Loyalty programs are complex financial entities. Teams from many disciplines with competing goals need to collaborate to be successful and reach their end goals. Each team has a set of financial questions that need to be addressed to make progress.
Customer Financial Intelligence (CFI) is an analytical framework that gives these answers. CFI aligns the organization, positioning it to capitalize on more opportunities.
You get stronger relationships with customers, and more profit to the bottom line.
A Loyalty Programs’ Financial Stakeholders
Loyalty programs have three key financial stakeholders: marketing, finance, and accounting teams. Our previous posts discuss at length the financial progress each of them strives for and the challenges they have to face. To summarize:
A Marketer strives to convince the CFO to invest in loyalty, so they can implement their initiatives and see them thrive.
Finance aims to have stable and predictable financial results so that they meet the Wall Street’s expectations.
Accounting wants to have a smooth and efficient closing process so that they have more time to focus on analysis.
The Struggles For Progress
On the surface, the path to progress for each of these teams might seem simple and straight forward to you. However, the truth is that there are a number of obstacles that each team has to face in their struggle for progress.
Marketers need to prove the incremental value of their campaigns and growth in customer lifetime value to convince the CFO to invest in loyalty. Such factors are incredibly hard to quantify because you need to predict customer behavior over a long horizon.
Finance needs to accurately predict financial performance in a world where marketing is constantly changing. This also requires the ability to predict customer behavior over long horizons, but the constant state of flux makes this complex.
To have a smooth and efficient close process accounting needs to predict member redemption behavior over many years to estimate liability. They also need to convince auditors and stakeholder that their predictions are reasonable.
This type of prediction is hard enough for a data scientist, let alone for an accountant.
Fundamentally the Same Problem
Regardless of whether you sit in marketing, finance or accounting, the solution to your financial challenges relies on the same core capability – the ability to predict member behavior over short and long horizons. This is a highly specialized and niche skill.
Customer Financial Intelligence is an analytics framework that builds on this core capability to help marketing, finance and accounting teams overcome their obstacles and to continue with their intended progress.
What is Customer Financial Intelligence?
Customer Financial Intelligence gives a holistic financial picture of your customers by predicting their financial behavior over short and long horizons. Incremental value and customer lifetime value are quantified with these predictions. These models are used to translate marketing strategies into short and long term impacts on financial statements.
You can derive reliable, accurate and timely liability estimates with necessary support for auditors from these models.
Finally, Customer Financial Intelligence models are operationalized so that they are able to be continually refreshed. This ensures you have the latest intelligence and data on which to base decisions on.
Note that Marketing still has their models and data science team to identify insights used to develop strategies. They have been doing it for a long time, and this shouldn’t change.
However, CFI models are different. They focus on translating those marketing strategies into short and long term financial implications.
Benefits of Customer Financial Intelligence
CFI makes for two key benefits. First, it allows for faster decision making. Since CFI gives you a single shared financial framework across marketing, finance, and accounting, teams can get aligned very quickly. This means you can capitalize on opportunities faster than your competitors.
Second, Customer Financial Intelligence enables smarter decision making. Typically, marketing teams first identify strategies to drive engagement. Then, the finance teams translate those engagement metrics into financial results.
With CFI, this can and should continue to be done. But, CFI allows for this flow to go in reverse.
Through Customer Financial Intelligence, you can start with the desired optimal financial outcome and then flow back into the engagement metrics that would drive that result.
Then, marketing can focus on devising strategies that target those engagement metrics. CFI introduces the ability to directly optimize the financial value of the program.
Why You Need Customer Financial Intelligence
All companies strive to make their clients happy and to do so while making a profit. SnapshotML’s framework for Customer Financial Intelligence is the missing link that aligns teams and breaks down obstacles for you to make faster progress towards this goal.
Does your organization already have Customer Financial Intelligence? If not, schedule a call now to learn about what SnapshotML has to offer.