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Held on May 24th, this webinar titled, "Card-Linked Offers; Driving Sales without Discounting" was presented by Madeline Aufseeser of Aite Group and Kevin McCarthy from Cartera Commerce. This webinar was available through Multichannel Merchant and Chief Marketer, and highlights card-linked offers, the industry's response to this emerging approach to in-store engagement, as well as sharing customer case studies.
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Card-Linked Offers: Driving Sales Without Discounting
May 24, 2012
Agenda
• The rise of the “deal first” shopper
• What’s a merchant to do?
• Card-linked offers: deals without discounting
• Aite Group: card-linked marketing growth projections from the top financial services analyst firm
• Case studies & ROI
• Q&A
The rise of the
“DEAL-FIRST” shopper…
The Value-Conscious Consumer
8 of 10 card offers last year were for cards
with rewards points, miles or cash rebates, up from 6 in 10 offers in 2009
Consumer Adoption of Deals
Source: TIME Moneyland 12/11, Street Fight Daily 1/12, BIA Kelsey 3/11
$1.4 Billion in daily deals sold in 2011
A quarter of “Extreme Couponers”
have incomes of
$75,000+
Deal buyers average 9 active vouchers in their wallet
at any given time
Over ½ of daily deal purchasers
have bought over 11 vouchers in their
lifetime
Price Shopping & Channel Hopping
Source: TIME Moneyland 12/11, Street Fight Daily 1/12
Nearly 7% of all online
holiday purchases were made using
iPads, just 18 months after they
were released
85% of US consumers use
multiple shopping channels
70% of consumers use their
smartphone to make purchase
decisions while in stores
Thinking “Deal-First”
Source: Coupon Cabin/Harris Interactive, PriceGrabber, Nielsen
74% OF CONSUMERS SEARCH
MULTIPLE ONLINE COUPON
SOURCES EACH WEEK
11% LOOK AT MORE THAN
10 SOURCES
Almost 40% OF CONSUMERS PLANNED
TO USE COUPONS FOR
2011 HOLIDAY SHOPPING
Deal Control Moving From Retailer to Consumer
Pre
Internet
Early
Internet
Current
Retailer
Consumer
Purchase
Cycle
Need
Recognition
Information
Gathering
Evaluation of
Alternatives
Purchase
Decision Transaction
Online (Debit,
e-Payments)
In-Store
In-Store, Phone
(Cash, Check,
Credit)
Social Media,
Deal Sites
Search
Advertising
Online Content &
E-Commerce Store
Social Media,
Deal Providers
Online Reviews
& Price
Comparison
Convenience,
Price
Social Media,
Group-Buying
Social Media,
Urgency &
Scarcity
Vouchers,
Loyalty Cards,
Rewards Points,
Mobile Wallets
Retailer Staff &
Store Displays
Location,
Affinity, Coupon Mass
Advertising
What’s a
MERCHANT to do?
“Industry watchers say Penney
faces an uphill battle in
attempting to shift the mindset
of U.S. shoppers, who
increasingly have become
accustomed to and spoiled by fat
discounts during the economic
downturn.”
Eliminate Deals Altogether?
Beef Up Your Loyalty Program?
Colloquy April 18, 2011- CensusTalk: The Billion Member March.(Cincinnati, OH)
Colloquy June 29, 2011- Enterprise Loyalty: How Card Issuers Achieve the Ultimate Customer Experience.(Cincinnati, OH)
286.8
324.9
428.8
Retail
Airlines
Financial Services
Hundreds of retailers
One dozen airlines
Dozens of banks and card issuers
of all loyalty members reside in Financial Services & Airlines ~40%
2011U.S. loyalty memberships exceed 2B
200% increase in U.S. loyalty memberships since 2000
Or Follow The New Deals?
Source: WSJ 9/10, Street Fight Daily 1/12
32% of merchants surveyed said
their daily deals were unprofitable
40% of the respondents said they
would not run such a promotion again
34% of deals were sold
at a loss to the merchant
After running a Groupon deal, 82% of businesses said they were not satisfied
with the outcome
How to
Market Deals Without Discounting
Keys to Success for Profitable Deals
Closed-Loop Targeted Sustainable
Closed-Loop
Fully attribute deals
to customer
acquisition, spend,
frequency
Measure each
customer’s purchases
over time
Sustainable
Acquire & retain
shoppers
Build a customer base
Sustain profits
Targeted
Better Data
•Spend history
•Location
•Frequency & AOV
•Last purchase
And Adoption By Today’s Deal-First Shopper
Simplicity is the key • Relevant, and easy to discover, find and share
• In currencies they already care about and collect
• 100% digital redemption at the point of payment
• No coupons, codes, paper rebates, vouchers or breakage
• Truly frictionless saving and earning
Card-Linked
Offers
20% Cash Back
50% Cash Back
50 Points
75 Miles
10 Miles
$3 off
5 Miles
250 Miles $1 off
25% Cash Back
100 Points
10 Miles
$3 off
5% Cash Back
50 Points
50 Miles
100 Points
MERCHANTS
CREATE
OFFERS
OFFERS
LINKED
TO
CARDS
OFFERS
TARGETED &
MARKETED
OFFERS
REDEEMED
WITH A SWIPE
OR CLICK
1 2
3 4
How Card-Linked Offers Work
• Linked to the point of payment
(online and in-store)
• Connected to the cards &
rewards consumers value most
• Digital redemption – no
vouchers, no breakage
• Completely secure with
built-in privacy protection
Frictionless
• Category spend
• Competitive share
• Average order size
• Purchase frequency
• Lapsed shoppers
• Brand loyalty
Targeted
Closed-Loop
• Customer acquisition and
loyalty
• Market and category share shift
• Purchase frequency and spend
• True campaign ROI
• No up-front cost - 100%
performance-based
• Offer types to meet needs
— High-value offers for new
shoppers
— Threshold & frequency offers
to boost spend
— Loyalty offers to reward every
shopper
Sustainable
© Copyright 2011, Aite Group, LLC. Page 22
The Case for Bank Card Incentives: New Opportunities for Partnerships
Aite Group May, 2012
Madeline K. Aufseeser
Senior Analyst
© Copyright 2011, Aite Group, LLC.
© Copyright 2011, Aite Group, LLC.
US$ 115B+ In Card-Based Sales Driven By Linked Incentives
© Copyright 2011, Aite Group, LLC.
$6.3 $15.8
$29.2
$47.5
$76.8
$115.1
$0.3 $0.8 $1.5 $2.4 $3.8 $5.8
2010 e2011 e2012 e2013 e2014 e2015
Face amount of transactions, credit, debit and prepaid
Gross dollar value of offers - credit, debit and prepaid
Gross Dollar Value Transactions With
Card-Linked Offer Redemptions
*In US $Billions
#LiveWebinar
467 Million Consumers Receiving Card-Based
Offers
© Copyright 2011, Aite Group, LLC.
877 922 960 995 1025 1047
51 87 148
222
333
467
8 19 36 58 93 140
2010 e2011 e2012 e2013 e2014 e2015
Number of US credit, debit and prepaid accounts
Credit, debit and prepaid subscriber base receiving offers
Credit, debit and prepaid subscriber base redeeming offers
US Cardholders Enrolled In Card-Based
Offer Programs
*In Millions of Accounts/Subscribers/Redeemers
© Copyright 2011, Aite Group, LLC.
2012 Market Place Still Emerging
• US FIs = 15,000 banks and 5,000 credit unions
– 170 total banks enrolled with assets over US$ 1 billion and 6,400 banks and credit unions with under US$ 1 billion
• Less than half of the projected cardholder enrollment base is actually subscribing
• Approximately 700 merchants (400,000 physical locations) with over US$ 50 billion in sales participating
© Copyright 2011, Aite Group, LLC.
Why Consumers Want It
•Better than other loyalty programs in the market
•No advanced purchase required
•Known merchants
Cardholder program features
Points & mileage programs Cash-back programs Card-based offer programs
Timing of benefit Accumulates over time Paid 1 to 2 months after purchase
Immediate or delayed –card issuer choice
Benefit amount Percentage of purchases Percentage of purchases Percent-off purchase or flat-dollar discounts
Offer marketing Passive Passive Active
Fulfillment Cardholder requested Automatic Automatic
© Copyright 2011, Aite Group, LLC.
Easy For Merchants and Consumers
