The customer loyalty space has evolved over the last few years from predominantly coupon driven rewards to including card-linking offers (CLO) embraced by the online-to-offline (O2O) industry. Card-linked offers enable consumers to receive a discount or cash back automatically when they pay with a debit or credit card that has been linked to an offer. Increasingly large national brands and SMBs are adopting the card-linking approach to connect online offers with in-store purchases.
From Coupon Clipping to Card-Linking
Promo codes, paper and digital coupons have been moderately successful at increasing sales and average order value. They have been a tried vehicle for generating brand loyalty and improving overall revenue. However, the benefits of card-linking is that it’s completely hassle-free. Customers do not have to cut or print coupons. There is no need to load coupon apps to get the rewards and the consumer does not have to mail-in rebates. With card-linking you are still getting all of the incredible benefits of coupons but it’s an effortless process for the customer at checkout. Consumers just link their credit or debit card with a publisher that promotes the offer, and they get automatic cash back when they pay at the store without the retailer needing to jump through any integration hoops. Card-linking successfully answers consumer’s coupon concerns…
Measuring Digital Marketing ROI
The coupon process includes the added annoyance of generating promo codes and training retail staff about the loyalty offers. Marketers have also been left guessing when it comes to measurable ROI of their digital advertising spend. To quote department store magnate, John Wanamaker’ “Half the money I spend on advertising is wasted; the trouble is, I don't know which half.” Card-linked offers tie the knot between online and offline shopping. Marketers now can track online advertising to offline purchases.
Consumers know how coupons work. But card-linked offers successfully get around the challenges like last click attribution that exist with clip or code coupons. It has been difficult to draw a detailed correlation between the efforts of the publisher and that of the marketer to attribute fair compensation in the coupon process. Card-linking alleviates these pain points.
Why is it Still Important to Focus on In-Store and Brick and Mortar Commerce?
Physical stores still remain the foundation of retail and 90% of all retail sales are transacted in-store according to AT Kearney’s Omnichannel Shopping Preference Study. It goes on to say that “brick and mortar” remains the customers preferred shopping channel as the physical store provides the ability to touch products and engage with sales staff. A whopping 95% of retail sales are still captured by physical stores. However, 80% of those consumers are on their mobiles while in the physical store - led there thanks to a great deal seen online.
Digital marketing influenced more than half of in-store retail sales in the US in 2016, to the tune of $2.1 trillion (Deloitte). And that’s only retail. The total O2O opportunity is estimated to be more than $4 trillion. Despite digital’s proven ability to influence in-store sales, there remains a gap in tracking and reporting this performance.
Card-linking and O2O Industry Revelations
Recently the CardLinx Association released their annual report Card-Linking and O2O Industry Survey. The study revealed how the card-linking and O2O industry will continue to gather momentum and dominate the customer loyalty space.
Some highlights of the survey:
- 51% of the participants asserted that card-linking programs would definitely be a catalyst for bringing consumers back into shopping centers.
- Card-linked offers advertised online catch shoppers attention and motivates them to go to the store, where their purchases are then tracked with crucial O2O technology.
- 98% of the survey participants affirmed that they will continue using card-linked marketing or loyalty campaigns in the next 12 months.
- 95% of the survey participants declared their participation in the O2O commerce industry in 2017.
- Survey participant offering loyalty points as the reward have grown from 12% in 2016 to 20% in 2017.
- An O2O feature that has found resonance with millennials is to use the rewards gained to benefit socially responsible businesses and nonprofit organizations.
The survey findings reveal an optimistic outlook that O2O technology will help to revive in-store traffic in 2017.
The Future of Card-Linked Offers
Card-linking means no more printing coupons. You don’t have to make a purchase immediately online to get the promo code but can go in-store at any time to redeem the offer. The offers taken up by consumers can be instantly tracked back to the referring publisher so they are able to register the transaction. This leads to advertiser’s being in a better position to negotiate better shelf space with the retailer based on their ability to drive customers into the store. Win-win for everyone.
As card-linking continues to grow, the industry is expanding and diversifying, entering new industries and merchant categories. The results of the survey show card-linking at its tipping point, with more traditional retailers starting to complement their traditional digital marketing channels with card-linked technology to drive in-store sales. It will be interesting to see how new technologies will shape and advance this industry.
We’d love to hear your thoughts on how you think card-linking will impact the loyalty rewards space. Are you currently looking into card-linked offers? Drop us a comment or contact us here. We’re curious about what you think.