The future of short-chain shopping offers and the huge potential of SKU-level data

Card-linked offers (CLOs) continue to grow in popularity among consumers. They are particularly popular with younger, more digital consumers. In fact, 75 percent of Gen Zers are likely to visit businesses that offer cash back using CLOs.

But all too often, CLOs don’t offer discounts on items that cardholders actually want to buy or experiences they want to have. Some seem completely random, like discounts on a sock subscription, resulting in promotional programs that are less strategic and don’t add value or impact sellers’ bottom lines. But historically, CLO programs have been limited by offering structures that require cashback fulfillment at the merchant level (versus more specific category, brand or product level). Too many offers simply aren’t relevant or compelling to consumers, and thus don’t end up providing the sales traction sellers are trying to achieve.

So what can be done to make CLOs more efficient for sellers and more seamless for consumers? Enables sellers to structure their offers in a way that fits their budgets and sales goals.

Better flexibility will open up participation in the CLO program for more retailers (especially everyday) and more relevant offers for consumers. Furthermore, improved card issuer-retailer collaboration on a data network that leverages item-level purchase data can create greater agility around card rewards offers—a critical factor in card selection, and one that drives repeat use and higher spend. A collaboration can enable the targeted offer of incentives to the exact item, category or aisle-level items they wish to reward. And it opens up new opportunities for loyalty programs in areas that consumers are passionate about.

This type of offer targeting really appeals to customers and sellers. Consider, for example, the hardware store in the neighborhood. In the spring, the hardware store can lure shoppers to the grill aisle with a seasonal offer of, for example, 10 percent cashback on the purchase of grill accessories (in addition to the card rewards they earn on the purchase). Such an offer is an incentive for both the hardware store and the consumer because it enables both the merchant and the consumer to unlock new cost savings and better utilize their budgets. It also enables the seller to compete better and win sales over competitors who also run seasonal sales campaigns.

Enriched data enables merchants to leverage incremental marketing budgets that provide sharper merchant-level offers with exclusions (for products that don’t support the offer), item-level and category-level offers. Here, sellers can make multiple offers on products they have a surplus of and want to offload to consumers they know are already interested in them, continuing this trend by showing customers that they can provide the personalization they are looking for.

To advance inventory management through this partnership, merchants can also keep shelves stocked with the right products and help avoid losses along the way, while offering discounts and deals at the item, category and aisle level (rather than store discounts). Doing so keeps customers happy and helps cut costs.

In addition, the collaboration between merchants and banks on item-level data enables merchants to leverage bank marketing and service channels more frequently and more effectively with offers tailored to their specific sales goals. Simply put, they are able to provide consumers with more relevant, personalized offers in their banking apps.

Perhaps an even greater opportunity for merchants going forward is to work directly with banks to collaboratively optimize loyalty reward program structures. This can enable more specific rewards that mutually benefit big-ticket purchases and everyday spending on cards for items they already know their customers are interested in.

At the end of the day, the “secret sauce” in the recipe for success is the SKU-level data that merchants have access to. This is the key ingredient for creating relevant offers that generate sales and benefit all participants.

Card-linked offers are more attractive than ever for retailers – and for consumers facing high inflation, they are an effective way to save money, especially money spent on everyday needs. Now, merchants who engage with the right third-party data network can create relevant, practical and more rewarding CLOs that empower and engage consumers while benefiting the retailer’s bottom line.

Jehan Luth is the founder and CEO of Banyan, a company that enables merchants to increase customer engagement, create new revenue channels, unlock powerful insights and expand marketing opportunities.