Playing your cards right: How card-linked cashback is shaking up the retail sector

Illustration by Ross Lesley-Bayne

Card-linked technologies are changing the cashback and retail landscape as new means of offering seamless consumer discounts emerge. Sean Hargrave takes a look at how new partnerships in the card cashback space are presenting exciting opportunities for retailers.

Recent developments in cashback and affiliate marketing have made in-store the new huge opportunity, and no doubt battleground, for performance marketing publishers and advertisers.In the latter half of last year, two of the big four banks (Lloyds Banking Group and RBS Group) launched in-store cashback services, introducing the masses to the notion of promotion and loyalty schemes returning money to their wallet. They joined the million shoppers at the country’s leading online cashback service, Quidco, who have registered a debit or credit card so they can take advantage of long running and shorter terms deals by simply using their everyday card to make the purchase.Cashback is now moving in-store from the banks on the one hand, and affiliate marketers on the other, to tap in to the nine in 10 sales that still happen face-to-face on the high street.Banking loyaltySo, how have these new developments come to be?Cardlytics launched Everyday Offers in Q4 last year with Lloyds Banking Group (which includes Halifax and Bank of Scotland) and has a very simple premise. The majority of its customers will bank online nine times per month and around 40 per cent of its 11 million customers bank through a mobile app nearly daily, offering a vast, frequently engaged audience which the bank has detailed spending data on.“The beauty of what we’re doing is people don’t have to do anything new, they don’t have to go off finding sites with deals, they don’t have to sign up to schemes,” says Charlie Humphreys, Cardlytics managing director. “We bring the deals to them and they’re offered based around detailed data analysis because we can look at what an advertiser is trying to achieve and then present those people to them. For example, one of our clients, Gourmet Burger Kitchen opened a restaurant in Norwich recently. Through the banking data we knew which customers in the area were interested in casual dining and could offer them a targeted offer next time they checked their account online or through their mobile phone.”As with all the major players in the area, a similar looking control group is never shown a particular offer so the incremental sales can be proven by comparing identical types of customer who are only differentiated by those who have seen the offer and those who haven’t.It is a very similar situation with Reward Insight, which powers Natwest and RBS Cashback Plus. The initiative expects to add several new retail partners to its current roster of seventeen before Easter. “We’re all about allowing the banks to offer their customers little thank yous,” says Penny Shaw, marketing director at Reward Insight.“Nobody’s going to rich off them but they’re a great way of getting, typically, one per cent cashback all the time through selected partners without customers having to even think about it. It’s effectively cashback as a loyalty scheme.”Online reactionSo, what do the online giants in the area make of the banks taking on the charge of introducing cashback to in-store? Quidco, the country’s large cashback site, soon expects to hit four million members and already has a million cards registered for in-store redemption? Its commercial director, Andreas Andreou claims that rather than being worried about the move, he welcomes it.“It’s actually really good news for cashback because it introduces it to a much wider audience and helps us to then make the link between offers on a smartphone or our web site and in-store redemption,” he says.“We don’t need to be worried because the banks just have a handful of shopping partners but we have more than 4,000 and so that’s why people see us as a shopping partner, they just don’t have that same relationship with their bank.” Birdback, the company providing the technology which can take affiliates’ offers and track the card registered with them, so the customer gets paid and their shopping habits tracked for marketing purposes, is similarly optimistic. And with good reason – Birdback is expected to announce a deal with an affiliate network this month to link publishers’ vouchers and deals to a card for in-store redemption.“We’re still rolling out the network but our strategy is that people want access to the widest range of deals possible without having to remember to print out coupons or belong to a particular bank,” he says.“With us they just register for the deal from just about any of the big voucher or cashback sites and the cashback is automatically processed. It’s not like a deal with a single bank or a single cashback site where you only get one set of offers. With our technology you get the whole lot but without having to remember to carry vouchers around with you.”What is clear, then, is that while much has been made of the phenomenal success of cashback online, the real battleground was always going to move on to where the majority of purchases take place – in-store.With the banks offering either long term loyalty cashback orientated or short term deals with a small number of large retailers, there is definitely a great deal of exposure being given to what was previously an online offering. The online companies that have been offering cashback for the past few years are poised to ride the coat tails of this drive and take their offers in-store. Given that the latest moves are opening up 90 per cent of retail (ie in-store) it is true to say that there is room for everyone as the banks work mainly with a dozen or two dozen partners and the affiliates work with thousands.An interesting part of these developments is going to be not only online cashback sites proving how they can drive footfall in-store and capture data to shape future offers around, it is going to be good old-fashioned de-duping. This has not been an issue for the online pureplays before because people would either type in a code or online or show up at a shop with a printed out voucher. However, with that need taken away, Quidco is encouraging its retail partners to work through accepting offers that have to be activated by the customer, even though, in theory, they could actually just register their card once and then have all transactions linked to their card.“We’re certainly working under the assumption of last-click wins, should someone have come across two offers for a retailer from different sources which they’ve linked their card to,” says Andreou.“That’s why we’re encouraging retailers to take up our service of asking shoppers to activate offers so we not only show intent to the retailer but we can demonstrate the last click. We don’t see it as a big issue, because it’s nothing new to affiliate marketing but it’s going to be a very new issue for in-store attribution because these issues just haven’t arisen before.”The other obvious development is that the banks are likely to focus more on loyalty with some tactical campaigns thrown in by a small selection of large, well-known mainly high street brands. While the same is also true of online performance marketing publishers, they will be looking to seek an advantage through their wide reach so thousands, rather than dozens, of advertiser retailers. Two very different strategies that are now running alongside each other for the first time.This feature was first published in The Drum's 19 March issue.

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