Transformation of Retail Through Card-Linking
CardLinx talks to Kirsty Rankin, Mastercard’s SVP of Merchant Value Proposition, Loyalty about mall, Millennials and the magic of card-linking.
CardLinx: Mastercard’s CMO Raja Rajamannar recently said on CNBC that people are less interested in pure traditional advertising, and instead they want to engage in advertising experiences. How can card-linking programs help create experiential purchases for consumers?
Rankin: When we think about card-linking, I think what it does is really create that “in the moment” experience and creates that seamless transition from pre-purchase through to purchase though to post-purchase experience. Giving the cardholder an experience by reducing friction, saving time and in the context of that “in the moment” experience is a great example of what is happening in the world of wearables and IoT devices.
Let’s use wearables as an example, like a FitBit, where you have an active engagement with that device. Card-linking can open that whole segment of marketing. It’s about having that user generated contextual data that creates the real experience for the customer. They are already doing something they are motivated to do, like going for a run, but then if an offer comes up from a sports drink company once the run is finished, then that is about a powerful experience as you can create.
The offer is user-generated based on the consumer’s activity or preferences and goes beyond spend data, transactional data so you are able to look at what the context is, what the consumer is actually doing. So, all of a sudden, you have way more data and insights to work with to get that one-to-one communication. This is a good example of experiential purchases.
CardLinx: What are some different examples of card-linking programs at Mastercard?
Rankin: We work a lot with content aggregators like Empyr and Shop Your Way because they can provide the offers to their constituencies in a seamless way that doesn’t mean you have to have coupons or that you need to remember an offer. It’s all done through digital channels which is obviously the way of the future with everything embedded in apps. We are seeing a lot there.
We’ve also interestingly just launched a program with Cheesecake Factory, Subway and Fresh Direct using Facebook Messenger’s chatbot. So, through that you can link your card and purchase Subway sandwiches through the Facebook chatbot. I think there are lots of new use cases coming to the fore.
We’re doing some things in Australia with a shopping mall where you can earn through the card-linking mechanism. You earn points by shopping at particular stores in the mall and then redeem those points for free parking. It’s another use case that’s quite interesting.
We’ve done so many programs. We’ve done programs with Google through Google Play, connecting your Mastercard to get three months free. And then it becomes a regular transaction after the three months.
In the UK, we’re working with British Airways and their Avios frequent flyer program. We’re using card-linking to open up the ability to earn frequent flyer points at a whole range of merchants. So, you’re earning if you shop with merchants like Marks & Spencer’s. You can earn British Airways Avios points through card-linking services to fast track earning points.
CardLinx: There have been a lot of recent articles about the decline of malls. What are your thoughts on card-linking programs for malls as a way to bring people back?
Rankin: I think there can be a mall loyalty program and it might be that the points don’t have monetary value but it’s around getting an experience around accumulating points. It might be you earn points and then you can redeem the points for 2-for-1 deals or other offers within the mall that shoppers can avail themselves of by virtue of repeat visitations. It could be entries into some kind of draw or lottery to win something. There are a lot of different applications where you can leverage card-linked services. It’s actually a big opportunity.
CardLinx: How has Mastercard positioned itself to take advantage of expected shifts in consumer spending behavior towards wearables and other IoT devices?
Rankin: How can you help through card-linking services to create a better experience for all stakeholders? It saves time, reduces friction, gain loyalty points. There are all sorts of potential use cases and opportunities. And particularly given the whole move towards customers wanting increased personalization.
At Mastercard we have a platform called Personalized Card-Linked Offers that uses traditional historical data as a guide. Basically, you are what you spend. We can serve up offers that are meaningful and merchants are prepared to actually give more away as targeting accuracy increases. It’s an interesting opportunity and we are seeing some really great results driven out of those programs in terms of spend lift for merchants and increased consumer engagement for the issuing banks who are leveraging their channels to push out these offers. It’s a win-win for everyone.
CardLinx: What are retailers seeking when using Mastercard’s card-linking products?
Rankin: First of all, they’re seeking new distribution channels. Using the issuing banks as a marketing platform, if you will, for their content to go out. They are looking through that to drive a better return on spend. And they are getting much better returns than other digital means.
Also, it’s important that they have online-to-offline attribution as well so it’s measurable. And it comes back to their pain points: How do I acquire more customers? How do I get my existing customers to spend more? How do I get my lapsed customers to come back? And how can I do all of this at the best return on investment?
So, I think card-linking can tick off those boxes as well as deliver a great customer experience. Because when you think about it, with coupons or QR codes often it involves the merchant having to change their point-of-sale or train their staff, which can be very difficult. Whereas with card-linking it’s all very seamless and frictionless. It all happens behind the scenes, like magic. For the retailers, this is very important.
CardLinx: What developments or trends do you see in the near future for card-linking?
Rankin: Loyalty is really creating a preference to a brand. Through the use of card-linking we’re able drive that preference in a very seamless way. Traditionally card-linking is used as an offer, discount or cash-back on your card. A very interesting application is turning the value of that cash-back into a points equivalent. Using the example of that British Airways Avios program, I link my card to the frequent flier program and then when I shop with my card, instead of getting $10 cash back I get $10 worth of points.
Now those points, that $10 worth of points can translate into maybe 2,000 points for some programs. And those points have a much higher perceived value than $10. People are thinking, “2,000 points will help me towards my next holiday.” So, it’s an interesting development around points programs. We are seeing them as being very powerful in building out coalition networks, having a network of merchants to earn points towards your favorite loyalty program.
CardLinx: I know I like getting my points! Another trend we are seeing is gamification, using psychology or other marketing strategies to bring consumers to card-linking. How do you see gamification in card-linking?
Rankin: Gamification especially with Millennials will drive further card-linking engagement and it comes down to getting a reward for something you’re doing that will drive you to keep doing it to get more rewards. Gamification brings that that to life.
We did something in Vietnam for the Rugby World Cup where you spent on your card and it got you points that got you different levels. When you got to level A it entitled you to an entry to the draw to go see the World Cup Finals. And it was tiered, so that at the second level, every point was doubled and as you work your way up the league ladder you got many more opportunities to enter the draw to win. There was that real incentive to win and drive spend through the card through different offers. You get doubled the benefits that accumulated at different levels.
CardLinx: You talked about Millennials and everyone is interested in this demographic and their shopping habits. Do you see anything unique about their purchases?
Rankin: Millennials are an industry on its own. They are more into experiences than accumulating stuff. You think about the whole collaborative economy and Millennials in that space. They don’t want a car; they want a ride to a party. It’s not about having stuff; it’s about experiences. And they are very tuned to save money when they can. And so card-linking is the perfect vehicle to reach Millennials. There is research by Forester about Millennials that they are more likely to shop where there was a card-linked offer. That will help to create preference for one store over another. There is a big opportunity with that market.
CardLinx: Thank you so much for your time and we covered a lot of topics. Anything else you would like to add?
Rankin: The other trend to touch upon is getting more SKU-based data. Manufacture-funded rewards is the holy grail. Merchants will often have CPG funding or manufacture funding but they can’t bring it to life with card-linking yet. So, it’s a trend that is definitely prevailing and we will see more happening in that space. The ability to provide specific offers in a store from a specific brand is an iteration that will be very powerful.