Daily deals held great promise for local merchants as a way to quickly acquire many new customers by literally cutting the consumers’ cost to engage in half. It’s worked well for some. But for many, the 50% off deal has been a bad and/or costly experience they’re not eager to repeat.
The market also is responding to this sentiment. Facebook has abandoned its daily deals program after just four months. Yelp is withdrawing from daily deals and refocusing on reviews. And the influx of hundreds of me-too daily deals providers have drastically diluted the market.
Merchants who are still engaged in daily deals are pushing providers to allow them to offer less than 50% off and for better payment terms. In exchange for cost and risk connected with the current daily deals model, they’re demanding more options and better control. But in the current model, there’s a limit to how much control there is available to give.
Stepping up to provide merchants with options, control, and more, are the newest members of the marketing industry: banks. Banks now know more than practically anyone about consumer spending behaviors and they are rapidly entering the digital marketing and local commerce space. Financial institutions such as Ally Bank (Ally Perks), Fifth Third Bank (5/3 Prewards) and American Express (Link Like Love) already have rolled out programs that leverage technology to offer customers truly digital deals from merchants of all types via their existing credit or debit cards; also known as “card-connected” offers.
Of particular benefit to the hyperlocal merchant is the ability to micro-target consumers by geography and demographic and offer them digital deals via payment devices already in their wallets. To redeem the deal, consumers need only to swipe their card at the POS and the rebate is automatically deposited back into their account. The transaction is turnkey and transparent; no new equipment is required and no one needs to be retrained.
The bank connection enables merchants to tap into bank analytics (via the technology provider) and send deals only to the consumers that meet specific criteria. For example: New moms in a specific zip code, families who have recently moved into town or millennials spending in your category, but not with you. Additionally, card-connected offers can be laser targeted to bolster business during down times. For example, restaurant owners can make offers good between 2-4p.m. to fill up tables between lunch and dinner.
Card-connected offers also provide merchants with the ability to account for every deal and track its impact. An example: The average transaction at a local ice cream parlor without an offer is $7. A card-connected offer of $2 off a $12 purchase results in an average ticket of $21 — three times the typical transaction size. This particular example of redemption data also reflects signals of new behaviors. In this case, rather than dad and son stopping at the shop after baseball practice for one scoop, dad got the offer, loaded the family into the SUV and took them out for ice cream. And because he had an offer, he likely grabbed a pint of butter pecan for home, too.
For those who like the daily deal model but want more control, card-connected offer technology can deliver that as well. For example, merchants can run an initial deal of 50% off $30 in January and follow up with remarketing at $3 off $15 monthly (20% off) for the rest of the year. The difference is that they will have complete control over how much the deals are, how many of them they want to make available and to whom they are delivered. And they’ll also be able to track exactly who has redeemed them and when, allowing them to refine offers in future campaigns.
The future of digital deals and incentives is with technology that delivers the best experiences for both consumer and merchant via existing payment devices. Card-connected offers are sustainable, risk-free and available now. Use them to your advantage. Your competitors certainly will.
Jonathan Dyke is chief operating officer for digital marketing technology company EDO Interactive, developer of Prewards, instantly redeemable, personalized and measurable offers delivered to consumers over current global payment and mobile networks via consumers existing, debit, credit and prepaid cards.
Image courtesy of Flickr user Andres Rueda.