Loyalty & Reward Programmes
January 18, 2024

Building a Loyalty Programme Business Case: Getting Stakeholder Buy-In

Loyalty Program Business Case

You’ve decided the time is right for your business to implement a customer loyalty programme. The next step is to build a business case to get your stakeholders onboard and secure funding to reward your loyal customers, while increasing revenue through increased retention.

 

This means you need to do a couple of things:

 

  • Highlight the strategic advantages of loyalty programmes. 

  • Equip decision-makers with the necessary knowledge to justify a loyalty and rewards programme.

 

This blog aims to do this by providing insights into the benefits of a loyalty programme. We’ll discuss best practices for crafting an effective business case, looking at the benefits and types of loyalty metrics that you should focus on in your pitch. 

In addition to this, we’ll also look at how to align your loyalty initiative with wider business goals. As well as the importance such programmes hold when obtaining crucial customer insights and market analysis. 

Finally, we’ll offer some presentation tips, and recap on everything we’ve discussed so that you’re ready to give a compelling business case.



 

Contents:



 

Understanding the Value of Loyalty Programmes

The popularity of loyalty programmes has significantly increased amongst both consumers and businesses. Frustrated customers want to feel valued and appreciated by the brands they use.

Expectations have shifted and continue to shift as more customers than ever rely on brands that offer them tangible benefits, ancillary value, perks and rewards for their business. 

On the other hand, forward thinking organisations continue to reap the huge commercial benefits of customer loyalty programmes.

A benchmark study by the Harvard Business Review found that companies with effective loyalty programmes can
increase profits from 25% – 95%. And there’s a lot more where that came from.

 


 

Benefits of loyalty programmes

Loyalty programmes come with many benefits for businesses. They increase customer retention, higher customer lifetime value, revenue growth, acquisition and engagement. 

Let’s take a look at each of these in closer detail in relation to a compelling business case. 


Improves customer acquisition

Customer acquisition continues to be one of the most expensive components of a marketing strategy. Customer loyalty programmes with relevant and tailored rewards experiences are naturally more attractive to consumers. Regardless of the industry your brand operates in, chances are the competition is growing fiercer. 

With a loyalty programme in place, your brand can create its own compelling point of difference. Less than 8% of consumers say rewards don’t factor in their purchase decision. Which means rewards are a factor for the other 92%. By not rewarding customers, you could be alienating the majority of your customers. 

 

Increases customer retention 

Loyalty programmes can increase customer retention too. This is an essential metric for businesses for a number of reasons. First of all, it increases customer lifetime value (CLTV), and it’s 60-70% easier to sell to existing customers. 

The board must understand the implications of rewarding customer loyalty with relevant benefits and unforgettable experiences. Another point you should make is if the CLTV of existing customers is enhanced, this could subsidise further acquisition efforts. Or you could remodel your acquisition model so that it relies on long term retention and subsequent referrals in the future. 

 

Improves customer engagement 

The customer experience is considered one of the most important things by the modern consumer. Many studies and surveys show that people value positive experiences more than price and sometimes even rewards. 

So, how exactly do loyalty programmes offer better customer experiences? First of all, rewarding their loyalty is still important to many customers. Secondly, rewards platforms are built with features designed to drive engagement. Gamification and streamlined self-service come together with highly relevant, tailored rewards experiences, into a single cohesive (and engaging!) ecosystem. 

Again, improved customer engagement is important to mention in an effective business case for a very good reason. Customers consistently plugged into your brand are better insulated against your competitors.

 

Increases customer conversions

Implementing a loyalty programme has also been shown to improve customer conversions. We’re not just talking about successful acquisition here. According to Hubspot’s Sales Strategy Report, upselling and cross-selling generates 11-30% of the revenue for nearly half (42%) of all companies.  

It goes without saying why this is an important benefit to include in your business case. Wider revenue margins from your existing customer base is a perfect example of how loyalty programmes optimise positive commercial outcomes in existing target audiences. 

Depending on your business goals, the increased customer conversions as a result of a loyalty programme could add to its viability. For example, if your business is planning on expanding its range of products or services. 

Improves brand advocacy 

Finally, we come to the last benefit of loyalty programmes. Brand advocacy is the end result of successfully nurturing customer loyalty. Referrals are a fantastic benefit that should definitely be included in your business case. 

Improved brand advocacy opens up the possibility of referral marketing. This is the most trusted form of advertising. It’s also the cheapest. If your existing customers are satisfied enough and consistently delighted with your brand, they will automatically share their positive experiences with their social circles. 

New leads who hear about your brand this way lean on the trust of the person who referred them to the brand. As long as you reward brand advocates, the positive affirmation will incentivise them to keep generating warm leads. Substantially mitigating advertising costs and lead nurturing.

Back to Contents

 


 

 

Crafting the Business Case

 

Align with business goals

Aligning the goals of your loyalty programme with broader business objectives ensure strategic cohesion. It’s for this reason the programme will become an integral part of your overall business strategy. Whether that’s to: 

  • Retain customers.

  • Acquire more customers. 

  • Boost customer lifetime value

  • Or any other relevant objective related to the benefits discussed above…


Aligning your loyalty programme with wider strategies and objectives gives you a roadmap. This lays out exactly how enhanced customer loyalty will contribute to the overarching success of the company. Something which will need to be substantiated to garner support from the board. 

 

Customer Insights and Competitor Analysis

Loyalty programmes also benefit businesses by giving insights into customer behaviour (such as purchase history). You will need this information to effectively tailor loyalty programmes. Both in terms of resonating with your customer base and achieving business goals. 

Customer data not only facilitates deeper connections due to resonating with peoples’ preferences and needs. They also ensure your proposed loyalty initiative is strategically aligned with evolving market trends. This is important for your business case as it shows through data-driven insights, the business can gain a long term, competitive edge.

 

Competitor analysis 

Thorough competitive analysis is instrumental if you want to craft a compelling case for a loyalty programme. Examining competitors’ loyalty initiatives will yield valuable insights into the impact implementing a programme had on other businesses. 

It also helps you identify both what made them successful and perhaps in some cases what caused them to fail. Understanding this demonstrates to stakeholders that: 

  • You know how to reiterate the strategies of a successful loyalty programme to make them work for your business. 

  • You know which mistakes or pitfalls to avoid.    

     

In the end, “competitive intelligence” informs your programme’s design. This enhances its competitiveness on the market, creating advantages that result in some of the benefits discussed above e.g., improved acquisition and retention. As long as it’s distinctive, foolproof and bound to get results, it’ll improve your case. 

 

Cost of implementation 

Part of crafting your business case will include showing financial projections. It’s important to illustrate the tangible benefits of the loyalty programme. Bear in mind, how this looks depends on the route you choose between building your own programme or licensing one from a third party. 

Begin by outlining the initial investment required for implementing your programme. You’ll need to cover costs such as:

  • Planning.
  • Software development. 
  • Product testing.
  • Technology. 
  • Ongoing maintenance. 
  • Customer support. 
  • Marketing.

ROI projections

Next, look into the potential return on investment (ROI). You do this by estimating the increased revenue from repeat business, customer referrals, higher spending and other important customer loyalty metrics and KPIs.

In addition to this, consider the long term value of the programme. Customer lifetime value showcases the sustainable financial impact of the programme. This detailed financial analysis over extended periods will serve as a persuasive tool when presenting your case to stakeholders. After all, it highlights the economic viability the programme offers.  

 

calculate_2

 

ROI Calculator

See How A Customer Loyalty Programme Can Impact Your Business

Enter the size of your audience, average customer value and programme type to see how much you can gain.

Calculate your ROI >

 

 

 

 

Back to Contents

 


 

Stakeholder Buy-In and Presentation Strategies

Now, it’s time to look at strategies for gaining support from stakeholders and tips for presenting a business case in an effective and compelling manner

Stakeholder buy-in and gaining support

Strategies for securing stakeholder buy-in involves understanding and aligning a variety of business goals, fostering collaboration, and emphasising the all round benefits of loyalty programmes.

Understanding stakeholder priorities 

The first step is to identify and understand the concerns and priorities of each stakeholder group. Tailor your approach to showcase how the loyalty programmes align with each of their specific goals. 

Emphasising strategic advantages 

Communicate the strategic advantages of a loyalty programme. A good place to start is with the benefits discussed above. From there, discuss the positive commercial outcomes resulting from implementing a loyalty programme. 

Utilising data and case studies

Use case studies showcasing successful examples of well-designed programmes. Emphasise the realities of modern markets too. Use stats that show sentiments of the modern consumers. Link this to your loyalty programme’s ability to increase customer satisfaction and of course, enhanced brand loyalty.
  

Promote open communication

Open communication channels to build trust and collaborate across the organisation. This allows you to directly address any question or concerns from stakeholders. 



Effective presentation of the business case

Next we’ll delve into some effective presentation techniques. From setting the market landscape to explaining unique selling points. The presentation must ensure your business resonates with stakeholders to convince them. This step is crucial because it: 

  • Secures necessary resources for the implementation of the programmes. 

  • Ensures a collective understanding is reached and a communal commitment is agreed. 

 

Setting the market landscape

Start with a clear and concise overview of the current market landscape. Highlight the challenges and opportunities of implementing a loyalty programme. 

Detailing programme analysis 

Transition into a detailed analysis of your proposed loyalty programme. Emphasise how it aligns with the broader business objectives. Try to use visuals that illustrate financial projections.

Articulating unique selling points

Clearly articulate what the unique selling points of the loyalty programme will be. Will it drive engagement with features such as gamification? Or will it be accessible to all with Always On (otherwise known as Instant Rewards). Maybe eventually you want to leverage brand advocacy and increase your customer base through referrals

You must anticipate how the type of programme you choose will impact customer behaviour and affect the brand perception. 

Addressing concerns and contingency plans 

Preemptively address potential concerns, showcasing contingency plans and risk mitigation strategies. This will instil confidence in the programme’s success.  


Tailoring presentation to audience 

Tailor your presentation to the specific interests of your audience. Engage them through interactive elements. Or maybe give them a preview of what the programme would look like. 


For example, here at Propello, we create an instance for all of our potential clients. They can interact with this to see how it works in the back end and user end. By doing this we encourage prospects to ask questions and discuss their main concerns or points of interest. 


Following these steps improves your chances of gaining the necessary support and resources to successfully implement your proposed loyalty programme.



 

Let’s wrap it up 

There we have it! Building a business case for a loyalty programme should start with exploring their main benefits for both customers and businesses alike. Doing this helps you understand their value and will assist with conveying that value to the key decision makers. Furthermore, the benefits often lead to outcomes that align with business objectives.

Crafting a business case also requires accurate financial projections. This can look very different depending on whether you build a programme in-house or licence one from a third party. In addition, using case studies as part of well researched market analysis paints a vivid picture of stakeholders. 

With the strategies we’ve shown you for gaining stakeholder buy-in and tips for effective presentations, you should be in a better position to make your case for a loyalty programme.

 


 

calculate_2

 


ROI Calculator

See How A Customer Loyalty Programme Can Impact Your Business

Enter the size of your audience, average customer value and programme type to see how much you can gain.

Calculate your ROI >

 

 

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