Card Linked Offer (CLO) programs are the most recent and dominant trend in the loyalty and rewards industry. It is estimated by the experts that the transactions through Card Linked Offer programs will likely exceed billions of dollars. Many major companies in Australia are trying to roll out their CLO programs. There are currently more than 20 major CLO programs in development.
What is the size of the market as Card Linked offer?
The CLO program market has the potential to be very large. There are roughly 13 million credit cards and 36 million debit cards in Australia alone. These cards account for ~$850 billion of transactional value per annum. If only 1% of these transactions happen through CLO programs, the transaction value through CLO programs will be ~$8.5 billion. If average cash back from these programs is 5%, customers will be able to get back ~$425 million which can pay back outstanding debt of nearly 250,000 credit cards. For tech-savvy, new generation customers, naturally these programs will have a very strong appeal.
What is needed to set up a CLO based loyalty program?
A CLO based loyalty program needs the following components:
- Loyalty Program Platform – a platform that can be embedded into an existing app (e.g., Everyday Banking App of a bank) that provides the operating platform for Loyalty Program operations
- Card-Transaction Matching service – a service that can analyse each transaction involving a registered card and match it to an appropriate offer provided by the merchant involved in the transaction by matching Card ID with Merchant ID
- Content Services Platform – a platform that is used to on-board Merchants to offer CLO-ready rewards for consumption in the loyalty programs
- Audience base – members will need to register their cards to the Loyalty Program to receive offers. Registered cards are at the start of the journey
How does a CLO program work?
A CLO program works typically through the following process steps:
- Loyalty Program Operator runs a campaign to get their members register their card to their program
- Member is presented with offers provided by participating merchants. These offers searched by member’s search criteria
- Member visits a location with an offer of interest, e.g. their local pub, and pays the bill using registered card
- The transaction is picked up by the card-transaction matching service
- The transaction is real-time validated with the Content Service Platform
- Post validation, the offer (cashback or points or other mechanisms) is recognised by the Loyalty Program
- Member gets the real cash or points as per the program rules
What are the key success factors for a CLO program?
There are two (2) important ingredients to success for developing a card-linked offer program, each of which will increase customer loyalty and reduce churn.
- Purpose of the CLO Loyalty Program: Every card holder in the country will have many suitors to register their cards into a CLO loyalty program. For example, a typical card holder will have her bank, health insurance, major retail, general insurance, and telco asking them to register their card to their program. The member may ultimately register their card to a program that shares a high degree of alignment, not simply the best ‘cash back’
- Quality of the Loyalty Program: There are two major sub-elements for this success factor:
- Designing the program to foster ‘repeated’ behaviour from customers – Loyalty programs succeed when their customers use them repeatedly. This is more important for CLO programs as CLO program economics rely on transaction volumes – greater the transaction volume, more sustainable program. Key drivers to foster ‘repeated’ behaviour from their customers are:
- Depth and breadth of offers – Offering a variety of offers so that when a member comes to your program for the first time, finds something motivating to use the program for the first time
- Near real-time recognition of valid transactions to build member confidence that the program works and drives member gratification
- Recommendation to members about offers they may like (i.e., personalisation)
- Regular member research to keep abreast of shifting member needs
- Maintain excitement about the program – ALoyalty and rewards program is a central part of customer engagement. Members need to feel excitement about the program to stay interested in it, even if they are ‘super savers’. Some proven ways to maintain the excitement are:
- Inform your members about what’s new – it’s a great way to keep your existing users engaged and attract new users. A great new merchant in the program or a great new offer in the program from an existing merchant can deliver a sense of freshness. ‘Dynamic offers’ and ‘Flash sales’ that ‘surprise and delight’ your members are fantastic ways to keep them engaged
- Gamify engagement – value-seeking engaged members love contests and a chance to win. Best contests are those that have simple rules and an award that is relevant to the season (e.g., travel offer during school holidays). Redeemable points for activities are another great way to engage the users
- Develop a roadmap that aligns to the Enterprise Loyalty Program’s audience – continuous improvement of the program (I.e., the App, rewards and offers) makes a member feel like the program is invested in. It also provides a great channel for new ideas and feedback
As many major organisations in Australia are trying to develop CLO programs, speed to market will be key to establish the presence of your program. Entertainment has launched its Seamless Rewards program ( https://www.seamlessrewards.com/ ) to support organisations in developing their CLO programs. Entertainment is building its best in Australia CLO-ready merchant content services platform and has established relationships with Card-transaction matching service providers to help any organisation develop its CLO program. It is possible for you as an organisation to develop all of this yourself, but it’s very slow, highly expensive and there is no guarantee of success. When you partner with Entertainment, our expertise becomes your expertise. We make it easier to build your CLO program.
Visit https://www.seamlessrewards.com/ to learn more or contact us on firstname.lastname@example.org.
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Ani Chakraborty, CEO, Entertainment Pty Ltd
Phillip Scott, Head of Technology Transformation, Entertainment Pty Ltd
James Rich, Head of Enterprise Sales
Gena Clarke, Transformation Manager