RetailWire Webinar: Rewarding Shoppers and Retailers
By Tom Ryan
Concept Shopping Inc. and HSBC have joined forces to introduce a combination loyalty and PIN-based payment card. The OptiPay card promises to significantly lower payment processing costs while also driving customer loyalty through a rewards program based on customer preferences.
On Tuesday’s RetailWire Webinar, Rewarding Shoppers and Retailers, John Hennessy, vice president at Concept Shopping, said the card was partly developed in response to the surge in interchange fees for retailers in handling credit or debit card transactions. Costs are rising not only because customers are choosing plastic over cash, but also because bank rates have climbed and customers are preferring credit or signature debit cards offering rich rewards programs.
The combo card promises to cut retailer payment processing fees by more than half for customers choosing to pay with the OptiPay card.
The rewards portion is designed to encourage customers to use the cards instead of costlier signature debit or credit cards.
“Shoppers want a plastic payment, but they do want to get rewards too,” said Mr. Hennessy.
The loyalty program is built around customer preferences tied to past purchases. During each shopping visit, cardholders receive offers intended just for them by swiping a kiosk at the store entrance. The customer is then able to use their rewards for additional in-store purchases.
“Those rewards will now be placed on that one card and it creates a balance that gives them a compelling reason to come back to that store,” said Mr. Hennessy. “When a shopper checks out, they can use that card to identify themselves for loyalty as they do today, they can use that card to draw down part of the balance that they’ve earned, or they could use that same card to pay.”
The loyalty program is largely based on Concept Shopping’s Automated Marketing program, which is currently operating in over 600 stores across the U.S., and is designed to encourage repeat visits and more spending per visit.
The program not only drives additional trips to the store with enticing offers on their favorite items, but knowing their purchase history enables more targeted marketing for retailers, such as offers for complementary items.
Mr. Hennessy believes that by combining loyalty and rewards with a flexible payment card, retailers can get over that hurdle of PIN-based payments that shoppers won’t adopt.
“They can now get the rewards that they seek on products that make sense for them and they can get rewards spendable at a store they’re familiar with and that they trust,” said Mr. Hennessy.
In the following Q&A session, participants agreed the rising costs of interchange fees is becoming a huge issue across retail while also noting that loyalty programs often offer little margin if not run cost-effectively.
“You can generate loyalty, but a lot of retailers are letting a lot of margin walk out the door,” said Nikki Baird, executive director of research at Retail Systems Alert Group. But Ms. Baird said the OptiCard has some appeal because of it offers convenience.
“Consumers are increasingly looking for ways they can make their lives easier and if this removes a complication, all the better,” said Ms. Baird.
Joel Rubinson, senior vice president and general manager of solutions at Synovate, also added that payment options and rewards programs add yet “another dimension” to help retailers build relationships with customers beyond core factors such as assortment and price.
“I like a deeper meaning of loyalty,” said Mr. Rubinson. “Loyalty means devotion; loyalty means forgiveness; loyalty means a branding relationship between the customer and the retailer and in that sense what I really like with what John was talking about is that this isn’t just putting coupons or price reductions in people’s hands – this is actually adding to the shopping experience.”
Discussion Questions: What to you think of the potential for a single merchant
card for both payments and loyalty rewards? How do payment options weigh in
as a factor for shoppers in choosing where and how to shop? Do frequent shopper
programs typically motivate shoppers in ways that truly benefit retailers and
marketers?
- HSBC Introduces New Loyalty and PIN Payment Card Program – Concept
Shopping - Rewarding Shoppers and Retailers: New developments in one-card payment and loyalty rewards. – RetailWire.com
- View recording (slides and audio)
- Download PDF (slides only)
One Comment: Finally.
I felt that the importance of the panel is that they showed how you could take two seemingly incongruent technologies…one that related to traditionally passive retail Kiosk solutions, and make it kinetic by marrying it with both settlement and loyalty programs. Then, at another level, the other panels expertise in the areas of consumer behavior and retail trends provided an additional perspective that enhanced the program. As food for thought, I had written an article on a related subject for the hospitality industry that I believe the readers of RetailWire would find intriguing, since a number of the solutions that are dimensioned could be implemented in a retail environment. Here is the link.
All of the panelists did a good job, and the webinar was worthwhile.
I really love this concept because it starts to address two core issues: 1) most retail loyalty programs don’t drive loyalty–they simply give consumers discounts for transactions they probably would have bought anyway and 2) few retailers have leveraged the analytics behind the data captured at POS to really understand how to motivate and build real loyalty. By taking cost out the transaction where there is no value for the consumer and putting it back where there is perceived consumer value this partnership can start to leverage loyalty programs for something more than discounts.
One thing I really want to understand, though, is the analytical engine behind all this. Without robust real time analytics, the targeted nature of this program can’t fly. If the engine is there, then I believe this has the potential to be a great leap forward in loyalty marketing.