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The Price Is Right ...

You think you know your customers? Think again. Most marketing and advertising executives presume that when consumers begin to discover that direct marketing systems are infiltrating their personal bank accounts, tracking their spending history, and using that data for more targeted sales and marketing tactics, the immediate reaction will be hostility and fear of exposed personal finances. What’s next? Will employers require your bank statements, along with references and valid identification?

It might come as a surprise to know that marketing executives and teams are experimenting with -- and in some cases have already implemented -- the capability to generate marketing offers based on every customer debit and credit card transaction. Partnerships with the financial institutions, large retail chains (fast food, restaurant, grocery chains, etc.) can create highly targeted promotional media that reaches individual households based on their credit and debit card purchasing history. What’s more, consumers love it!  Opt-out rates among banking customers receiving the offers for one U.S. system are just 1.6%.

And unlike eBay, Google, and Groupon, the consumers’ personal information never leaves the financial institution -- typically a highly trusted service provider. This created an environment in which the consumer’s identity and behavior are completely protected. Not only is the price right for the retailer (because it only pays for reward offers when they lead to purchases), but the consumer is protected from any personal financial history being obtained, as well as from irrelevant mobile ads and other promotions that are overwhelming and not in line with their budgets and personal preferences. Freestanding inserts and other mass coupons and rewards are indiscriminate.  They might reach a mass audience, but they don’t necessarily reach the shoppers who are most valuable to the retailer’s business.

Let’s take, for example, eBay and its recent acquisition of Where. With clear plans to play a larger role in connecting consumers to offline brands and retailers, eBay claims this expansion will provide retailers with technology that can deliver relevant deals and promotions to consumers at a local level -- a huge goal for retailers looking to capture greater share of wallet from new and existing customers. Although eBay's acquisition will eventually allow it to help retailers reach consumers in a specific proximity with mobile ads and other promotions, however, it will have no way to determine who among these shoppers are significant spenders in the specific retail category. Many offers will be subsidizing behavior that was going to take place anyway rather than changing behavior. Merchant rewards linked to bank transactions uniquely have that ability.

Consumers only get rewards from merchants who matter to them -- they don’t waste time searching for and clipping rewards. The reward offers are delivered via a media in which the consumer is thinking about financial issues and shopping costs, e.g. when they are looking at their online or mobile banking statement. They simply click on the reward, and the next time they make a purchase with their debit or credit card, the reward is credited to their account. 

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