Retailers competing for customers and facing declining profit margins have increasingly turned to loyalty and rewards programs in recent years. But as these offerings grow more ubiquitous, once-unique programs can get lost in a sea of relative sameness.
Rewards and advertising company Cardlytics has a platform that allows retailers take their offers straight to consumers’ online bank accounts. The creators of the program say it has the potential to revolutionize the rewards industry because it benefits participating banks, retailers and consumers.
Accurate tracking
Founded in 2008, Atlanta-based Cardlytics relies on the heavy shift to online banking, taking reward offers right to where consumers look the most — their online bank statements. On behalf of participating advertisers, banks run offers targeted against actual purchases in consumers’ transaction statements.
“Offers are based on where the consumers actually spent their money,” says Rod Witmond, Cardlytics senior vice president of product management and marketing. “The targeting is about as accurate as you’re going to get because it’s based on purchasing behavior.”
That capability allows retailers to finely tune offers. An electronics retailer might only target consumers that have spent more than $50 at other electronics retailers in the past month. Or a retailer might target their own customers with a loyalty discount based on previous purchasing patterns.
Cardlytics’ software operates on the participating bank’s hardware system. Arbitrary ID numbers are assigned to actual account numbers (so those account numbers never leave the bank) to track purchases and transactions on a daily basis. The transactions are transmitted to the Cardlytics system, which then matches offers to accounts using complex algorithms.
The system can report how many accounts are targeted, how many offers are served, how many are activated and how many are redeemed. Retailers can also find out what percentage of a category’s buyers has not visited their store in the past six months and the percentage of customers that spend with the competition.
“We can measure the true impact of the program,” says Marc Ginsberg, executive vice president of merchant services. “We can bring insights such as how much your customers are spending elsewhere and what is going on in the category.”
Witmond says that on average, every dollar spent within the market channel drives back $5.48 in revenues. Cardlytics is also able to deliver up to a 15 percent shift in category spend. All of this is driven by a strong value proposition to the consumers.
Customizing offers
Witmond says the average rewards program user will save $100 to $200 per year “without even really paying attention to it.” For those who fully optimize and take advantage of it, the benefits can grow larger — some payouts have exceeded $600.
To ensure that online statements are not “turned into a huge mall,” a maximum number of offers are extended to one customer at any given time, Ginsberg says. Offers typically have click rates of 20 percent, he says, because “we only show the most relevant offers that make the most sense to that customer.”
Cardlytics currently has about 200 campaigns running on its network. It will be launching with two of the top five national banks by the end of the year, Ginsberg says, and will have access to 70 million households and almost 180 million consumers.