Aimia Stock Forecast (Are Loyalty Programs Big Business?) - Financhill

Aimia Stock Forecast (Are Loyalty Programs Big Business?)

Aimia Stock Forecast: The expansion of the digital world has changed how consumers think about the brands they support and the purchases they make. It was once enough to promote the features and benefits of one product over another through one-way advertisements, but that strategy simply isn’t effective anymore.

The combination of social media and mobile technology makes it possible for marketing to be interactive – and consumers have noticed. In fact, they show a strong preference for businesses that engage them in conversation, captivate them with clever original content, and create personal relationships.

One of the most successful methods of building relationships is through loyalty programs. But are there any companies that dominate this area?

The Nuts and Bolts of Loyalty Programs

Customers gain access to special pricing and exclusive rewards by allowing the business to track their purchases.

It’s a win/win marketing technique, because brands benefit as well. Program participants are motivated to choose the company with whom they have a relationship over a competitor, increasing repeat business and prompting greater per-transaction spending.

Better still, loyalty programs allow companies to collect a wealth of data about customers, including who is buying, when, and how much. Offers can be customized to particular demographics, and entire campaigns can be tailored to better match the target audience.

The problem that most companies face when it comes to creating loyalty programs is a lack of experience.

Consumers are accustomed to such plans, and they have certain expectations about how they are structured and what they will experience when joining up. Companies that are new to the loyalty program arena often struggle with balancing benefits to the consumer with benefits to the company, and they over or under promote.

Aimia Loyalty Solutions specializes in developing and maximizing loyalty programs with comprehensive end-to-end solutions for businesses of every size – and in every industry.

Aimia makes it simple for any business to design and launch a branded loyalty scheme, and it handles everything from marketing the program to analyzing the resulting data.

Of course, what investors want to know is whether such a service is profitable – and if so, is Aimia achieving financial success? More to the point, is Aimia stock a buy? What is the Aimia stock forecast?

What Does Aimia Do?

Aimia specializes in the loyalty program space.

Some of its most well-known clients include Hallmark, PetSmart, Nestle, Eukanuba, HSBC, Avis, and Wheel of Fortune.

Aimia uses its extensive experience and expertise in loyalty program design to provide clients with customized solutions to build customer engagement.

The company’s goal is simple: Aimia wants to personalize and elevate your customer experience with custom services that give you the guidance and framework to increase engagement.

How Aimia Loyalty Programs Work

The process begins with Aimia’s trademarked SmartJourney Methodology.

Aimia experts partner with client businesses to visualize and monetize the actual customer journey versus the ideal customer journey, and then a plan is created to close the gap.

Aimia sets growth milestones, then applies predictive, data-driven tools that leverage the power of artificial intelligence and machine learning. With these tools, milestones can be measured against industry benchmarks, moving clients towards long-term success.

As the program is implemented, Aimia uses a digital Experience Touchmap to help pinpoint opportunities for increasing customers’ loyalty across channels. Through the Touchmap, clients have greater visibility into the consumer experience, and they can make adjustments to touchpoints that increase profitable brand behavior.

One of the products that comes out of the SmartJourney Methodology is a Strategic Roadmap that offers step-by-step direction for implementation and maintenance of loyalty programming. It covers all of the key segments of a client’s business, and it looks at opportunities internally and externally. The Strategic Roadmap, like any good project plan, creates and assigns tasks, along with a timeline. This ensures launch success and long-term optimization of the program.

Aimia Collects Data To Help Businesses Segment Customers

Perhaps the most important resource Aimia offers is a powerful set of data collection and analysis tools that give clients a clear picture of their program’s success – and where more work is needed.

Among other things, these tools provide a deep dive into customer segmentation, making it possible to personalize campaigns at a granular level.

This ensures communications are relevant to individual customer needs, improving response rates and avoiding blanket messaging that turns off audiences to whom the content does not apply.

Aimia tools also provide Customer Lifetime Value Modeling (CLTV) and Predictive Churn Modeling – both of which are critical to retaining the most valuable customers.

All of this sounds good, but for investors, the question is simple. Is Aimia profitable now or will it be in the future? In short, is Aimia stock a buy?

Is Aimia Stock A Buy? 

The truth is that Aimia is struggling from a financial perspective.

It’s important to note that Aimia is a Canadian company, and most figures are reported in Canadian dollars (CAD$). So far, despite an impressive client list, the company is operating in the red.

Third quarter 2019 revenue came in at CAD $33.3 million – a decrease of (21.6 percent) over third quarter 2018’s CAD $42.5 million.

The good news is that quarter over quarter, CAD $33.3 million is a slight improvement, reversing a four quarter downward trend.

Overall revenue for the second quarter of 2019 was CAD $31 million – and the decrease in revenue doesn’t reflect Aimia’s growing client base. For the third quarter of 2019, Aimia had 6.6 million members enrolled – a year over year improvement of 11.9 percent.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) paints a slightly more promising picture. This figure totaled $21.5 million (in US dollars) for the third quarter, which is a year over year increase of 12.6 percent.

The message here is somewhat mixed, which makes trading decisions more difficult. What is the Aimia stock forecast?

Aimia Stock Forecast

The bottom line is that Aimia’s financials don’t look strong today, but there is evidence that the company has growth potential.

In the past quarter, it won a large contract with a leading global consumer goods client, and it renewed contracts with four big brands – a leading telecommunication service provider, a global payments provider, a leading airline partner, and worldwide entertainment company.

Aimia’s management team recognizes the challenges it is facing with expenses that exceed revenues, and it has made bold moves to bring those figures in balance.

Headcount has been streamlined, down to 520 from 780 a year ago, and real estate has been consolidated. The company has contracted for IT services that are 40 percent lower, and business travel and entertainment have been reduced by 42 percent year over year.

Are these positive steps towards profitability, or are they last-ditch attempts to stave off insolvency? It’s hard to say for sure. However, based on the company’s strong, in-demand value proposition, and its low per-share price, some investors might decide the risk is worth the potential rewards.

For more conservative investors, it might be better to take a wait-and-see approach. If Aimia trends upward in coming quarters, there will still be opportunities to buy in at a low per-share price.

Learn more about investing in the marketing tools of tomorrow from the experts at Financhill – where many of the world’s smartest investors go for information.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.