The document discusses the concept of card-linked offers, which allow merchants to drive sales without resorting to traditional discounting. It highlights changing consumer behavior, particularly the rise of deal-first shoppers, and provides insights into how merchants can effectively leverage loyalty programs and targeted marketing strategies. Case studies and growth projections from the Aite Group indicate significant potential for card-linked offer strategies in driving consumer engagement and sales growth.

1. Card-Linked Offers:
Driving Sales Without Discounting
May 24, 2012

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. The rise of the
“DEAL-FIRST”
shopper…

4. 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

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. 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. Thinking “Deal-First”
74% 11% Almost 40%
OF CONSUMERS SEARCH LOOK AT MORE THAN OF CONSUMERS PLANNED
MULTIPLE ONLINE COUPON 10 SOURCES TO USE COUPONS FOR
SOURCES EACH WEEK 2011 HOLIDAY SHOPPING
Source: Coupon Cabin/Harris Interactive, PriceGrabber, Nielsen

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. What’s a
MERCHANT
to do?

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. Beef Up Your Loyalty Program?
2011U.S. loyalty memberships exceed 2B
200% increase in U.S. loyalty memberships since 2000
Financial 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 & Airlines
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)

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. How to
Market Deals
Without Discounting

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. 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. Card-Linked
Offers
10 $3 off 50 50 75 $3
25% Points 50% 50 100 Miles
Miles off
Miles
250 10
Cash Back
5%
Points
Cash Back $1 off Points 20%
Cash Back
100 Points Miles Miles 5 Miles Cash Back

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. 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. Targeted
• Category spend
• Competitive share
• Average order size
• Purchase frequency
• Lapsed shoppers
• Brand loyalty

20. Closed-Loop
• Customer acquisition and
loyalty
• Market and category share shift
• Purchase frequency and spend
• True campaign ROI

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. The Case for Bank Card Incentives:
New Opportunities for Partnerships
Aite Group
May, 2012
Madeline K. Aufseeser
Senior Analyst
Page 22
© Copyright 2011, Aite Group, LLC.

23. © Copyright 2011, Aite Group, LLC.

24. US$ 115B+ In Card-Based Sales Driven By
Linked Incentives
© Copyright 2011, Aite Group, LLC.

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. 467 Million Consumers Receiving Card-Based
Offers
#LiveWebinar

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. 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. 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. Easy For Merchants and Consumers
© Copyright 2011, Aite Group, LLC.

31. Thank You and Q&A
Learn More: www.offerlink.com