Challenges for loyalty program managers under ASC 606/IFRS 15
Navigating the new revenue recognition standards
The converged standard on revenue recognition, ASC 606/IFRS 15, has raised the visibility of loyalty programs to company stakeholders by generating higher program liabilities, more strenuous reporting disclosures, and a new duty to clearly articulate the drivers of changes in estimates that flow through earnings.
While operating under the new standard, loyalty program owners are encountering a number of challenges in several key areas, including:
- Identifying the different impacts of program levers,
- Understanding key drivers of true-ups,
- Monitoring assumptions, managing non-redemption expenses, and
- Refining models that impact the loyalty deferred revenue balance.
