Harnessing the Power of Financial Modeling: Part 3

Jul 16, 2023

PART 3 – Navigating Financial Modeling Success with Effective Data Analysis  

Creating a clear and organized performance dashboard is crucial for navigating the complexities of data analysis and decision-making in loyalty programs. It can be compared to deciphering blinking lights on a sophisticated device like a spaceship, where you need to prioritize where to pay attention. Regularly assessing relevancy and staying aligned with industry trends is important, as is effectively communicating with key stakeholders, such as the CFO, to share new insights and validate important metrics. Managing numerous metrics can be challenging, so developing a system for prioritizing what will have the most significant impact on results is essential. However, it’s important not to blindly dig into data without a clear understanding of what to focus on.   

The overall goal is to guide the company toward predictability. Engaging with financial professionals through monthly updates can help narrow the gap between expectations and outcomes. It’s crucial to continuously forecast, revisit assumptions, monitor, and update program metrics every month as well as communicate any variances in those assumptions while maintaining the support of financial stakeholders. By refining the forecasting model, better decision-making and alignment with organizational goals can be achieved.   

It is important to collect and analyze data to improve customer experience, value, satisfaction, and engagement with an eye on how they impact financial performance.  While organizations may not specifically request these types of data, they ultimately want the benefit that comes from analyzing it. At Kobie, we collect and analyze data in such a way that allows us to answer the financial context of client requests like, “I really want a better experience for my customer (which is how I feel when I’m doing things)” or “I want better value and more satisfaction for my customers (which is how I feel about what I spent)” or “I want more engagement (which is how often I’m doing things while I’m spending and where I’m doing it).” We are able to provide the tools they need to effect real and meaningful change in their program as well as the financial implications.  We call this framework “Triple Play Data”, or the collection of transactional, behavioral, and emotional data, and when used effectively, it addresses the nuances between all the types of data everyone already collects and provides a more monetized understanding of impacts. 

There is also an added significance to emotional data and how it relates to customer loyalty and satisfaction.  Kobie’s proprietary Emotional Loyalty Scoring® tool gives you a holistic understanding of your customers’ emotional motivators, as well as benchmarking and measuring engagement metrics. Understanding emotional loyalty drivers can help assess program effectiveness to alignment of incentives and is proven to improve engagement.  Aligning a program to customer emotional motivators can have a big impact on program ROI. 

It is important to understand which factors truly matter in achieving your company’s desired outcomes. Often, there are elements that companies consider crucial but actually have little impact, while other overlooked aspects can significantly affect their programs. To determine these key factors, it is recommended to work with a decision sciences team or engage in open conversations with finance teams to align objectives and secure necessary resources.   

Check Your Pulse 

Creating a system to track and measure performance with quarterly pulse checks is paramount to the health of any loyalty program.  Focusing on key objectives, such as increasing value, experience, and engagement and prioritizing attention towards these objectives is crucial for the success of the program and be open to adjusting priorities over time.  These “pulse checks” will ensure that you are on track towards your goals and that course corrections don’t need to be made.   

Financial modeling is a crucial tool for making informed decisions and predicting outcomes. It involves a combination of data, context, and intuition to calculate return on investment and guide strategic choices. However, without proper measurement and prediction, it is challenging to determine the effectiveness of strategies and anticipate future outcomes.   

To learn more about Kobie’s Financial Modeling COE (Center of Excellence), reach us today.