Retail is Not Dead, But Small Businesses Need Help

Path to Purchase is Changing

Even though the vast majority of sales still happen in-store, the path to purchase is dramatically shifting so retailers have to rethink how they attract and retain customers. 88% of shoppers research products online before purchasing in-store or online according to PYMNTS.com. Consumers now go online to research a restaurant, store or product in order to make an educated decision on where to eat or what to buy in-store.

Most retailers recognize the importance of digital marketing in driving consumers who are online into their brick & mortar store, but the majority of small businesses find it difficult to compete in this environment where they don’t have the expertise, time or advertising budget. Larger retail and restaurant chains have the advertising dollars to outspend local businesses in local markets.

Introducing Card-Linked Offers

Fortunately, Card-Linked Offer (CLO) technology is leveling the playing field for all merchants. If you haven’t heard of CLOs, you’re not alone. According to the Cardlinx Association, CLO marketing is the fastest growing segment of digital marketing, with a majority of  large companies expecting to double their CLO budgets from last year, and the number of consumer transactions doubling from last year. Despite this rapid growth most of the 25 million small businesses in the US have never heard of CLO marketing or know that it is available to them.

Card-Linked Offers (CLOs) are offers (cash back or discounts) that consumers automatically receive just by linking their debit or credit cards to an app, website or loyalty program such as Yelp, Groupon or American Express. Once a consumer links her credit card, every time she makes a purchase, she will automatically receive cash back or a discount at participating businesses. Consumers do not need to hand in a physical coupon or show the offer on their mobile device.

Online to Offline Attribution Solved

Card-Linked Offers are unique in that they seamlessly connect online advertising efforts with in-store purchases. With traditional digital marketing campaigns, merchants pay for impressions or clicks, which can get very expensive quickly; and they cannot track how many in-store visits and sales were driven by their online ads. With CLOs, merchants can now see the direct impact of their online advertising budget because every transaction made can be tied back to the consumer through the linked credit card.

A major benefit of CLOs is that there is no upfront cost - merchants do not have to pay for advertising impressions or to print mailers and coupons. Merchants only pay a small fee each time someone makes a purchase. Also, there is no hardware or software needed to get started. Employees just swipe the customer’s credit card and the cash back offer is given automatically.

CLO technology enables small businesses to get broad reach across a variety of apps and websites. Their offers automatically get distributed through the CLO platform where potential customers will see their offer, and then the merchant only pays the small marketing fee on each transaction that is made in-store.

Increase Sales & Customer Retention

CLOs have been proven to increase the number of in-store visits and customer retention, with 61% of consumers saying discounts and coupons increase their loyalty to a brand (Expedia Affiliate Network) and 77% of consumers saying discounts influence where they shop (RetailMeNot). Cash back offers also increase the size of purchase by 30-40%. In restaurants that translates into a couple of extra drinks or an additional dessert, which is “gravy” on the tab.

And with CLO technology merchants can track customer behavior easily by seeing average order size, as well as the number and frequency of purchases. This knowledge gives merchants the ability to incentivize customers to make repeat purchases and to reward their best customers for their loyalty.

The Future is Bright

CLOs help maintain a vibrant and profitable local merchant ecosystem, because small businesses now have the means to advertise and retain customers like large retailers without taking on any risk. The reality is that the vast majority of retail sales still happen in-store and with the advent of CLO marketing to small business owners, that is not going to change any time soon.

This commentary was posted on StreetFight Mag on October 1st, 2019.