I was particularly interested in the merchant funded rewards session put on by Jonathan Silver of Affinity Solutions and John MacMillan from Comerica Bank. Having listened to several discussions point to debit card rewards as important to consumers, this session focused on how to develop compelling rewards programs.
First of all, rewards need to be compelling with an advertisable value proposition. This is very different from the now common online mall. Rewards programs should include everyday spend and ideally cover up to 15% of the customer spend at the point of sale where they want to spend it. Merchant Funded Rewards are often an extension of current rewards programs e.g. Bank of America “Keep the Change” has an online mall to support further merchant funded rewards for the consumer. Chase and Citi also extend their loyalty programs this way.
Comerica selected merchant funded rewards as a strategy to encourage signature authorization. Some customers like cash, some like stuff, and some like experiences. A loyalty platform should offer all three with analytics to support customization and personalization of offers. Offers can be targeted based on how the consumer spends and where they live. Comerica uses points to encourage behavior and provides employees with the authority to give “happy points” to at risk customers who may have had a bad experience. Employee training and engagement in the loyalty program is critical to its success. The Comerica program with merchant partners and Affinity Solution has experienced success in higher number of transactions and spend.
Many debit card programs can now be found to have rewards. The debit rewards programs are encouraging merchant-funded components to offset the challenges with the lower revenue than credit cards. Citibank ThankYou points offers a relationship rewards program to encourage the consumer across all product lines. Citizens Bank also has a cross-product merchant funded approach while Bank of America Keep the Change focuses on the Visa Check card. For now, Comerica is focused on their signature debit product. With Debit overdraft fees under attack by consumer advocacy groups and legislation pending, merchant funded rewards are an essential part of the debit rewards strategy.