In 2014, I wrote about the potential for using digital receipts to expedite loyalty program enrollment. My viewpoint has been that the real-time push notification, leveraged in the context of everyday retail purchases, is a powerful tool for merchants, consumers and banks alike.
Over two years later, digital receipting is still a largely untapped space, with only tepid interest from merchants and banks. Perhaps banks overestimate what it really takes to deliver this simple, yet dynamic solution. Or, they fail to understand the enormous value that a mobile device’s push notification – termed ‘digital receipt’ – can provide for the three primary parties involved in a retail transaction.
Recap of Incentives in Retail Spending
Merchants are not only interested in making a sale wherever one can be made, but also keen on developing loyal, long-term shoppers who habitually choose their brand over others.
Consumers are interested in finding and purchasing products that meet their specific lifestyle needs and not wasting time or money in doing so. They need to be able to identify targeted products in a timely fashion and to ensure that the respective cost agrees with their disposable income and long-term financial goals.
Banks are tasked with acting as trusted fiduciaries by processing their customers’ transaction data and regurgitating it back to them in the form of insights, to help them make responsible, more informed spending decisions. The idealistic thinking goes: if a consumer spends smarter – leveraging deals and tailored product discovery – then he will ultimately free up funds for savings and for greater spending on the products and brands that are most important to him.
Existing Customer Relationships
Your average consumer already has many established brand affinities with relationships that date back to early years in the work force. Starbucks and Amazon, in particular, have built many of these types of loyal relationships, which have given them the latitude to control the entire payment experience by way of proprietary digital wallets.
But at least 80% of a consumer’s relationships are non-intimate in nature – ones where store visits and spending aren’t always habitual. Think about your relationship with stores like 7-Eleven, Potbelly and DSW. Chances are, your identity to them is nothing more than the last four digits of your credit card number. The level of engagement in these offline relationships is minimal now but has the opportunity to be broadened during your infrequent purchase at one of their stores.
Facilitating New Customer Relationships
One such tactic is turning offline relationships into digital ones – an approach that can be accelerated by the digital receipt. A real-time push notification displaying details on a purchase that just took place at Kroger may appear rudimentary in nature but it is actually a gateway to a new customer relationship. This relationship is one that historically fell victim to points of friction surrounding loyalty program enrollment forms, distrust of merchant marketing or general disinterest in taking the time to learn more about new products and promotions.
But now, instead of the customer leaving the store as a stranger, the customer’s bank can provide him with the option to share basic information with the merchant on the terms of a bank-facilitated relationship. Under this arrangement, the bank and its mobile app are the sole communication platform between the merchant and customer, until the customer chooses to opt into other forms of marketing.
The digital receipt would allow the customer to enroll in the store’s loyalty program, view reward points earned on a particular purchase and redeem relevant coupons for future use. The consumer could also opt into location and contextual alerts for that merchant, which would inform the customer when a store is nearby or when the bank believes that he may be in need of the merchant’s products (e.g., advising that a subway store is two blocks away at 11:45 AM).
As opposed to the offline relationship that previously existed, the digital receipt has facilitated some form of engagement that allows the merchant an opportunity to grow the relationship. The merchant would pay the bank a one-time referral fee for customers that opt-in and then pay fees based on spending thresholds met by the customer in the future.
The experience becomes even richer if the bank is able to access itemized purchase data – something that is not typically sent from point-of-sale (POS) processing software to bank systems. Merchants are highly-protective of this data – and for good reason. Similarly, banks have the ability to readily demonstrate the impact that an individual purchase has had on the consumer’s budgets and monthly finances, to continue to encourage smart spending and use of deals and discounts at stores.
Allowing a single card transaction to establish a more meaningful, engaging, digital relationship between a customer and merchant that was previously all offline removes friction from a customer acquisition process that has historically been burdensome and annoying to customers. Merchants have the opportunity to grow a long-term relationship, banks earn referral revenue and ‘custodial’ role with the consumer and the consumer is more informed of relevant products and deals to him.