Cobalt Robotics: Will the Loyalty Programme Pay for Itself?
Marketing
medium35 min0 submissionsMcKinsey
Scenario
Cobalt Robotics operates in industrial robotics across Japan with about 187,801 active customers, who buy 3.1 times a year at an average basket of ¥3181. Gross margin is 55%.
Marketing proposes a points programme returning 2.6% of spend as future credit. The business case assumes a 6.7% lift in purchase frequency among members.
Analysis of the base shows 53% of customers already buy above the category average and would very likely enrol on day one.
Supporting data
base
- average basket
- 3181
- active customers
- 187801
- gross margin pct
- 55
- purchases per year
- 3.1
proposal
- reward rate pct
- 2.6
- assumed frequency uplift pct
- 6.7
base composition
- already above average frequency pct
- 53
Your task
Advise the CMO. Your answer should provide:
- Analysis — programme cost, incremental margin, and the net position. Show your working.
- Risks — including who you are paying and what for.
- Recommendation — launch, redesign or decline, with the break-even uplift.
State any assumptions you make.
Ready to move forward? Up next: Otter Payments: Is the Growth Worth What It Costs?Next question
How you'll be graded
80 points, 60% to pass.
- recommendation20
- market analysis20
- risk assessment15
- financial analysis25
Hint
Reveal suggested structure
Reward cost applies to all spend; incremental margin applies only to changed behaviour. Break-even uplift = reward rate / gross margin.