A company behind the CMO’s dream and the CFO as an enabling partner
The co-founders of SheerID give an eye-opening example of how technology can help develop new markets, improve the customer experience for retailers, make CMO’s look really smart while relying on the finance team to model the value created from the program. They make the CFO a little nervous, but that’s what provides the great learning opportunity for our finance leaders.
The Cast: SheerID Cofounders: David Shear and Jake Weatherly
The Interviewer: Diane Fraiman, Partner Voyager Capital
The Host: The Portland Chapter of The Association for Corporate Growth
The Plot: How to take a great concept that requires two constituents simultaneously adopting the concept, but to be successful each constituent depends on the other to adopt it first.
The Story Line: Perseverance, deep belief in your concept, getting the right advisors and hiring people smarter than yourself can create an industry leading juggernaut.
ID the details of SheerIDs success here:
SheerID started out as a technology play to help retailers improve their loyalty programs. The business model was based on demand from retailers for a sleek, participant qualification tool for their loyalty programs.
The company struggled early with “the chicken or the egg” problem. They lacked the data required to satisfy their promise to customers and didn’t have enough customers to gain interest from the data providers.
Initially their business model revolved around selling data. Their investor group helped them develop a more sustainable, less commodity type product that centered on selling marketing options to retailers, not simply data.
Access to data was the big turning point for the company (an example, a comprehensive list of people enrolled in college globally obtained directly from the original source – current college enrollment records). Data gave them something tangible to sell to potential customers.
To provide assurance to program participants their data won’t be misused or shared inappropriately SheerID:
- Received permission from the participants to use the information they request.
- SheerID only uses the information for the specific purpose requested by their customer.
- Sensitive personal data is not asked for or captured. (David noted that SheerID has very good data security but in the unlikely event they were hacked, the information obtained would be worthless to the hackers and have no impact on the participants)
The company has gone through a number of iterations regarding its pricing model. Initially they tried a flat % transaction fee. This pricing method didn’t work for their customers. They then moved to a fee based on the number of questions answered. This become too cumbersome to administer. Current pricing includes an annual subscription + payment for a bundle of API calls. To incent data providers to participate, SheerID apportioned some of the fees they received form the retailers to the data providers.
- Companies who use internal processes which are normally clunky and slow, creating a poor customer experience.
- List providers whose data is not clean, creating integrity issues with clients and their customers
Contrast the above with SheerID’s model. By having the customer enter a few key pieces of information the first time they checkout with a retailer, SheerID provides and immediate green light (customer validated for the discount) or red light (customer not validated for the discount) to the retailer that is very accurate.
They have created a valuable tool to help retailers develop or expand markets while improving the customer experience in loyalty programs.
NOTE TO CFOs – Jake made this comment about Client CFOs and the Loyalty programs SheerID supports:
“The programs SheerID supports normally have an inverted relationship between CFO happiness and growth in our customers gated offer programs.”
Where the CFO can really add value is assisting the CMO in calculating the long-term value of the loyalty program vs the absence of a loyalty program.
On the value the Board of Directors bring to a company: “Friction and conflict are why Boards exist.”
How is conflict within the Boardroom resolved: “The first step is to remember all Board members are acting in the best interest of the company, we just have different opinions on how to get there.” After that its about presenting logic and facts that support your position. The best logic and facts win the day.
Fraud is prolific in the loyalty industry – 30% of participants are fraudulent according to SheerID – and that number goes up as the ‘offer’s’ value increases. This a key statistic in driving SheerID’s success. They can basically drive this to 0%
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