DM Magazine November 2024

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Data Center Financing: The Keys to Growth

Employee Appreciation Art, Math & Science

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VOL. 37 • NO. 11 • NOVEMBER 2024

THE AUTHORITY FOR THE DATA-DRIVEN BUSINESS

Buyer Personas: An Interview with Jim Kraus, President, Buyer Persona Institute

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Vol. 37 | No. 11 | November 2024

Buyer Personas: An Interview with Jim Kraus, President, Buyer Persona Institute

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Strategic Patience and Expertise: The Keys to Successful Data Center Financing in Canada

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The Art, Maths, and Science of Employee Appreciation ISTOCK/NANZEEBA IBNAT

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The ROI of Whistleblower Programs: Reducing Financial Fraud and Protecting Bottom Lines DMN.CA ❰

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Environics Analytics released new enhancements to its MobileScapes product suite.

For the first time anywhere, EA’s data scientists have successfully combined SDK data (from GPS enabled in apps) with location data from the cellular network to estimate people movement. This upgrade reinforces EA’s position as provider of the most accurate and comprehensive mobile movement data for marketing and business applications in Canada.

MobileScapes is one of EA’s flagship products. It supports businesses and organizations – for instance retailers, brands, shopping centres, government service providers, out of home advertisers – and anyone interested in the demographics of people moving about daily in Canada. It helps our clients know where customers are coming from, where else they shop (cross-shop), where they travel to, what leisure attractions they visit, and when they do all these things.

Improving the quality of data results in better business decisions and outcomes.

By combining the two data sources, EA has increased the number of observations underlying the estimation process by twenty times, offering a more accurate view of what ❱ DMN.CA

types of consumers are going where. Key improvements are: ❯ Better coverage and representativity ❯ Less volatility ❯ Enhanced reflection of seasonal trends ❯ Ground tested against trends in official statistics and actual client data This version of MobileScapes is the outcome of three years of research and innovation to combine multiple data types and sources.

It is also the outcome of implementing advanced privacy-enhancing technologies.

MobileScapes exceeds Canada’s privacy laws by following forward-looking global best practices. This means, amongst other features, implementing transparency and consent principles for source data and analytical outputs. These are all consistent with global Privacy by Design standards – including those embodied in the GDPR (Europe) and Quebec Law 25. EA’s production processes are ISO 31700 certified.

“Bringing in cellular data significantly improves our MobileScapes estimates. The quality and quantity of apps-based SDK information have been decreasing in the last three years for a variety of reasons. Adding privacy-protected cellular data to our process

is a game changer. And a change that we will continue to build on in the future.” remarks Jan Kestle, President, and CEO of Environics Analytics.

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Canadians who aren’t yet investing online with RBC, there now are up to 500,000 more reasons for doing so.

That’s how many Avion points — worth up to $10,000 in travel value— investors new to RBC Direct Investing or to RBC InvestEase now can gain, when they open and fund an eligible account with either of these services

by March 3, 2025. They can also receive $300

in cash and other benefits.

“For Canadians who may not have considered RBC online investing options before, this is an opportunity to gain up to 500,000 Avion points to use as they wish – to pay commissions on Canadian dollar and U.S. dollar trades, fund their RBC Direct Investing account or help make a special trip possible,” added Busevs. “This is yet another reason to take a look at the ease, convenience and depth of our trading platform.”

“We understand Canadians want their money to work harder for them, and with this offer, we are rewarding them for choosing RBC to help them make that happen,” noted Christine Socasau, head of RBC InvestEase. “We expect the opportunity to obtain up to half a million Avion points will be highly appealing to clients new to RBC InvestEase, who value professional advice at a reasonable cost.”

Bringing access to markets around the globe, RBC Direct Investing has launched online International Trading in multiple foreign currencies for all its investors – becoming the only bank-owned online brokerage in Canada to offer this capability.

RBC Direct Investing clients can now trade online through London, Hong Kong, Frankfurt and Euronext Paris exchanges, and hold and

trade in eight global currencies – including the British pound (GBP), Hong Kong dollar (HKD) and Euro (EUR). This new capability is in addition to being able to trade online in U.S. markets and hold and trade in U.S. dollars.

Clients can also trade by phone in multiple international markets.

The added benefits: Clients with an RBC British Pound, Hong Kong Dollar, or Euro eSavings Account can instantly transfer funds, within the standard business day, in the same currency between their RBC account and their RBC Direct Investing account; From within their RBC Direct Investing account, that currency is then immediately available for online International Trading– no wire transfers, no delays NOVEMBER 2024

// 5 Also, once clients hold GBP, HKD, EUR, JPY, CHF, SGD, AUD and NZD foreign currencies in their RBC Direct Investing account, they can trade in the same currency with no further foreign exchange fees “All our self-directed investors already have the strength of three powerful trading platforms, plus extensive research and commentary at their fingertips – now we are bringing them online access to trade around the world,” said Dimitri Busevs, president and CEO, RBC Direct Investing, one of Canada’s largest online investment brokerages.

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Canadian Tire Corporation completed an assessment of strategic alternatives for Canadian Tire Financial Services and decided to retain 100 percentage ownership, which includes expanding the Triangle Rewards program.

The Company explored options with a range of interested parties, including several of Canada’s leading financial services companies, and has chosen a path which builds upon the bank’s strong return profile and meaningful earnings stream, and maximizes its contribution to CTC’s retail portfolio. As CTC scales the Triangle Rewards loyalty program, CTFS will continue to add value through its relationship with Triangle credit card holders and its lens on the Canadian consumer.

“The review underscored that Canadian Tire is uniquely positioned to maximize the Bank’s long-term financial and strategic potential,” said Greg Hicks, President and CEO, Canadian Tire Corporation. “Having reviewed the alternatives, we have gained insights that will make us an even better bank owner, with confidence that this is the optimal path for shareholder value creation, including through a scaled loyalty program.

“Retaining the Bank cements our flexibility to drive value to our retail businesses and pursue partnerships that will make Triangle Rewards membership more rewarding every day, in our stores and beyond. We are actively engaged in conversations with several of Canada’s largest brands about loyalty partnerships that are expected to broaden the value of Triangle Rewards – giving more Canadians more reasons to shop with us.”

The Company is expanding its retail ecosystem around Triangle Rewards, powered by its store banners and bank, as well as strategic loyalty partners like Petro-Canada – which allows Triangle members to earn eCTM outside CTC channels, every day.

Triangle Rewards is the cornerstone of the NOVEMBER 2024

Company’s customer-focused retail strategy.

The program uses insights, strategic offers and Canadian Tire Money (eCTM) to reward and engage more than 11 million loyalty members. CTFS distributes approximately 75 percent of all eCTM through its relationship with 2.3 million members who carry Triangle credit cards. Engaged Triangle Rewards members spend more than twice as much as non-members on average. Triangle credit card holders represent some of CTC’s most engaged customers.

Canadian Tire Financial Services has been integrated with CTC’s retail business and customers for nearly three decades. It provides a competitive advantage – acquiring new accounts and issuing eCTM to loyal customers. The Company’s strategic review highlighted CTFS’ differentiated capabilities for assessing and managing credit card risk.

Over the last 10 years, the number of Triangle credit card holders has increased from 1.8 million to 2.3 million, and average receivables have grown by more than 65 percent to approximately $7.3 billion at the end of Q3 2024. In 2023, the CTFS business ranked as Canada’s seventh largest issuer of credit cards by receivables outstanding, generating $385 million of income before income taxes.

size and format they qualify to receive the 13th item for free. Now including Royal Canin dog and cat dry food, the Your Rewards frequent buyer program features over 3,000 products across several of Pet Valu’s most popular brands, helping feed dogs, cats, small animals and birds for less. As one of Canada’s largest pet specialty loyalty programs, the Pet Valu Your Rewards loyalty program provides its 2.8 million active members with multiple ways to save on purchases for their pets. In addition to its frequent buyer program, Your Rewards members benefit from: ❯ Seniors/Military Day – qualifying members save 10 percent on regular-priced merchandise on the last Thursday of every month; ❯ Case discounts – save 5 percent when purchasing cases of select cans, pouches, tubs, tetras and trays; ❯ Frequent wash program – buy four dog washes and get the fifth wash free; and ❯ Exclusive emails and offers – subscribe to Pet Valu emails and be eligible for personalized offers.

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Pet Valu, the leading Canadian specialty retailer of pet food and pet-related supplies, has announced that Royal Canin, one of the most recognized premium pet food brands in Canada, has joined the Company’s popular Your Rewards loyalty program, through participation in its frequent buyer program.

Underscoring the Company’s leadership role in the Canadian pet retail industry, and our strong collaborative relationship and support of the Royal Canin brand, Pet Valu is pleased to be selected as the first Canadian retailer to offer Royal Canin in a frequent buyer program and provide value to our loyal Royal Canin shoppers.

“Royal Canin is known for creating precise nutritional formulas that help cats and dogs lead long, healthy lives,” says Greg Ramier, Chief Operating Officer and President at Pet Valu. “We are excited to be able to offer Royal Canin dog and cat dry food through the Your Rewards frequent buyer program, helping provide further value to our loyal members particularly at a time when they need it most.

We invite all devoted pet lovers who feed their pet Royal Canin to take advantage of this offer.”

The Your Rewards frequent buyer program rewards members for purchasing their pet’s favourite food. Each time a member purchases 12 items of the same select brand,

Plusgrade, a global leader powering ancillary revenue solutions for the travel industry announces the expansion of its partnership with Flying Blue, the loyalty program of Air France and KLM, to launch ‘Subscribe to Miles’ – an innovative service that transforms how members earn Miles.

This new offering allows members to steadily build their Miles balance through simple monthly subscriptions, making reward travel more attainable than ever.

The new Flying Blue subscription service delivers several key benefits for members: Automatic monthly Miles deposits directly into members’ accounts; Choice of four flexible plans: Starter, Smart, Advanced, or Complete; Most competitive rates on Miles available; Simple way to save for future travel experiences.

Members can use their growing Miles balance for a wide range of travel rewards, including flights to desired destinations, premium cabin upgrades, partner hotel stays, and more. The subscription model ensures a steady accumulation of Miles, helping members reach their travel goals faster and more predictably.

“Expanding our partnership with Flying Blue represents an exciting evolution in how members can engage with their loyalty program,” said Ken Harris, Founder and CEO of Plusgrade. “The ‘Subscribe to Miles’ service DMN.CA ❰

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makes earning Miles more accessible and predictable, helping members transform their travel aspirations into reality while creating sustainable ancillary revenue for our valued partner.”

“With ‘Subscribe to Miles,’ we’re making it easier than ever for our members to grow their Miles balance and achieve their travel goals,” said Benjamin Lipsey, SVP Customer Loyalty and President of Flying Blue at Air France and KLM. “This innovative subscription approach reflects our commitment to providing practical, valuable benefits that enhance our members’ travel experiences.

By partnering with Plusgrade, we ensure our members have access to a seamless and efficient way to earn Miles.”

Plusgrade powers the global travel industry with its portfolio of leading ancillary revenue solutions. Over 200 airline, hospitality, cruise, passenger rail, and financial services companies trust Plusgrade to create new, meaningful revenue streams through incredible customer experiences. As the ancillary revenue powerhouse, Plusgrade has generated billions of dollars in new revenue opportunities across its platform for its partners, while creating enhanced travel experiences for millions of their passengers and guests. Plusgrade was founded in 2009 with headquarters in Montreal and has offices around the world.

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As from November 2024, Heuritech has officially joined the Luxurynsight Group.

This strategic operation marks a major step forward their shared vision to become the global Data Intelligence SaaS leader for strategic decision-making in the Luxury, Fashion and Beauty industries.

This union reinforces Luxurynsight’s renowned expertise in market intelligence with Heuritech’s cutting-edge consumer ❱ DMN.CA

insights creating a powerful, allencompassing solution for professionals across the industry to make more informed, data-driven decisions.

Luxurynsight built its reputation as the trusted data partner for prestigious Groups and Maisons such as LVMH, Chanel, Kering, L’Oréal, Dior, Bulgari, Balenciaga, Armani, Coty or Puig. Heuritech bridges the gap between AI and business by empowering major and global brands, retailers and manufacturers to forecast demand and trends more accurately.

“The addition of Heuritech AI-powered product recognition and trend forecasting strengthens our ability to provide a full 360-degree view of market dynamics and consumer behaviors, enhancing our clients’ competitive edge” said Jonathan Siboni, CEO of Luxurynsight.

Elaia and Serena investment funds are happy and proud to join Luxurynsight’s shareholder base alongside historic strategic shareholders such as Christian Blanckaert (ex EVP of Hermès), Stanislas de Quercize (ex CEO of Cartier), Isabelle Gex (ex President of Shiseido Fragrance), Pierre Denis (ex CEO of Jimmy Choo), Boris Collardi (ex Managing Partner of Pictet, ex CEO of Julius Baer), Sandrine Zerbib (ex President of Adidas China) etc. Luxurynsight and Heuritech are very excited about the future and dedicated to continue delivering actionable insights that clients increasingly need to stay ahead of market dynamics.

Luxurynsight provides a suite of AI-powered SaaS platforms to over 50 luxury, fashion and beauty Groups, Maisons and retailers. It supports them in unparalleled data-driven analytics to optimize decision making in Competitive Intelligence and Marketing (LY News, LY Watch), Pricing (LY Price), Retail (LY Retail) or Investment.

Heuritech developed a world leading AI-based visual recognition technology and forecasting model for fashion brands. First recipient of the VivaTech LVMH Innovation Award, its SaaS platform brings the largest, most scalable dataset and most accurate forecast model for brands to quantify and predict what people wear by market and typology (products, colors, etc.).

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Databricks, the Data and AI company, unveiled a new Economist Impact report, “Unlocking Enterprise AI: Opportunities and Strategies,” which examines the challenges businesses face in adopting and scaling AI, and the techniques they are using to drive greater value from these investments.

The report found the vast majority of enterprises (85 percent) are using or testing generative AI (GenAI) in at least one function.

But few (22 percent) feel confident that their current IT architecture could effectively support new AI applications moving forward.

As demand for data intelligence grows worldwide, AI continues to be a major focus area for companies. According to Goldman Sachs, global AI spend is expected to reach $1 trillion in the next few years. While more companies are investing in AI than ever before, struggles related to delivering business-specific, highly accurate, and wellgoverned results at a reasonable cost are preventing organizations from scaling their AI efforts and achieving more transformational results. Today, only 37 percent of executives believe their GenAI applications are production-ready. This figure falls to just 29 percent among practitioners, who cite key hurdles including cost (41 percent), skills (40 percent), quality (37 percent) and governance (33 percent).

“It’s clear that AI is becoming an integral part of every business, but leaders still have concerns about quality and cost when it comes to GenAI. They’re seeking solutions tailored to their organizations, and they realize they need a platform that prioritizes data, centralizes governance and delivers efficient TCO at scale,” said Andy Kofoid, President of Global Field Operations at Databricks. “At Databricks, we’re bringing together data, analytics and GenAI that understands our customers’ unique businesses to deliver data intelligence. This report from Economist Impact showcases why data intelligence is essential, and why the winners in each industry will be those who take a holistic approach that encompasses data management, governance and domainspecific expertise.”

Whether streamlining clinical trials in the pharmaceutical industry or identifying potential vehicle issues before they occur in the automotive sector, many enterprises are already using AI to improve efficiency and productivity. With the growth of ‘Agentic AI’ — artificial agents with a natural language interface that can plan and execute tasks on behalf of a user — companies can spread these benefits to more of the workforce. In fact, nearly 60 percent of respondents expect that, within the next three years, natural language will be the primary or only way NOVEMBER 2024

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KICKER non-technical staff will interact with complex datasets. Increasingly, organizations are also using AI to improve customer service, fraud detection and patient care, among the many other use cases, highlighting the long-term potential of the technology to accelerate overall business success.

“AI can lead to gains in productivity across the workforce. And for businesses just starting out on their AI journeys, it’s a logical way to measure initial progress,” said Senthil Ramani, Global Lead, Data and AI at Accenture. “However, organizations aiming to become the AI leaders of tomorrow will need to capitalize on the use of the technology to drive growth, enhance customer experience, manage risk and unleash enterprise knowledge. This holistic approach will not only boost efficiency but also open new business opportunities and can attract and retain talent.”

show that, for many organizations, the real value comes when the technology is unleashed on their own proprietary data to develop data intelligence,” said Tamzin Booth, Editorial Director of Economist Impact.

“That data intelligence is even more valuable in an increasingly unpredictable world.

To drive the algorithm advantage they’re seeking, it’s clear enterprises must address significant challenges with producing highquality outputs, identify ways to evaluate performance and governance with large AI models, and work out how to effectively connect AI to the workforce.”

Databricks is the Data and AI company.

More than 10,000 organizations worldwide — including Block, Comcast, Condé Nast, Rivian, Shell and over 60 percent of the Fortune 500 — rely on the Databricks Data Intelligence Platform to take control of their data and put it to work with AI.

Additional key findings include:

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Only 18 percent of respondents believe AI is overhyped. In fact, 73 percent see the technology as crucial to their long-term goals.

Despite the momentum, only one in five believe investment across technical and nontechnical domains is sufficient.

Large organizations are flocking to GenAI, with 97 percent of companies with over $10 billion in revenue now using the technology in at least one internal business function. By 2027, 99 percent of all respondents expect GenAI adoption across both internal and external use cases.

Nearly half of data scientists (45 percent) are still using a general-purpose large language model (LLM) without contextual enterprise data. Those models often struggle to provide the necessary quality, governance and the ability to evaluate outputs. 58 percent of data scientists have begun to augment their LLMs with proprietary data through retrieval augmented generation (RAG), and two-thirds of organizations see significant potential in combining LLMs with enterprise data to build data intelligence.

Organizations expect to mix and match different models and tools in their Agent Systems, spanning open source and proprietary technologies, to drive better performance. By 2027, 96 percent plan to deploy open source AI models.

Just one in six respondents are confident their organization can secure enough AI talent.

40 percent of respondents acknowledge their organization’s data and AI governance is insufficient. Half of data engineers say governance takes up more time than anything else, with many practitioners and executives pointing toward unified governance as the key to unlocking enterprise AI. “From classic machine learning to generative AI, the business world’s obsession with AI isn’t letting up. But our findings NOVEMBER 2024

This strategic initiative will empower FirstOntario to better address the evolving needs of its members by offering more personalized, innovative, and seamless financial services, including readiness for consumer-driven banking.

core banking solution and by unifying its core and digital banking capabilities onto a single, reliable platform, the credit union will benefit from greater simplicity and operational efficiency. This integration will streamline operations, reduce complexity, and enable more efficient management of technology as FirstOntario continues its digital transformation journey. In addition, the new platform will also be used to improve the digital performance of Saven Financial and Creative Arts Financial, both divisions of FirstOntario.

Lloyd Smith, CEO, FirstOntario Credit Union, said: “Temenos has been a trusted partner for our core banking, and we’re pleased to extend the collaboration to enhance our digital capabilities. Temenos Digital is an exciting step forward in our innovation journey, enabling us to deliver best-in-class online and mobile experiences that strengthen our support for our members and communities.”

Rodrigo Silva, President Americas, Temenos, commented: “We’re delighted that FirstOntario has chosen to expand its partnership with Temenos. Temenos Digital’s proven capabilities, combined with our expertise and commitment to the Canadian market, will support FirstOntario’s ambitious growth objectives and deliver an exceptional digital experience for its members, today and into the future.”

FirstOntario is a full service cooperative financial institution, serving members for 85 years throughout the Golden Horseshoe,

FirstOntario is a member-owned credit union serving 133,000 members across Hamilton, Niagara, Halton and the southwest regions extending to Chatham-Kent. With deep community roots, FirstOntario has a strong focus on supporting members and investing in the communities it serves.

Temenos Digital allows FirstOntario a comprehensive 360-degree view of its members to deliver personalized services that drive higher satisfaction and loyalty. By moving from its legacy system to Temenos Digital, FirstOntario will gain the agility and flexibility required to further expand its member base and accelerate innovation.

FirstOntario is a long-time user of Temenos’

Niagara Region and Southwestern regions of Ontario. With $7 billion in assets under management, FirstOntario is one of Canada’s largest credit unions. Everyone is welcome to be part of FirstOntario for financial services including daily transactions, mortgages, lines of credit, loans and investments. FirstOntario profits are invested into the communities we serve through support for entrepreneurs, competitive rates and charitable pursuits, including our award-winning student nutrition program. Temenos is a leading platform for banking, serving clients in 150 countries by helping them build new banking services and state-of-the-art customer experiences.

FirstOntario Credit Union has selected Temenos Digital to elevate its online and mobile experience for consumers and small businesses.

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Strategic and Exp The Keys to Successful Data

BY JIM MOSCHOS

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anada’s data center industry is booming, driven by surging demands for cloud computing, artificial intelligence, and the expansion of digital infrastructure. While global tech giants play a significant role in this growth, financial professionals in Canada face a unique set of challenges when it comes to building or expanding data centers. These complex undertakings require substantial time and financial resources, but the two most critical ingredients for success remain strategic patience and specialized expertise.

Developing a data center in Canada is far from a rapid process. Typically, these projects stretch over two to three years, requiring meticulous planning and financial stability.

Financing such ventures often involves senior secured construction loans, frequently paired with equity components, adding another layer of complexity. Insufficient or inconsistent funding can lead to delays, jeopardizing even the most carefully designed projects.

For a data center to be completed successfully, it’s crucial that financial partners remain committed for the entire duration of the construction phase. Consistent funding throughout the process safeguards against disruptions that could derail progress.

Canadian developers also face distinct hurdles, including weather-related delays and varying regional permitting requirements. Collaborating with ❱ DMN.CA

financing partners who deeply understand these hurdles is vital to managing risks and ensuring that the project stays on course.

Power infrastructure as a strategic imperative Securing sufficient power in Canada can be particularly challenging due to the country’s diverse geography and often remote project locations.

The energy demands of a data center are comparable to those of a small city, making reliable power supply a pivotal factor in successful development. Coordinating the timing of grid connections and ensuring proximity to existing power infrastructure are, therefore, critical considerations during planning.

Delays related to power infrastructure can lead to significant financial and operational setbacks.

As a result, financial professionals must incorporate utility readiness into their strategies and explore alternative solutions like renewable energy. By adopting renewable energy sources, developers not only address immediate power needs but also align their projects with broader sustainability objectives. Proactively integrating such solutions during the planning stage can position a data center as both innovative and environmentally responsible.

Another crucial aspect of project execution involves coordinating multiple stakeholders. Data center construction requires collaboration among various parties, including construction crews, equipment NOVEMBER 2024

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Patience pertise:

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suppliers, utility providers, and financial institutions. Misalignment between these groups can result in delays, cost overruns, and suboptimal outcomes. Financial professionals can mitigate these risks by engaging with lenders experienced in navigating the demands of large, multifaceted projects.

Such partners offer not only financial support but also strategic insights and adaptable solutions.

Their ability to coordinate hyperscale and multi-tenant developments ensures that each project’s unique needs are addressed. This expertise is especially critical in Canada, where regulatory diversity and logistical hurdles amplify the complexities of stakeholder management.

Sustainability is a critical priority Sustainability is no longer an optional consideration for data center projects in Canada — it has become a non-negotiable requirement.

Corporate sustainability mandates, evolving consumer expectations, and regulatory frameworks are all pushing developers to adopt greener practices. While the goal of fully renewable-powered data centers remains aspirational for many, an increasing number of Canadian projects are integrating renewable elements to achieve their sustainability targets.

Incorporating renewable energy and minimizing environmental impact must now be addressed at the outset of planning. Financial professionals can make a substantial difference by NOVEMBER 2024

aligning with financing partners who prioritize environmental, social, and governance (ESG) principles. Lenders with expertise in sustainable financing are better equipped to navigate the challenges posed by green technologies, helping developers achieve environmental goals without sacrificing economic feasibility.

As the demand for data centers in Canada continues to grow, the industry faces mounting pressures related to power availability, stakeholder coordination, and sustainability. Addressing these complexities requires collaboration with financial partners who go beyond merely providing capital.

The most effective partners offer industry-specific expertise and guidance at every stage of development.

From securing initial funding to navigating asset securitization, experienced lenders simplify the financing process and help reduce risks. By choosing financing partners who truly understand the intricacies of data center development, financial professionals can position their organizations for success. Armed with strategic patience and the right expertise, these projects can then move forward confidently, fostering sustainable and profitable growth in Canada’s burgeoning digital infrastructure sector.

JIM MOSCHOS is the Canadian Director of Technology Finance Division at Mitsubishi HC Capital America.

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Center Financing in Canada

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INTERVIEW

Buyer Personas: An Interview with Jim Kraus, President, Buyer Persona Institute

BY STEPHEN SHAW

Jim Kraus is President of the Buyer Persona Institute and the co-author of the book “Buyer Personas”.

Y

ou may have seen them displayed on large wall posters in your building hallways and common areas. Maybe you were given laminated one-page summaries of them. Or possibly been handed a richly illustrated reference booklet prior to a brainstorming session. Quite likely you were asked to attend a kick-off event or been taken through an overview slide presentation. Perhaps you were directed to an internal web site dedicated to explaining them.

Or given promotional trinkets like coffee mugs, mouse pads and key chains, even trading cards, in a company-wide effort to heighten awareness of them.

Whatever form they take, buyer personas have been widely embraced by all kinds of businesses to help foster customer first thinking. They are a way to gain insight into the needs and motivations of customers — their goals and aspirations — their beliefs and values. To understand what bothers them — what pleases them. To know, in brief, who they are, and what makes them different. That insight, or so the theory goes, should breed empathy for customers, ultimately leading to better products, more intuitive interfaces, more persuasive messaging.

In theory. But only if they yield meaningful insight. And therein lies the challenge. Because if they are too superficial or too general or too vague, they stand little chance of being widely adopted.

The concept of a buyer persona was first introduced and popularized in a book called “The Inmates Are Running the Asylum” back in 1998 by the software pioneer Alan Cooper. In those days software applications were based on extensive “user requirements” compiled by business analysts and converted into design specifications. A more productive approach, Cooper felt, was to center design thinking around the needs of a single primary user who could be personified as a fictional character based on the synthesized needs of actual people. That concept resonated with the technology community and personas soon became a standard tool in software development.

Product managers and designers also saw the value in using personas to guide the innovation and development process by minimizing assumptions about what buyers might want while keeping the focus on ❱ DMN.CA

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INTERVIEW the needs of “the ideal customer”. And then, as more and more people began to interact across multiple media channels in the 2010s, marketers began to recognize the importance of personas as a means of developing deeper insight into the lives and digital habits of the target audience.

Personas became the crucial jumping off point for customer journey design.

Today rich, incredibly detailed personas can be generated automatically using machine learning and artificial intelligence which hoovers up publicly available data from open sources and combines it with internally generated behavioural and survey data. These personas can then help to drive marketing messaging and content creation.

Yet no matter how much time and effort goes into the creation of buyer personas, no matter how enthusiastically they are merchandised, they are only useful if they lead to more buyers willing to buy more of what marketers are trying to sell. Which is why, according to persona design expert Jim Kraus, persona development should revolve around the buying decision and not the buyer. Otherwise, all that effort can easily go to waste, no one really sure how to make optimal use of them.

Ten years ago, Jim Kraus’ company published a ground-breaking book called “Buyer Personas” by the founder Adelle Revella which called for a novel approach to persona design based on a thorough exploration of buyer decision making rather than the invention of fictional buyer profiles. And now a revised and expanded edition of the book has come out which takes into account the more complex business decision making environment of today.

Stephen Shaw: The first edition of your book came out almost ten years ago. What led you to publish a revised edition at this time?

Jim Kraus: There were a few reasons. The main driver was we’ve learned so much from our clients over the past ten years, specifically how to use buyer persona insights to improve marketing and sales performance. We also wanted to include some additional ways to get buyer insights. So we added a chapter on doing survey research. We wanted to include where and how to leverage AI when developing buyer personas. So, it was a way to include more ways to make buyer personas actionable.

SHAW: What’s your definition of a buyer persona?

KRAUS: The traditional way of viewing a buyer persona is a fictional avatar of an individual involved in a buying decision based on demographic or firmographic characteristics.

But when you think about marketing and sales, the objective is to influence a buying decision.

So, the buyer personas that we’ve been doing for the last 15 years focus on developing deep insights around a very specific buying decision.

The buyer persona will identify five things: we call them the “Five Rings of Buying Insight”.

NOVEMBER 2024

The first one is “priority initiatives”. And priority initiatives are the triggers. These are the things that are pushing buyers to look for your particular product or service at this moment in time. The second is “success factors”. These are the benefits and outcomes that buyers are looking for from your solution. The third we call “perceived barriers”. These are the concerns, fears, or trepidations buyers have about making the buying decision or making it with certain providers. Fourth is “decision criteria”. These are all the really detailed questions that buyers actually use to evaluate your solution and the different competitive alternatives they may be looking at. And the fifth and final one is “buyer’s journey”, which includes typical steps in the buyer’s journey, who the key influences are, and the information sources they use.

So, if you step back for a minute and look at those five rings in totality, you can develop a forensic understanding of the buying decision you’re trying to influence. Now, those are the types of insights you can really do something with from a marketing and sales perspective, as you’re thinking about how you connect with buyers in a really powerful way and make them feel assured and confident that you’re the best choice for them.

SHAW: Your objection to the more traditional role-based persona is that it’s mostly descriptive and can’t really be leveraged for selling and marketing purposes very effectively, is that correct?

KRAUS: Exactly. So, the simplest example I can give is if you think about a buyer persona for, let’s say, a CIO. Traditionally, you might have certain characteristics of CIOs in terms of demographics, firmographics, maybe what their priorities and goals are. But I can tell you unequivocally, having done these studies, that what’s really important to CIOs will vary if they’re looking at a CRM solution versus servers for their data center, versus an IT security solution, versus a communication solution.

These are all different buying decisions. And unless you understand what’s important to the CIO in those specific cases, it’s going to be really hard to market to them effectively.

SHAW: A buyer and a customer are not necessarily synonymous, is that right?

KRAUS: We don’t want to ignore customers.

But there are buyers who bought from a competitor but never looked at you. And then there are those who did look at you but chose a competitor. And the reason to include those two types plus your customers is that it provides a full view of your target market so that when you develop your buyer persona, you can feel confident that it is literally the bible in terms of what the buyers in your market want.

SHAW: What do you say to companies who tell you their salespeople, know their buyers better than anyone, so why would they even

need a buyer persona?

KRAUS: Sales professionals have this great vantage point because they get to talk to prospects regularly and get to understand what makes them tick. But they only have a narrow view of the market. Even the best salesmen are only talking to so many customers. They don’t have a full view of the market. They have their slice of the prospects that they’re interacting with. The other challenge is that sales professionals aren’t trained in how to do persona interviews and then analyze the data from those interviews. And that’s not a knock on them at all. That’s not their job. Their job is to develop one on one relationships, and they do it very well. The third challenge is just inherent biases. You really want to be able to interview buyers very objectively so that they can tell you the unvarnished truth and not have to worry about maybe there’ll be a sales call or something coming up afterwards.

SHAW: Does sales resist going down this path?

KRAUS: Not usually, because we don’t want to just talk to current customers. We want to find buyers using good recruiting and screening practices. And because of that, sales teams really don’t resist because they’re getting a vantage point that they haven’t had before where the buyer is free to say anything, whether it’s good, bad, or ugly about the particular organization or a particular solution. They’re just able to be very objective. So, it just enhances the knowledge that the sales folks have. So we rarely get any resistance from them.

SHAW: Can you provide an overview of the main steps in developing a buyer persona?

KRAUS: So, the first thing is to define two things: One, what is the buying decision that your buyer persona is focused on? The second thing is what the target market is. In a B2B setting, it could be certain geos or industries or company sizes or other characteristics of organizations. That’s the first step.

The second step is going out to identify, recruit, schedule, and conduct those interviews.

You want to find organizations that have made a buying decision pretty recently. And you want to find people who had significant involvement in that buying decision.

The interview is the third step. These are 30-minute qualitative interviews. And what I mean by that is they’re open ended. There’s a certain structure to them because we’re trying to get to those five “rings of insight”. But we’re not trying to lead the witness. We’re not trying to have people rate or rank lists or anything like that. We are trying to understand the buyer’s story. They have a story to tell, which is their journey. From that, you record and transcribe all the interviews, typically a minimum of ten. You want to analyze the data across the interviews so you can find patterns in the data, and those really become your buying insights.

You definitely want to include buyer quotes DMN.CA ❰

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INTERVIEW in your buyer persona. So, for example, let’s say you identify a particular success factor that is really important. It’s a key outcome that they want. You want to support that with actual quotes from the interviews that you did because it adds incredible credibility to your findings it’s the buyer saying this stuff. It also provides such a deeper, richer understanding of your buyers by actually hearing and seeing the words and phrases that they actually use.

SHAW: What follows the interview phase?

KRAUS: Typically, we do a readout meeting in the organization where we walk through the persona in detail, including going through many of the actual buyer quotes. And the reason that’s so important is because it just galvanizes the organization around one source of buyer truth.

Let’s really dig in and understand what it is that buyers are looking for. So that’s a really important step and those calls can go anywhere from 90 minutes to even 2 hours to really get in depth.

SHAW: In those sessions where you’re debriefing folks internally around your findings, are there a lot of “AHA” moments, or is it more a confirmation of their own intuitive understanding of the market?

KRAUS: It’s both. I can tell you that confirming information is pretty darn valuable because it just makes people feel a lot more confident that they’re shooting in the right direction. But there’s also “AHA” moments for sure. Or there are things that they suspected, but they weren’t really sure how important it was. It helps do all those things.

SHAW: Let’s go back to the process a little bit. How do you figure out which of the job functions and stakeholders in that buyer journey should be the ones that you talk to?

KRAUS: So when we kick off a study design meeting, you usually have a sense of who the key decision makers are. What we always recommend is getting a cross section of buyers. By interviewing multiple types of roles involved, the buyer persona ends up being representative of the buying committee. And that is the critical thing.

We don’t want to miss an important viewpoint.

We want to make sure they’re all included.

SHAW: How many personas should a company develop?

KRAUS: You should have one buyer persona per buying decision. So, if you’re looking to do a buyer persona for a particular product or service, you should have one buyer persona who represents that buying decision. Now maybe there’s two different roles and you think there are differences by industry or company size, as an example, then what you want to do is do enough interviews in each one of those categories so that your buyer persona will be representative of both. So, in that case, it would be still one buyer persona, but it would be segmented by industry. ❱ DMN.CA

SHAW: Effectively you’ve got one persona who represents the collective decision buying process within a company. So you’re creating a composite profile. Is it possible when you’re interviewing different job functions that those people will have unique perspectives on company needs?

KRAUS: One of the challenges we often find is we’ll have an organization come to us and they’ve got too many personas that they know what to do with. We had one organization that had 20 personas, and they were all role based and the challenge with that is you probably don’t have the resources to be able to uniquely market to them all differently in the first place and number two is you’re creating unnecessary complexity. We’ve done hundreds of buyer persona studies, and we don’t find differences by role nearly as much as some people think you would. Because when you’re galvanized around a particular buying decision in an organization, there are going to be a core set of needs, challenges, benefits, decision criteria that they’re all using. And you just want to make sure that you get those. You don’t want to miss any of them. They’re really important, but it’s not necessary to have to customize it or tailor it by role. You’re just introducing complexity that you’ll have a hard time dealing with, or even worse, it ends up actually hurting your marketing because you’re trying to bend over backwards to tailor something or customize something that really doesn’t need to be.

SHAW: Let’s say by way of example you have to get the buy-in of the IT department, the buy-in of end users, and the buy-in of finance.

Are you creating a composite profile across those three very diverse functions?

KRAUS: So, let’s take one of the “rings of insight” just to simplify this. One of the first ones is “priority initiatives”, and these are the triggers. So, this is where we identify the reasons your buyers are even looking for the type of solution that you offer. The key thing is you want to know what those are. You don’t need to know them specifically for three different roles. You want to know in totality, that’s the really important thing. Now, there may be differences by those roles that you just mentioned. That’s rarely the case. What is much more common is, the organization overall collectively finds that this is a key buying trigger.

SHAW: The other thing I want to understand is, what’s the ideal ratio between the number of interviews that you’ve actually got to conduct and creating that one persona?

Earlier you mentioned the number ten.

KRAUS: What we have found is after ten interviews, we start getting diminishing returns.

Certainly, we’re always happy to do more interviews. Every buyer we talk to is going to make you smarter about them. But after ten, we start to hear a lot of the same things. So usually, ten is kind of the minimum. And then the only reason you’d

want to do more would be if we did a segmented study where there are different markets.

SHAW: As far as a number of interviews go, is there an ideal mix between customers and noncustomers?

KRAUS: We don’t typically have a hard and fast rule. It’s just something we keep an eye on so that when we’re done, there’s a decent mix across all three of them.

SHAW: Now I know I’m hung up on this a little bit, but you have one persona per buying journey per industry, I think is what you said.

What if there are multiple products in different product categories?

KRAUS: Just quickly, it doesn’t have to be per industry. It’s only per industry if you think a couple of industries are vastly different, right?

Which generally isn’t the case. But to your point, you define a buyer persona based on a buying decision. Now, the beauty of this is you can define the buying decision however you want, right? So it could be something like a specific piece of technology, for example, or very specific service. You could also make the buying decision broader. As an example, we did a study for a client that offered managed services for different types of security offerings. So, it was actually more helpful to look across the different solutions.

SHAW: Now, you also mentioned that the optimal interview time is 30 minutes. It’s hard to imagine that in half an hour you can squeeze that much information out of an individual. It has to be, presumably, a tightly structured interview.

KRAUS: Yes, it is pretty tight because you want to know the “five rings” that you’re trying to get at. The thing to remember, you’re not just doing one interview. So, it’s not uncommon that we’ll do an interview and maybe we don’t get to everything. Maybe there’s one of the “rings of insight”, let’s say “perceived barriers”, that we didn’t dig in quite as much as we would have ideally hoped for. You just have to keep track of how the interviews are going, where you may need a little more, a little less. What happens is at the end of the ten interviews, you end up having a pretty complete picture.

SHAW: One of the points you make in the book is that the people you’re interviewing are always delighted to share their story.

KRAUS: The nice thing about it from the buyer standpoint is that you’re not asking them to think big, grand thoughts. You’re just literally asking them, what happened? What was your mindset? They don’t have to come up with something super creative or provocative. They’re just literally kind of acting like a voice box for the organization, saying, here’s how it went down and here’s the things that were really important. So, we find that they actually enjoy doing it.

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INTERVIEW SHAW: What’s the output from the process? In the end, what does the client get as a result of the work? What form does the buyer persona take?

KRAUS: What you have is for every one of the “five rings”, you have each one of the insights that we’ve identified, and then you have buyer quotes that support each one. A typical buyer persona study has 30 to 55 buying insights across the “five rings”. So that’s the core deliverable, right? This is the forensic understanding of the buying decision. And then there’s specific things that you can do to actually activate those insights in your marketing.

SHAW: Are there creative ways to bring those personas to life, beyond the initial presentation of your findings?

KRAUS: Think about a simple Venn diagram, two interlocking circles. One of the circles is buyer wants and needs. And these are all the insights that you just got in your buyer persona. You know exactly what your prospective buyers want.

The other circle is your capabilities. These are your features, functions, your support, whatever it is, these are the things that you do well. You want to interlock those two circles because at the middle of those things is your sweet spot. So, if you’re developing value proposition themes, you should be able, just from that exercise alone, to identify five or six winning value proposition themes. So how to do that?

You list your capabilities to meet each particular buyer need. Now, you may have some where you’re like, oh, this is a home run, we kill it here. You may have others where we have no answer to this, and a lot of them are somewhere in between. So ,you do that exercise.

And then the next thing you want to do is as objectively as you can is figure out how well you can differentiate yourself on each one of those capabilities based on your knowledge of your competitors. And from that you’re going to develop value proposition themes at the intersection point. And then now that you’ve done this hard, objective work on your capabilities, you’ve got all your proof points.

So, it’s a great way to develop value proposition themes and proof points.

SHAW: Should market research be the starting point to this whole process? Or is it best used after the fact to prove that the insights you’ve gleaned are in fact valid?

KRAUS: There’s a couple of reasons to do survey research. One is if you do want to validate the findings. What you do is you go out and survey a broader audience and actually give them the list of your “five rings” and you ask them how important these things are. The other thing that quantitative survey research is great for is to figure out how important each thing is. So earlier I mentioned that we typically have 30 to 55 buying insights. You would be able to look at those 30 to 55 and find out the ten most important or the ten least important.

NOVEMBER 2024

SHAW:You describe in the book a message strategy workshop to create more layered, more segmented, more personalized messaging that speaks directly to the needs of an end buyer. That seems to be the big payoff.

KRAUS: Yeah, exactly. So, you know, the process I told you with the Venn diagram, is that messaging workshop — that’s how you come up with the value proposition themes. So, yeah, that’s a great step to do. It’s a fantastic step to do because it takes all the insights, and it really gives you focus and clarity about what’s important and what you’re going to focus on.

SHAW: Once the buyer personas are created, how are they socialized within the organization?

KRAUS: So, it depends on the audience, right.

So, from a marketing perspective, we typically just focus on going through the persona readout with the insights and the buyer quotes. When you start getting into sales, we would never advocate showing them the persona because it’ll look like a piece of research to them. You’re better off introducing them as conversation starters where you say, “Here’s five things that we can tell you that your prospects are going to care about. And here we’re going to equip you with a proof point where we actually differentiate our selves”.

SHAW: When is it time to update that persona and what’s the trigger to update it?

KRAUS: You have to think about how dynamic your particular industry is. So, if you see there’s a lot of changing dynamics in customer needs, if you see there’s a lot of changes in the types of ways or solutions that can address those needs in a particular market, that’s when you want to update your personas more frequently.

SHAW: How hard is it for companies to do it themselves?

KRAUS: Just finding buyers and knowing how to recruit and screen them is probably the hardest thing that we do. We use over 40 global recruiters. How well you can screen and qualify and recruit buyers is pretty important because if you can’t get them, then that becomes a challenge. The second thing is doing the interviews themselves. It is a skillset, and it’s something that you get better at as you go. And there’s little booby traps to avoid in terms of not introducing bias unintentionally or not questioning and probing enough to get the insight you really need. And then the third thing is how to analyze the data and to pull the buyer quotes through your buyer persona.

Again, it’s not rocket science, but it is a skill and it’s something that you get better at with experience.

SHAW: And when you’re hiring staff to do that work, are you looking for ex-journalists? How do you pick a good interviewer?

KRAUS: That’s a great question. I rarely get

that question. The interviewers that I look for typically are people who have an innate curiosity. I want somebody that when they talk to a buyer, they’re almost a blank slate, right?

They’re literally going into it saying, “This buyer’s got a story to tell. And my entire job in the next 30 minutes is to make sure I understand their viewpoint and their organization’s viewpoint as well as I can. And everything I’m going to do in this interview and all the questions I’m going to ask is to make sure I understand it as deeply as I can, and I’m going to ask good questions and give them airtime to really voice what’s important.” Those tend to be the best interviewers, because that’s the foundation of it all.

SHAW: I’m going to move on to AI. Do you see a time when AI can get to the point where it’s so sophisticated that it can actually build personas on its own?

KRAUS: I don’t know. That’s the honest answer.

No matter what model AI is using, it’s going to be pulling from publicly available data unless it’s an internal model. What you’re trying to do is you’re trying to get information that is deep in the minds of buyers. This is “behind the curtain” stuff. What tends to happen is AI tends to pull in everything. It misses certain nuances that are really important. So, we would never use it for source data, at least not yet. Where AI is pretty useful is helping analyze transcripts. So if you’re looking to get a quick lay of the land on the key challenges people are facing, AI can certainly help you get a jump start. The other place which we’re using it a lot for now is to help clients with messaging, because it does a great job of identifying the words, phrases, and terminology that buyers actually use.

SHAW: Toward the end of the book, you say there is a lack of buying insight in most organizations — you call it a “vacuum”.

Why is that?

KRAUS: It’s really just having the wherewithal to go out and actually talk to recent buyers.

What we’ve been talking about in this conversation is a highly achievable thing to do.

The other thing is they need to stop thinking about their specific offerings, their capabilities, all the things they’re trying to do, and try to understand prospective buyers in the purest way. That’s where the gold is.

STEPHEN SHAW is the Chief Strategy Officer of Kenna, a marketing solutions provider specializing in delivering a more unified customer experience. He is also the host of the Customer First Thinking podcast.

Stephen can be reached via e-mail at sshaw@kenna.ca

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MANAGEMENT

The Art, Maths, and Science

BY TSVETELINA HINOVA

W

e all know instinctively when we are happy at work and employers value continuity and stability so having a contented workforce is a win-win for any business or organisation.

In today’s economy, with historically low levels of unemployment, remote working and disparate workforces often spread across borders and time zones, employers must work harder to keep hold of the most talented and engaged workers.

As well as ensuring that they are productive, profitable, diverse and progressive, one of the most important metrics for modern businesses is employee appreciation.

What is employee appreciation?

Employee appreciation is about more than simply paying a competitive salary, offering a Christmas bonus, or organising occasional Friday afternoon drinks.

It transcends mere engagement strategies or career development pathways. It’s about creating a welcoming, inclusive, and genuinely appreciative organisational

❱ DMN.CA

culture. It is about treating employees as human beings, recognising their individual value and contributions beyond their job descriptions.

Remembering personal details — birthdays, anniversaries, the birth of a child, or even a favourite coffee order — demonstrates a genuine interest in their lives outside of work.

It involves recognising and celebrating achievements, both big and small, acknowledging landmark occasions such as long service awards, and providing a memorable send-off for departing employees, making them feel valued and missed.

Creating a culture of appreciation fosters loyalty, boosts morale, and ultimately contributes to a more productive and successful organisation.

Employee appreciation as a strategic investment With many western economies in the midst of, or facing, recession,

employee appreciation emerges as a powerful and cost-effective solution for businesses to remain productive and profitable, particularly if they have remote or hybrid working employees.

Offline workers, who receive a single gesture of appreciation weekly, are 56 percent more likely to be engaged than average, and more than twice as likely as those who are never recognised.

Similarly, remote workers receiving at least monthly monetary recognition are 42 percent more likely to report being productive.

A 2023 State of Recognition research study showed that feeling appreciated significantly mitigates the impact of layoffs, understaffing, salary concerns, and even a heavy workload. Another study found that about two in three people would quit their job if they didn’t feel appreciated.

More than half of employees believe recognition would inspire greater productivity, reduce job-hunting desires, maintain morale during layoffs, and lessen the negative effects of an underpaid or stressful role.

Implementing effective appreciation programmes Creating a culture of appreciation doesn’t require a massive overhaul.

Simple actions can make a significant difference.

A good starting point is budgeting one

percent of payroll for recognition programmes and scaling up based on results. Importantly, frequent recognition proves more effective than salary increases alone in boosting engagement and retention.

By prioritising appreciation, businesses can improve employee morale, boost productivity, and reduce turnover costs, ultimately enhancing their bottom line and securing their future.

This requires a company-wide commitment, spearheaded by leadership and supported by a strategic budget allocation.

The art of employee appreciation The “art” of employee appreciation lies in the creative and personalised approaches used to show gratitude and build strong relationships. It is about the thoughtful gestures that resonate deeply with individuals.

This requires an understanding of individual personalities, communication styles, and cultural backgrounds.

Thankbox is an online card and gifting platform, and we’re on a mission to support cultures of appreciation everywhere.

We recognise that appreciation does not come easy for everyone, so we’ve set up an AI message generator that allows you to create a personalised message using different tones including formal, funny and supportive.

We also have a simple framework to help people to share appreciation confidently in the workplace.

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MANAGEMENT

e of Employee Appreciation Be specific: Call out specific actions, behaviours, or contributions. Example: “I appreciate how you took the lead in that meeting. Your presentation was clear, I can see you had prepared well.” ❯ Highlight the impact: Explain the impact their actions had on you, the team, or the project.

Example: “Your presentation made it simple for everyone to agree the next steps, which will keep the project on track.” ❯ Express genuine gratitude: Make it clear that their efforts are appreciated. Example: “I’m grateful for the extra effort you put in. It means a lot to have someone like you on the team.” ❯ Encourage future contributions: Encourage them to keep it up and express confidence in their abilities. Example: “I’m looking forward to seeing what you’ll bring to the next project. Keep up the great work!” ❯

The science of employee appreciation The “science” of employee appreciation revolves around understanding the psychological and behavioural factors that drive employee motivation, satisfaction, and retention.

Positive psychology informs us about the power of positive reinforcement, recognition, and appreciation in boosting morale and fostering a sense of belonging. Behavioural economics highlights the impact of both intrinsic (internal motivation) and extrinsic (external rewards) motivators on employee performance. Understanding the different generational values and preferences is also crucial.

For example, younger generations might value flexible work arrangements and opportunities for professional development more than older generations, who may prioritise stability and recognition of experience.

Applying these scientific principles leads to the creation of targeted and

effective strategies, carefully designed to resonate with the specific workforce demographics.

Regular surveys, feedback mechanisms, and data analysis can provide valuable insights to continually refine and improve the effectiveness of appreciation programmes.

10 “small but meaningful” things employers can do to make workers feel valued: ❯ Regular “thank yous”: a simple verbal expression of gratitude can go a long way. ❯ Personalised birthday/ anniversary cards: A thoughtful gesture that shows you care. ❯ Team lunches or coffee breaks: Encourage informal social interaction. ❯ Use online appreciation platforms: Streamline the organisation of celebrations and gift collections. ❯ Public acknowledgment of achievements: Celebrate successes in team meetings or company newsletters. ❯ Opportunities for professional development: Invest in employee growth and advancement. ❯ Flexible work arrangements: Show

consideration for work-life balance. ❯ Employee assistance programmes: Provide resources for mental and physical wellbeing. ❯ Regular feedback sessions: Encourage open communication and constructive criticism. ❯ Memorable send-offs for departing employees: Make them feel appreciated for their contributions.

By integrating the arts, maths, and science of employee appreciation, organisations can create a workplace culture that not only attracts and retains top talent but also fosters a highly engaged, motivated, and ultimately, successful workforce.

The investment in employee appreciation is not merely an expense; it is a strategic investment with a significant and measurable return.

TSVETELINA HINOVA is co-founder of Thankbox, an online card and cash collection service whose main goal is to foster appreciation and connectivity within teams.

ISTOCK/WHYFRAMESTUDIO

The maths of employee appreciation The “maths” of employee appreciation involves quantifying its impact on the bottom line.

The cost of replacing an employee can be substantial, encompassing recruitment fees, training expenses, and the loss of productivity during the transition period.

Studies consistently demonstrate that organisations with strong cultures of appreciation experience significantly lower turnover rates.

This translates directly into cost savings, improved efficiency, and enhanced profitability.

Furthermore, employees who feel appreciated are more productive and produce higher quality of work.

NOVEMBER 2024

DMN.CA ❰

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MANAGEMENT

The ROI of Whistleblower Programs: Reducing Financial Fraud and Protecting Bottom Lines

BY SHANNON WALKER

I

n an era where corporate transparency and accountability are under growing scrutiny, whistleblower programs have emerged as critical safeguards against fraud and financial misconduct. Far from a mere compliance measure, these initiatives are increasingly seen as an investment in a company’s longterm financial health and ethical standing. Yet, many organizations hesitate, viewing these programs through a narrow lens of expense rather than as a strategic advantage with measurable returns. ❱ DMN.CA

Here, we’ll explore various studies and statistics centered around active whistleblower programs and measurable ROI. From detecting and deterring fraud to empowering employees, these programs create a foundation for trust and transparency like no other.

Financial benefits of whistleblower programs Whistleblower programs act as a proactive defense, helping organizations identify and address issues before they spiral into larger, more costly problems. In many cases, early reporting leads

to immediate corrective actions, mitigating the risk of financial losses and reputational damage.

Returns and cost savings Effective whistleblower programs deliver quantifiable returns on investment by uncovering fraud, waste, and misconduct. According to the ACFE 2024 Report to the Nations, the median loss from occupational fraud is $125,000 per case, underlining the financial impact these programs help mitigate.

We can also examine the City of Hamilton’s whistleblower program,

which identified $439,000 in fraud and waste within two years of implementation, representing a staggering 1,150 percent ROI. This high ROI isn’t unique; companies with active hotlines report an average of 20 percent lower legal and compliance costs, largely due to their ability to resolve issues before they escalate.

According to the ACFE report, over 40 percent of fraud cases are detected through tips, highlighting the critical role whistleblower hotlines play in early detection and cost-saving efforts. By addressing problems early, organizations NOVEMBER 2024

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MANAGEMENT

save on legal expenses, fines, and costs associated with prolonged investigations.

increases reporting frequency and the likelihood of resolving problems early.

Fostering a “Speak-Up” culture Creating an environment where employees feel comfortable speaking up is essential for the success of any whistleblower program. Studies from NAVEX Global and George Washington University reveal that companies with high hotline activity tend to have healthier organizational cultures. These programs offer employees and citizens an anonymous, safe channel to report issues, thus enhancing the organization’s overall integrity.

A “speak-up” culture relies on confidentiality and non-retaliation.

In the case of Hamilton’s program, reports are anonymized, and complainants are given the option to remain completely anonymous.

Such protections are not merely procedural but foundational, instilling confidence in employees that they can report issues safely, free from personal risk, and ensuring an open channel for honest communication.

How whistleblower programs work: Mechanisms and best practices Whistleblower programs should be designed to handle a range of reportable issues, from fraud and misuse of resources to health and safety violations. Hamilton’s Fraud and Waste Hotline, for example, allows reports on any behaviour that might compromise the ethical standards of city operations.

This expansive approach reflects a commitment to ethical oversight, creating a safeguard for accountability across all levels.

Protection from Reprisal Anti-retaliation policies are vital to a successful whistleblower program. To encourage genuine transparency, employees must trust that reporting won’t lead to retaliation or professional repercussions. Whistleblower systems that clearly communicate protections against reprisal empower employees to report unethical behaviour without fear, contributing to a more ethical workplace overall. This assurance ❱ DMN.CA

Best Practices For whistleblower programs to be widely adopted, reporting channels must be: ❯ Accessible ❯ Confidential ❯ Easy to use A 24/7 hotline, online form, or mobile app allows individuals to report concerns at any time, ensuring that no issue goes unnoticed. The City of Hamilton’s IntegrityCounts program provides round-the-clock reporting options, reinforcing their commitment to transparency and accessibility.

A reliable whistleblower system should also include case management, ensuring that reports are: 1. Tracked 2. Reviewed 3. Resolved efficiently Hamilton’s program features a

structured system where cases are managed promptly, allowing for a more organized and transparent approach to reporting and resolution.

Accountability and transparency in action The success of a whistleblower program depends on its transparency and accountability.

One way to do this is by making the status and outcomes of cases visible to those involved. For instance, Hamilton’s system categorizes and tracks cases from intake to resolution, allowing the Office of the City Auditor to assess the substantiation rate and take action when necessary.

In Hamilton’s case, outcomes have included terminations, disciplinary actions, and even financial recoveries, showing that the program’s impact extends beyond merely gathering reports — it actively enforces ethical standards.

It’s critical to note that this level of transparency regarding the actions taken can strengthen employees’ confidence in the system. Knowing that each report is taken seriously and followed by tangible actions reinforces the value of the whistleblower program and its role in fostering an ethical, compliant workplace.

The ROI of a transparent culture Whistleblower programs do more than just prevent misconduct — they build a culture of transparency, accountability, and ethical commitment. They give employees a voice in the

organization’s ethical landscape, allowing for an open dialogue on the values that drive success.

Hamilton’s program, which achieved a high ROI, demonstrates that organizations willing to invest in such systems see both financial and cultural returns.

Firms that adopt comprehensive whistleblower programs benefit from the following: ❯ Reduced financial losses by addressing issues early. ❯ A healthier organizational culture rooted in transparency. ❯ Enhanced reputation by demonstrating a commitment to ethics and accountability.

A whistleblower program isn’t just an expense — it’s an investment in a transparent, trustworthy, and financially sound organization.

Implementing these programs means organizations can see measurable improvements in both financial health and public trust.

For organizations considering a whistleblower program, the numbers and testimonials speak for themselves: protecting the bottom line starts with protecting integrity.

SHANNON WALKER is the founder of WhistleBlower Security Inc. and executive VP of Strategy at Case IQ, a workplace investigation tool that provides comprehensive risk management features for businesses around the world. Shannon frequently speaks around the world to a diverse group of industry professionals on case management, HR, and workplace ethics. She also has a B. A from Simon Fraser University in British Columbia and an M.A. from Pepperdine University in California and is passionate about creating speak-up cultures in organizations.

NOVEMBER 2024

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Changing Demographics

Online & Offline Habits

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Deposits by Region: Penetration vs. Wallet Share

Vulnerability Index | Social Vulnerability Unemployment Rate

49.1% Index:188

124 SOCIAL VULNERABILITY INDEX*

Community Involvement

11.7% Index:117

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Index:197

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47.1% Index:110

Close friends (0-2)

33.4% Index:124

Close friends in same city (0-2)

29.9% Index:107

Product Penetration (HHs that Hold Product)

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Finances

Environmental concern, privacy, trust and social connectedness.

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