion and ensuring that everyone is on the same page.

What executives are involved when presenting a loyalty program business case?

It’s important for the loyalty leader to identify the key stakeholders and ensure their input is considered throughout the process.

Generally, the loyalty program proposal would likely be presented to senior executives, such as the CEO, CFO, CMO, and potentially the Head of Customer Experience.

• The CFO will be interested in the financial projections and the potential return on investment.
• The CMO will be interested in how the program will enhance the customer experience and drive engagement.
• The CEO will want to understand how the program fits with the overall business strategy and aligns with the company’s values.

It’s also possible that other functional areas within the enterprise grocer may be involved in the process, such as the IT department, operations, and legal, depending on the scope and complexity of the program.

How to prepare a loyalty program business case?

By including these points in your loyalty program business case, a Loyalty Leader can demonstrate the potential benefits of the program and the investment required to launch or revamp the program.

Here are some key points to include in your loyalty program business case:

1. Overview and objectives:

Provide a brief overview of the current loyalty program (if any) and the objectives of the proposed program. Clearly define the purpose of the program, such as increasing customer loyalty, driving repeat business, or increasing sales.

Example:

Our organization currently has a loyalty program that is not performing well in terms of customer engagement and revenue growth. The objective of the proposed program is to increase customer loyalty and repeat business while also driving sales, making it a worthwhile investment.

2. Market research:

Conduct market research to understand your customer demographics, preferences, and behavior. This information will help you develop a program that meets the needs of your target audience and provides them with relevant rewards.

Example:

Our market research shows that our customers are primarily families with children and seniors, who prioritize convenience, quality, and affordability in their grocery shopping. They are also increasingly interested in sustainability, health and wellness.

3. Program structure and features:

Outline the program structure and features. This includes the types of rewards, how customers earn points, and any exclusive gamified features, benefits or perks.

Example:

Our proposed loyalty program will offer a points-based system where customers can earn points for purchases, referrals, and social media engagement. The program will also include exclusive benefits such as free delivery, personalized offers, and early access to sales. Rewards will include discounts, free products, and charitable donations.

4. Financial projections:

Develop financial projections to estimate the ROI of the loyalty program. This includes the costs of implementing and managing the program and the expected increase in revenue from increased customer loyalty and repeat business.

Example:

Our financial projections show that the loyalty program will cost approximately 10 million euro to implement and manage annually. However, we expect the program to generate an additional 50 million euro in revenue through increased customer loyalty and repeat business.

5. Competitor analysis:

Conduct a competitor analysis to understand what other grocers are offering in their loyalty programs. Highlight areas where your program will differentiate from the competition and offer greater value to customers.

Example:

Our competitors offer loyalty programs that focus primarily on discounts and rewards when they purchase specific products. Our program will differentiate by also offering points to customers that engage with our brand. Through a gamified program, we’ll be able to better communicate our values, unify the physical and digital shopping experience, and personalize every interaction to cater to our customers’ unique preferences.

6. Implementation plan:

Develop a clear implementation plan that outlines the timeline, resources, and responsibilities required to launch the program successfully. This should include the technology needed to manage the program, and any training required for staff.

Example:

Our implementation plan involves partnering with a third-party provider to manage the program’s technology and logistics. We will also invest in staff training and customer communications to ensure a seamless and effective rollout.

7. Risks and mitigation strategies:

Identify potential risks associated with launching or revamping the loyalty program, such as customer backlash or low adoption rates. Develop mitigation strategies to address these risks and ensure the program’s success.

Example:

Potential risks include low adoption rates, negative customer feedback, and technical issues. We will mitigate these risks by conducting a comprehensive marketing campaign, engaging with customers for feedback and insights, and having a dedicated support team to address any technical issues promptly.

Tips to present a solid business case

Here are some valuable and insightful tips to present a solid business case:

Start with a clear and concise executive summary:

This should be a brief overview of the proposal, highlighting the key benefits and value proposition of the loyalty program.

Define the problem or opportunity:

Clearly articulate the problem or opportunity that the loyalty program aims to address. Use data and analytics to support your argument.

Align with the overall business strategy:

Ensure that the loyalty program aligns with the overall business strategy and values of the enterprise grocer. This will help ensure that the program is seen as a strategic initiative rather than a standalone project.

Develop a strong value proposition:

Clearly communicate the value proposition of the loyalty program and explain how it will address the identified problem or opportunity. Be specific about the benefits and value that the program will provide to customers and the enterprise grocer.

Provide financial projections:

Develop detailed financial projections for the loyalty program, including costs, revenue, and ROI. Use realistic assumptions and provide a range of scenarios to show the potential impact of the program.

Leverage data and analytics:

Use data and analytics to support your arguments and demonstrate the potential impact of the loyalty program. This will help build credibility and demonstrate the program’s potential.

Cover risks and mitigation strategies:

Identify potential risks and challenges associated with the loyalty program, and develop mitigation strategies to address them. This will show that you have thought through the potential pitfalls and are prepared to manage them.

Present a clear implementation plan:

Develop a clear and detailed implementation plan for the loyalty program, including timelines, resources required, and key milestones. This will show that you have thought through the logistics and are prepared to execute the program effectively.

Be flexible and adaptable:

Be prepared to adapt and adjust your proposal based on feedback from the executives. This will show that you are open to input and willing to work collaboratively to achieve the best outcome for the enterprise grocer.

Practice your presentation:

Practice your presentation in advance, and be prepared to answer questions and address concerns from the executives. This will help you feel confident and prepared, and will increase the likelihood of a successful outcome.

FAQs: What executives might ask during a business case presentation

Here are some frequently asked questions that executives might ask the loyalty leader during their loyalty program business case presentation, along suggested answers:

How will the proposed loyalty program impact our current customer base?

Answer:

Our loyalty program is designed to enhance the customer experience and provide more value to our current customer base. By offering personalized rewards and exclusive benefits, we believe our program will increase customer loyalty and retention.

How does the proposed loyalty program compare to our competitors’ programs?

Answer:

We have conducted a thorough competitor analysis and have developed a program that differentiates from our competitors by offering a more personalized and holistic experience that reflects our customers’ values and preferences. Our program will also leverage the latest technology and data analytics to deliver relevant rewards and offers.

What are the potential risks and challenges associated with launching or revamping a loyalty program?

Answer:

Potential risks include low adoption rates, negative customer feedback, and technical issues. However, we have developed mitigation strategies to address these risks and ensure a successful program rollout. For example, we will conduct a comprehensive marketing campaign to drive awareness and adoption, engage with customers for feedback and insights, and have a dedicated support team to address any technical issues promptly.

How will the loyalty program be managed, and what resources will be required?

Answer:

We plan to partner with a third-party provider to manage the program’s technology and logistics, which will require ongoing investment. Additionally, we will invest in staff training and customer communications to ensure a seamless and effective rollout.

How do we measure the success of the loyalty program, and what are the expected financial returns?

Answer:

We will measure the success of the loyalty program by tracking customer engagement, retention, and sales growth. We expect the program to generate an additional 50 million euro in revenue through increased customer loyalty and repeat business, which represents a solid return on investment for our enterprise grocer.

Next steps – after a business case presentation

After the meeting, the next steps would depend on the outcome of the discussion. The objective is to get approval from the board, executive team, external stakeholders or investors for the business case.

• If the executives approve the loyalty program proposal, the loyalty leader should work with their team to start the implementation process. This may involve working with the chosen third-party provider to set up the program’s technology and logistics, developing and executing a marketing campaign to drive awareness and adoption, and training staff on the new program and its benefits.
• If the executives have some concerns or questions that need to be addressed before a final decision can be made, the loyalty leader should work with their team to provide additional information or conduct further analysis if necessary.
• If the executives reject the loyalty program proposal, the loyalty leader should ask for feedback and try to understand the reasons behind the rejection. Based on this feedback, the loyalty leader can make any necessary adjustments to the proposal and resubmit it for consideration or move on to exploring other potential initiatives.

Regardless of the outcome, the loyalty leader should communicate the result of the meeting to their team and stakeholders, and keep everyone informed on the progress and status of the loyalty program proposal.

If you’re a retailer and you’d like to talk about any of the ideas outlined in this article in more detail, please get in touch with our team – we’ll be happy to show you examples or talk through your brand’s unique challenges.