Driving Sales without Discounting; Card-Linked Offers

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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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Driving Sales without Discounting; Card-Linked Offers

  1. 1. Card-Linked Offers:Driving Sales Without Discounting May 24, 2012
  2. 2. 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
  3. 3. The rise of the“DEAL-FIRST”shopper…
  4. 4. The Value-Conscious Consumer8 of 10 card offers last year were for cardswith rewards points, miles or cash rebates, up from 6 in 10 offers in 2009
  5. 5. Consumer Adoption of Deals A quarter of “Extreme Couponers” have incomes of $75,000+ 9 active Deal buyers average vouchers in their wallet at any given time $1.4 Billion in daily deals sold in 2011 Over ½of daily deal purchasers have bought over 11 vouchers in their lifetime Source: TIME Moneyland 12/11, Street Fight Daily 1/12, BIA Kelsey 3/11
  6. 6. Price Shopping & Channel Hopping 85% of US consumers use multiple shopping channels Nearly7% of all online holiday purchases were made using iPads, just 18 months after they were released 70% of consumers use their smartphone to make purchase decisions while in stores Source: TIME Moneyland 12/11, Street Fight Daily 1/12
  7. 7. Thinking “Deal-First”74% 11% Almost 40%OF CONSUMERS SEARCH LOOK AT MORE THAN OF CONSUMERS PLANNEDMULTIPLE ONLINE COUPON 10 SOURCES TO USE COUPONS FORSOURCES EACH WEEK 2011 HOLIDAY SHOPPING Source: Coupon Cabin/Harris Interactive, PriceGrabber, Nielsen
  8. 8. Deal Control Moving From Retailer to Consumer Consumer Retailer Purchase Need Information Evaluation of Purchase Transaction Cycle Recognition Gathering Alternatives Decision Retailer Staff & Location, In-Store, Phone Mass Pre Advertising In-Store Store Displays Affinity, Coupon (Cash, Check, Credit) Internet Search Online Content & Online Reviews Online (Debit, Convenience, Early Advertising E-Commerce Store & Price Price e-Payments) Internet Comparison Vouchers, Social Media, Social Media, Social Media, Social Media, Loyalty Cards, Current Deal Sites Deal Providers Group-Buying Urgency & Rewards Points, Scarcity Mobile Wallets
  9. 9. What’s aMERCHANTto do?
  10. 10. Eliminate Deals Altogether? “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.”
  11. 11. Beef Up Your Loyalty Program?2011U.S. loyalty memberships exceed 2B200% increase in U.S. loyalty memberships since 2000Financial Services Dozens of banks and card issuers 428.8 Airlines One dozen airlines 324.9 Retail Hundreds of retailers 286.8~40% of all loyalty members reside in Financial Services & AirlinesColloquy 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)
  12. 12. Or Follow The New Deals? After running a Groupon deal, 82% of businesses said they were not satisfied with the outcome 32% of merchants surveyed said their daily deals were unprofitable 34% of deals were sold at a loss to the merchant 40% of the respondents said they would not run such a promotion again Source: WSJ 9/10, Street Fight Daily 1/12
  13. 13. How toMarket DealsWithout Discounting
  14. 14. Keys to Success for Profitable Deals Targeted Closed-Loop Sustainable Better Data Fully attribute deals Acquire & retain to customer shoppers •Spend history acquisition, spend, •Location frequency Build a customer base •Frequency & AOV Sustain profits Measure each •Last purchase customer’s purchases over time Targeted Closed-Loop Sustainable
  15. 15. 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
  16. 16. Card-Linked Offers 10 $3 off 50 50 75 $3 25% Points 50% 50 100 Miles Miles off Miles 250 10 Cash Back 5% PointsCash Back $1 off Points 20% Cash Back 100 Points Miles Miles 5 Miles Cash Back
  17. 17. How Card-Linked Offers Work 1 2 OFFERS MERCHANTS LINKED CREATE TO OFFERS CARDS OFFERS OFFERS REDEEMED TARGETED & WITH A SWIPE MARKETED OR CLICK 4 3
  18. 18. Frictionless • Linked to the point of payment (online and in-store) • Connected to the cards & rewards consumers value most • Digital redemption – no vouchers, no breakage • Completely secure with built-in privacy protection
  19. 19. Targeted • Category spend • Competitive share • Average order size • Purchase frequency • Lapsed shoppers • Brand loyalty
  20. 20. Closed-Loop • Customer acquisition and loyalty • Market and category share shift • Purchase frequency and spend • True campaign ROI
  21. 21. Sustainable • No up-front cost - 100% performance-based • Offer types to meet needs — High-value offers for new shoppers — Threshold & frequency offers to boost spend — Loyalty offers to reward every shopper
  22. 22. The Case for Bank Card Incentives:New Opportunities for PartnershipsAite GroupMay, 2012Madeline K. AufseeserSenior Analyst Page 22 © Copyright 2011, Aite Group, LLC.
  23. 23. © Copyright 2011, Aite Group, LLC.
  24. 24. US$ 115B+ In Card-Based Sales Driven By Linked Incentives © Copyright 2011, Aite Group, LLC.
  25. 25. Gross Dollar Value Transactions With Card-Linked Offer Redemptions $115.1 $76.8 $47.5 $29.2 $15.8 $6.3 $1.5 $2.4 $3.8 $5.8 $0.3 $0.8 2010 e2011 e2012 e2013 e2014 e2015 Face amount of transactions, credit, debit and prepaid Gross dollar value of offers - credit, debit and prepaid *In US $Billions © Copyright 2011, Aite Group, LLC.
  26. 26. 467 Million Consumers Receiving Card-Based Offers#LiveWebinar
  27. 27. US Cardholders Enrolled In Card-Based Offer Programs 1025 1047 960 995 922 877 467 333 222 148 51 87 140 58 93 8 19 36 2010 e2011 e2012 e2013 e2014 e2015 Number of US credit, debit and prepaid accounts Credit, debit and prepaid subscriber base receiving offers Credit, debit and prepaid subscriber base redeeming offers *In Millions of Accounts/Subscribers/Redeemers © Copyright 2011, Aite Group, LLC.
  28. 28. 2012 Market Place Still Emerging• US FIs = 15,000 banks and 5,000 credit unions – 170 total banks enrolled with assets over US$ 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.
  29. 29. Why Consumers Want It Cardholder program Points & mileage programs Cash-back programs Card-based offer programs features Timing of benefit Accumulates over time Paid 1 to 2 months after Immediate or delayed – purchase 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 •Better than other loyalty programs in the market •No advanced purchase required •Known merchants © Copyright 2011, Aite Group, LLC.
  30. 30. Easy For Merchants and Consumers © Copyright 2011, Aite Group, LLC.
  31. 31. Thank You and Q&ALearn More: www.offerlink.com

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