4 Steps to Effectively Integrating Rewards into your 2021 Strategic Plan
(Buzz Points CEO Dwayne Spradlin explores the critical steps to ensure rewards drive your institution's strategic goals)
Rewards are among your most powerful and cost-effective mechanisms for engaging your customers and improving acquisition, product adoption, and revenue. However, too often the goals and positioning of the rewards program are disconnected from the organization’s strategic vision, which can have substantial impact on the program’s effectiveness and the organization’s support of these programs. Failure to approach rewards strategically and from the very beginning often means the organization fails to achieve its goals at all.
These are symptoms of organizations that fail to position their reward programs for success:
· Program not championed (or abandoned) by senior leadership · Rewards disconnected from Financial Institution’s overall strategy · Rewards viewed as a cost center as opposed to a profit center · Program(s) not considered strategic or key to overall institution’s success · Program not included in yearly budgeting for costs and revenue projections · Multiple incentive programs (often working at cross purposes)
If any of these sounds familiar, you are not alone. Many organizations fail to position these programs properly and program success and performance lacks as a result. Even more damaging, these programs may never get funded in the first place. Why? Failure to position the initiative properly, establish the compelling business case, and/or secure needed organizational support. This article proposes a roadmap for you to take a fully strategic approach to rewards in your organization, from concept through delivery, and beyond. We will discuss briefly how sell a program effectively to senior management while ensuring the program will have the ongoing support and resources needed to ultimately succeed. Like most successful strategic initiatives, it begins with the organization’s annual strategic planning process and a laser focus on addressing the strategic goals and real challenges facing the institution. Resources are precious and limited. Not surprisingly, programs with compelling cases to significantly impact the institution’s main goals will be the ones that attract resources and support. #1: Align to the Financial Institution’s Business Goals
All marketing programs should begin with the financial institution‘s goals and strategies -- loyalty and rewards programs are no exception. These should tie to measurable business outcomes and should include financial and quantitative measures wherever possible, which is important for both measurement and focus. Surprisingly, these goals are typically independent of rewards or even marketing. These goals relate to defining desired success for the institution (e.g., growth targets, profitability, engagement, low cost deposits, new loans, etc.) Examples of both good and bad business goal definition are: · Good Business Goal Definition: Increase retail account growth by 2% annually at an acquisition cost <=$100 per account and an annual net income contribution >=$150 to improve growth, profitability, and deposits. · Poor Business Goal Definition: Attract more Millennials. A good business goal always incorporates measurement and constraints in addition to stating a simple strategy or objective. This is vital as any initiative in support of these goals must enable and deliver against those targets and constraints. It is easy for an organization to deprioritize non-strategic projects intentionally or unintentionally in a world of limited resources and competing priorities. Only when the program clearly and unambiguously enables delivery of the bank or credit unions overall goals measurably and profitably will a program garner the support needed to advance. Our approach suggests that this is not merely the prework but rather the foundation on which both the approval and subsequent execution will rest. To be clear, the overall success of the project may well depend on establishing this firm foundation.
#2: Identify Marketing Strategies and Tactics to Deliver on the Goals
Effective marketing strategies are seldom one dimensional. Generally marketing strategies will employ a powerful combination of tools and tactics from brand marketing and communications to deployment of multiple tools and methods to real world execution and everything in between. Any one of those elements may include multiple workstreams. For example, communications may include online and print advertising, collateral, event participation, in addition to others. The winning strategy will orchestrate all the available plays needed to delivery success. It is important to take a holistic approach. If the goal is to acquire low cost deposits, then the solution proposed may well be a combination of account acquisition, product upsell and marketing, as well as product definition (interest rates, etc.) Rewards programs can be a very powerful component of those approaches but must be designed effectively into a comprehensive program with clearly defined purpose, goals, measurement, resources, and governance. Once the overall program is defined and the role of rewards is clearly delineated, the specific rewards program requirements can be established. Rewards are sophisticated tools and require the same marketing discipline used by any other program strategy or tactic. What is the goal? How will we market? Which customer segments and campaigns can impact the desired goals? These are much easier to answer when the business goals are cascaded into the requirements as proposed here. · Good Marketing Goal Articulation: Drive 2% increase in account growth through aggressive marketing of a new and competitive premier account, valuable account opening sign up bonuses, an enhanced on boarding program, and a rewarding referral program. Integrate the approaches, messaging, and marketing through all marketing and communications channels. Design programs to measure attribution and constantly iterate program elements to ensure desired outcomes. · Poor Marketing Goal Articulation: Attract more millennials by offering a rewards program. Developing a competitive account in the example above would not be done in isolation. In fact, the sign-up bonuses and referral programs are not only powerful rewards tactics, but they can strengthen the value proposition of the new account. Further, building rewards into the onboarding of new accounts helps ensure a positive experience and accelerates the reward program. In other words, incorporate, coordinate, and integrate all the elements of the approach in support of financial institutions goals to ensure maximum effectiveness and a truly compelling plan. #3: Develop a multi-year Rewards Strategy, Execution Plan, & Budget
A program definition, approach, and budget (“proposal package”) should be developed with a critical treatment of cost, benefits, resourcing, governance, ROI, and budget. Programs and budgets should be developed with a 3-5-year time horizon as nearly any new program or product needs to be perfected over time and will require spreading early costs over a reasonable recovery period. Do not forget to account for uncertainty and the need to iterate the program based on real world learnings. Important inclusions include:
· Proposed governance process, including operational and senior level monitoring and reporting commitments · Articulation of the goal, opportunity, or challenge facing the organization · Succinct articulation of approach and program benefits tied to strategic goals · Effort, support, and alignment required from internal groups to ensure success
· Projected program costs including contingency and risk-adjusted economic benefits from program (net income contribution) · Multiyear program projected financial statements that incorporate the above · ROI analysis · Significant risks and associated mitigation strategies
Avoid unnecessary detail as the audience is at an executive level and will gravitate toward clarity and brevity in their reviews. This package will benefit from selected reviews with finance, IT, and other groups to ensure it is addressing any concerns and will also aid in securing organizational buy-in (next step). #4: Secure Organizational Alignment and Commitment
It is often said that the number one reason for a program’s failure is lack of effective executive sponsorship, poor organizational alignment, and flawed expectation setting. This is easy to believe when one considers that the work in getting a project to successful conclusion involves all the work that occurs after the project is approved – whether access to precious resources, ensuring ongoing organizational commitments are met, knocking down project roadblocks, and so much more. Keeping a program front and center for the C-suite is hard enough, but keeping a project marching forward in a complex organization is downright daunting. Key to the approach is proactive coalition building and anticipating objections:
· Identify and enlist a senior program champion and effective program leadership well in advance of seeking commitment and approval · Anticipate roles, benefits, and concerns of all stakeholders in advance and proactively develop support from each. Do not forget the role of groups like compliance and IT in securing support for large projects like these. · Understand your institution’s project approval process and calendar
· Support senior program champion in engaging the formal process as needed · Secure and document approval for senior leadership on approach, budget, and timeline · Ensure the program is positioned as a profit center, not a cost center · Engage C-suite in integrating program support and outcomes into MBOs
Consider identifying and enrolling the senior program champion and other stakeholder champions even earlier (step #2) if possible.
Ideally, the alignment and commitment are largely secured BEFORE the final management presentation and the approval is a foregone conclusion. Planning cycles are short, and many projects do not get multiple times at bat. Anticipate every element of the process to ensure the alignment ahead of time. Tie the project to the organizations business goals (and metrics!), and secure approval and resources to proceed.
Rewards can be powerful enablers, but they may only succeed when the program is positioned effectively and for success from the very beginning. Organizations are rational and will gravitate toward compelling investment cases that align to the institution’s strategy and priorities, especially when internal support for the program is strong and a senior champion is willing to take on the success of the program. Setting the right foundation and positioning the program for success from the very beginning will both dramatically increase the likelihood of success and set the stage for the long-term success of the initiatives.
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