Affinity Oversees Evolution of Card-Linked Offers 

By D.J. Murphy, Editor-in-Chief

In the early years of the new millennium, New York City-based Affinity Solutions—a company that had been providing loyalty solutions to retailers since 1998—saw an opportunity to leverage ever-increasing amounts of transactional payment card data into a shift from traditional reward programs funded mainly by credit-card issuers to a new paradigm reliant on the retailers themselves for funding. Merchant-funded rewards were born and Affinity Solutions was a pioneer in the space. In the intervening years, as the model morphed and became known as card-linked offers, Affinity has partnered with more than 4,000 financial institutions providing data for marketing programs driving increased traffic to more than 25,000 retailers. 

The road from merchant-funded rewards to card-linked offers was not a quantum leap. It was a process during which both issuers and retailers had a lot to learn, according to Jonathan Silver, president and CEO of Affinity Solutions.  

Jonathan Silver

“For us it’s been a continuum,” Silver says. “It hasn’t been a bright line between merchant-funded rewards over here and card-linked offers over here. It’s been the gradual evolution of banks recognizing that in order to deliver enough value to the marketer, they had to make the channel access more dynamic and more fluid. You don’t have 60 days to do a campaign. You have to be able to make a decision the week or two before and have a campaign deployed based on a recent triggering event that might make a specific consumer the right person for a specific offer at a given time.” 

Silver says Affinity uses the mountains of data it gathers from its issuer partners to build proprietary tools for the retailers to use in order to assess their position relative to competitors and to generate offers that will drive more traffic through the doors of their retailer partners. 

“We receive aggregated data from our banks daily, every transaction that occurs on the cards,” he says. “In turn, this data provides retailers visibility on market share, on average transaction basket, percent of customers that are first time vs. existing, RFM analysis (recency, frequency, monetary value), dual shoppers vs. exclusive shoppers and more. Really, a very deep view of their performance against their competition. So, they can not only get insights that help run their business, but they can identify opportunities or problems we can solve using targeted marketing initiatives we deploy in our bank channel.” 

The retailers taking advantage of the data Affinity crunches range from sole proprietorships to top mega-retailers, Silver notes. And, the company has evolved strategies that target businesses small and large. 

For smaller retailers, Silver says Affinity sends a “SWAT team” to a certain geography that aggregates many local mom-and-pops for a given issuing bank relative to their card distribution in that area. The company also is working with ISOs to reach small businesses, though Silver cautions that these organizations need special training as they’re more accustomed to selling a cost center than acting as a marketing partner, which they are when it comes to driving new traffic into the store using card-linked offers to consumers. 

Top 150-type retailers, he explains, demand a different, more customized strategy. 

“On the national end, we prioritize based on where we can make a meaningful behavior change on behalf of a retailer by delivering offers to get someone who wasn’t shopping at the store to come in, to get someone who is shopping to shop more and to win back customers who may have defected,” Silver says. “We’ll look at the data to see where the opportunity is greatest for a given retailer.” 

If merchants are to continue to fund the rewards, promotions and offers that lure new customers into their stores, issuers must continue to offer increasing value in the form of the type and volume of information they make available to merchants, the analytics that are applied to that data by companies like Affinity and by making it more convenient and a better experience when consumers redeem those discounts and offers. 

Moving forward, Silver says Affinity will address these issues and differentiate itself from others operating in the card-linked offers space in several ways. First, he says the space is in dire need of demystification. The people providing the technology and partnerships that enable card-linked offers are living in an echo chamber populated nearly exclusively by payments professionals who don’t have a great feel for retailers and their requirements. 

Affinity Solutions To that end, Silver reveals that Affinity has been collaborating with retailers and other marketing service providers on a study that will shape a set of standards surrounding data exchange and how more data (including personally identifiable information (PII)) can be leveraged securely. 

“While PII usage has to be incredibly controlled and consumer-permission based, it’s essential that the data sets can intersect in a number of ways with [a number of organizations],” he says. “They need to intersect for analytic optimization for the retailer, look-alike modeling, suppressions, measurement, reporting and proving that this incremental spend on an anonymized card is really incremental and not a payment device shift.” 

Delivering the offer is another way Affinity expects to differentiate itself. Silver says the company has patents pending on a recently launched product called “Coupon-on-a-Card.” Currently, when most card-linked offers are redeemed, the reward is applied as a credit on the consumer’s credit or debit card statement. Coupon-on-a-Card will give consumers the satisfaction of seeing their discount applied at the point of sale. 

Silver says Affinity is working with acquirers—it started with First Data—to implement the Coupon-on-a-Card system. In the next year, the company expects to have Coupon-on-a-Card integrated with 80 percent of U.S. acquirers. 

Since its inception, Affinity has overseen the shift in card-based loyalty and rewards programs from the banks to the retailers. The company continues to expand on the idea that some information, properly analyzed, contains enough value that retailers are willing to pay for it. 

“The early days of merchant-funded rewards confirmed our intuition that retailers would never play in the space unless we could give them a collective view of the datasets that matter,” Silver concludes. “The data we provide, the insight we give them through our bank channels, enables retailers to really drive behavior change.”

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