The promise of tying credit card rewards programmes to social
networks, Groupon-like daily deals and electronic couponing
services has long been touted as the next wave of loyalty
incentives, and it finally appears to be taking off, says
Charles Davis
Go deeper with GlobalData
A host of new
technological platforms are coming to market, offering card issuers
new ways to take advantage of the viral power of social networking
– turning cardholder relationships into powerful marketing
tools.
It is, in some ways, the card industry’s
answer to Groupon: card-linked offers – part daily deal, part card
reward programme – are gaining real traction.
It is a two-way proposition, after all: by
capturing a greater level of customer interaction during and after
the point of purchase, issuers can garner critical analytical data
about their cardholders’ shopping habits – analytics that can form
new revenue streams for issuers, all the while deepening consumer
relationships.
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By GlobalDataTargeted marketing
If all this seems a bit granular – after all,
who wants to talk about their credit cards on Facebook? – then look
at the business model of players like Swipely, an online service
that turns consumer purchase analytics into targeted marketing
messages to spur loyalty.
Founded by veterans of Tellme, Microsoft,
Netscape, eBay, LinkedIn and PayPal, Swipely has built a rich
analytics engine aimed at merchants – the Main Street Marketing
Manager – that uses payments data to build marketing messages.
The system has been running in a closed
beta-test form for the past year, and enables local merchants to
build loyalty and marketing programmes on top of their existing
credit and debit card processing systems.
Better rewards
Swipely signs up merchants for the service,
then analyses card data to identify recent versus lapsed
customers, and then works with the merchants to pitch discounts and
other offers directly at those lapsed customers.
Businesses can import their customer contact
information directly into Swipely, and use its many templates to
create ‘we miss you’ offers and ‘thank you’ messages. Merchants
can also automate the process, so the system sends a message to
lapsed customers once a month, without having to return to the
site.
Another player, Cartera, recently launched a
service for small businesses, OfferLink Local, that allows
merchants to offer deals that connect to the rewards programme of
a customer’s credit or debit card. Customers who use their cards at
participating local businesses can then earn rewards on those
cards in the form of airline miles, cashback or points.
Cartera is particularly attractive for
issuers, as it offers a merchant-funded rewards option that works
on existing loyalty relationships and payments preferences, and is
frictionless to merchants.
Marc Caltabiano, vice-president of marketing
and products for Cartera, says that unlike other local deals that
require merchants to fund discounts and often require them to
change POS systems, OfferLink Local enables merchants to market
offers to consumers that automatically deliver rewards in
currencies they care about – miles, points or cashback – simply by
using a linked credit or debit card.
“A lot of issuers are interested on the
loyalty side of the credit card business, but we’re also working
with a number of debit issuers that want to begin offering cashback
rewards and have them be merchant-funded,” Caltabiano says. “As
debit rewards that were issuer-funded disappeared, this really
fills the void and offers a revenue stream that wasn’t there
before.”
Caltabiano also says that merchants crave the
richer analytics offered by card-linked offers – a $1bn market, he
estimates – and that Cartera can show a merchant the precise number
of new customers that have walked in the door thanks to an offer,
without the need for Groupon-like vouchers cluttering the point of
sale.
Groupon, while wildly successful, has its
critics among merchants, who cite customers turning up with an
offer, then never returning, with no way to track repeat visits of
new customers.
“On the one side, you have the marketing
offer, but on the other side of our model you get this deep
analytic view of the customer, with targeting and measurability
that is impossible in other channels,” he says.
“You can measure with such exactitude, and
people are willing to pay for that on the merchant side. With a lot
of their marketing spend these days, return on investment is just
about impossible to measure.”
Merchant ROI
A merchant can create a deal for a certain
percentage off a purchase and the discount will be applied
automatically when a consumer uses a qualifying credit or debit
card. Consumers will be alerted to the offers through emails from
their banks or airline frequent-flier programmes, bank statements,
mobile alerts or though digital ads.
A consumer could earn frequent-flier miles
simply by making a purchase at a local store in addition to getting
an in-store discount. Local merchants fund rewards only after sales
occur, and get transaction-based reporting to prove how many
customers redeemed offers, how many were new, and how much they
spent.
After successful pilot programmes with
merchant ROIs reported of up to 600%, Cartera is now rolling out
OfferLink to local merchants across the US, including Boston,
Chicago, Dallas and Fort Worth, Los Angeles, New York City and
Philadelphia.
Its base already includes a card-linked
advertising network that markets offers to more than 150m consumers
– including 65m active linked cards.
MasterCard moves
Cartera has teamed up with several of the
nation’s top loyalty cards, including the American Airlines
AAdvantage programme, Barclaycard and United MileagePlus. Offers
are marketed by the OfferLink Local solution through bank and
loyalty programmes websites, emails, mobile apps, social marketing
and other channels.
According to Caltabiano, Cartera’s national
sales force is currently busy signing up merchants large and small
in an effort to provide a rich mix of big-box and ‘hyperlocal’
retailers.
In April 2012 MasterCard announced plans to
grow its own position in the expanding ‘daily deals’ industry,
signing an agreement with deal aggregator Local Offer Network.
According to the network, the agreement was
made to improve the support given to issuers and merchants in terms
of rewards and loyalty support.
Local Offer Network is set to provide daily
deal content to MasterCard issuers and through the network’s other
programmes, such as its Priceless Cities platform.
“Increasingly, consumers are looking for a
great deal and savings, whether that is in paper coupons or through
digital channels, that create a more enhanced holistic shopping
experience,” says Mario Shiliashki, group head of US markets,
emerging payments lead, at MasterCard.
“Our collaboration with partners like Local
Offer Network will make MasterCard the ‘go to’ offers solution for
merchants and issuers looking for a stronger connection with our
cardholders.”
MasterCard and Local Offer Network are working
with issuers to deliver specific offers programmes by the second
half of this year.
“From day one, we’ve focused on providing
consumers with great deals across the broadest range of products
and services,” says Dan Hess, CEO and co-founder of Local Offer
Network. “Our partnership with MasterCard reinforces the continued
value of the deals segment to shoppers, merchants and the
financial institutions that serve them.”
MasterCard’s global network brings scale to
what is, in many ways, an inherently localised industry. And, says
Caltabiano, the more issuers, and the more merchants, the better
the network for each side – not to mention the consumer in the
middle.
