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volume 7 • fall 2014
retailers craft marketing campaigns and offers based on individuals’ pre- vious purchases (keeping all trans- action data anonymous). Consumers click on a deal—usually displayed on the financial institution’s Website or within its mobile app—to redeem the offer, and the promised saving on those purchases appears as a cash reward on the cardholder’s monthly statement. “We’ve found that past purchase history is the best predictor of a consumer’s
next purchases,” Byrne says.
Bank of America says the program is getting results. BofA launched its BankAmeriDeals merchant-funded rewards program with Cardlytics
in 2012. To date, consumers have saved more than $29 million,
and participating merchants have generated more than $287 million in incremental revenue, a BofA spokesperson tells Paybefore.
At edo, with headquarters in Chicago and Nashville, Tenn., the pace of national retailers offering deals on its platform has increased “exponentially” in the last 18 months, according to Chris Camp- bell, vice president of product and marketing. edo also expects to see a boost in local merchant participa- tion from a partnership inked in March 2013 with merchant acquirer Global Payments. edo has 220 individual bank branches and four leading financial institutions on board, representing a combined reach of 50 million addressable cardholders, with new partners
and existing clients adding newly enrolled customers each month.
“It takes a certain amount of edu- cation and ongoing reinforcement to change behavior, but once consumers experience our offers, they’re hooked,” Campbell says.
Fine-Tuned Campaigns
For merchants, edo can fine tune campaigns to trigger specific out- comes, Campbell notes. “Our system can point out customers whose behavior suggests they need a little push to make a purchase, and then we can prove the offer worked by comparing with other test groups that didn’t get the offer.”
Cartera Commerce takes a some- what different approach, focusing primarily on card-linked offers for online purchases, according to Tom Beecher, Cartera’s president and CEO. Launched in 2006, Cartera works with two of the top three largest financial institutions, the five largest airlines and more than 935 online retailers, reaching an audi- ence of 90 million consumers.
Cartera has experimented with card-linked offers for brick-and- mortar retailers without much success, Beecher tells Paybefore. “We get the most traction from on- line offers, because our platform is very data-driven in both directions, which helps us customize offers. E-commerce merchants usually have emails, shipping data and payment information on customers, and they can use that data to shape very customized, effective promotions.”
Customers may receive notifications of deals via Cartera in diverse ways,
but typically banks integrate the offers with their proprietary rewards programs, promoting them via email, internal channels and social media, Beecher says.
Banks’ Killer Apps
Critics suggest one of the gaps in card-linked offers is their lack of insight to consumers’ specific pro- duct and brand choices within a basket of purchased items. Crone notes that even in today’s increas- ingly mobile-connected market- place, 90 percent of promotional marketing dollars are associated with manufacturers’ brand-driven deals and coupons, and unlocking those funds for promotions is where the big opportunities lie. Merchants may someday gain an edge by exploiting this, if they succeed in achieving broad scale and consumer use of merchant- branded apps touting deals funded directly by brand manufacturers, he suggests.
But Beecher maintains merchant- branded deal apps face a serious challenge that will be difficult to overcome: getting regular attention from consumers among thousands of apps and mobile wallets dangling offers. Most consumers already have tight connections to their financial services providers, and check their apps frequently, he points out. “The big advantage financial institutions have is knowing where consumers live, where they shop and what they buy. That is a powerful tool, and we can reach consumers directly and daily with deals, which merchants will always struggle to do.”
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