The Future of Card-Linked Shopping Offers and the Huge Potential of SKU-Level Data

Card-linked offers (CLOs) continue to grow in popularity with consumers. They’re especially popular with younger, more digital consumers. In fact, 75 percent of Gen Zers are likely to revisit businesses that offer cash back using CLOs.

But too often CLOs don’t offer discounts on items that card holders actually want to buy or experiences they want to have. Some seem totally random, like discounts on a sock subscription, resulting in offers programs that are less strategic and not valuable or impactful to merchants’ bottom lines. But historically, CLO programs have been constrained by offer structures requiring fulfillment of cash back at the merchant level (vs. at the more specific category, brand or product-level). Too many offers are just not relevant nor compelling to consumers, and thus don’t end up providing the sales traction merchants are trying to achieve.

So what can be done to make CLOs more impactful for merchants and more seamless for consumers? Enabling merchants to structure their offers in a way that aligns them to budgets and sales goals.

Better flexibility would open up CLO program participation to more retailers (particularly everyday spend ones) and more relevant offers for consumers. Furthermore, enhanced card issuer-merchant collaboration on a data network that leverages item-level purchase data could create greater agility around card rewards offerings — a determining factor in card choice, and one that drives repeat usage and higher spend. A collaboration could enable the targeted offering of incentives to exactly the item, category or aisle-level merchandise they want to reward. And it opens up new opportunities for loyalty programs in areas that consumers are passionate about.

This type of offer targeting holds real appeal to shoppers and merchants. Consider, for example, the neighborhood hardware store. In the spring, the hardware store can lure shoppers to the grilling aisle with a seasonal offer of, say, 10 percent cash back on purchases of grill accessories (in addition to the card rewards they earn on the purchase). An offer like that is an incentive to both the hardware store and the consumer because it enables both the merchant and consumer to unlock new cost savings and better leverage their budgets. It also enables the merchant to better compete and win sales over competitors that are also driving seasonal sales promotions.

Enriched data enables merchants to tap into incremental marketing budgets providing more pointed merchant-level offers with exclusions (for products that cannot support the offer), item-level and category-level offers. Here merchants can provide more offers on products they have a surplus of and are looking to unload to consumers they know are already interested in them, continuing this trend of showing customers they can provide the personalization they're looking for.

In furthering their inventory management through this partnership, merchants can then also keep their shelves stocked with the right products and help avoid losses along the way, all while offering item-, category- and aisle-level discounts and offers (in lieu of storewide discounts). Doing so keeps their customers happy and helps cut costs.

Additionally, the collaboration between merchants and banks on item-level data enables merchants to leverage bank marketing and servicing channels more frequently and effectively with offers aligned to their specific sales goals. Put more simply, they're able to provide consumers with more relevant, personalized offers in their banking apps.

Perhaps an even bigger opportunity for merchants ahead is to partner directly with banks to collaboratively optimize loyalty rewards program structures. This could enable more specific rewards that drive mutually beneficial big-ticket purchases and everyday spend to cards for items they already know their customers are interested in.

At the end of the day, the “secret sauce” in the recipe for success is the SKU-level data that merchants have access to. This is the key ingredient in creating relevant offers that bring sales and benefit all participants.

Card-linked offers are more appealing than ever for retailers — and for consumers facing high inflation, they’re an effective way to save money, particularly money spent on everyday needs. Now, merchants that engage with the right third-party data network can create relevant, practical, and more rewarding CLOs that empower and engage consumers while also benefiting the retailer’s bottom line.

Jehan Luth is the founder and CEO of Banyan, a company that enables merchants to increase customer engagement, create new monetization channels, unlock powerful insights and grow marketing opportunities.