It’s no secret online sales have proved challenging for large retailers—they can’t compete. But one Toronto-based company thinks it has the key to increasing loyalty and engagement for not just retailers, but banks too.
Engage People, a business committed to helping companies build interaction and engagement with customers, is leveraging something tied to the plastic already wedged in your wallet: credit card points.
With the launch of LRG Waav, Jonathan Silver, CEO of Engage, says the points-based reward system tied to credit cards can be used just like a currency to make in-store purchases at partner retailers. For now, the functionality is only compatible with cards issued by the Canadian Imperial Bank of Commerce.
By encouraging customers to spend their points at a lower cost per point, this can help banks reduce their funded liability from unredeemed points customers have racked up.
In 2015, Engage launched a product known as LRG to serve as a loyalty redemption platform where reward points could be used on any e-commerce site to make purchases. So far, Silver said over 1,000 iPhone pX pre-orders were made using the original LRG platform.
With LRG WaaV, Engage wants to bring the same kind of ease and convenience to redeeming points to the mobile wallet and in-store transactions.
The company announced a global partnership with Marriott Tuesday, and Silver said LRG Waav will be live across the chain in Canada, United States and the United Kingdom in Q1 of 2018, with plans for expansion to 15 additional countries within a year.
Reward Points and Trophy Value
Traditionally, reward point programs tried to compete with commerce by maintaining warehouses of prizes. But, over time, Silver explained, the value of those prizes declined, especially in light of the cost to ship them, and people pivoted to redeeming gift cards with their reward points instead. Today, Silver said they see 60 percent of redemptions are gift cards. But passing out cash doesn’t contribute to brand loyalty.
“Say you’re on a credit card program, you save up and you’re given an iPad—you will always associate that iPad with the credit card program. And that’s what drives the loyalty,” Silver explained. “You’ll tell your friends about it and there’s that strong connection which will drive you from a behavioral point of view to say ‘Okay, I want to keep earning points cause I want the next thing.'”
“Cash doesn’t drive that strong connection,”Silver said. “I can’t brag about cash, there’s no trophy value.”
Partnerships and In-Store Traffic
The credit card reward program’s affiliated bank can make decisions about which brands to partner with that make the most sense for their customers. That might mean the demographic they’re trying to reach or the segment of current users they want to target. For the retailers’ part, Silver said, they love it.
“We’re driving traffic into their existing channels,” Silver said. “So when we talk to someone like Apple who says, ‘I have spent billions of dollars on having the best customer experience inside of an Apple store’—we now don’t interfere with that. We bring you back into the Apple store so Apple can keep you engaged.”
The platform also empowers retailers to target mobile users by their current location to send promotions and special deals directly to the device in their hands.
For retailers, this opens up access to people they wouldn’t otherwise be able to reach. The consumers, in turn, will “most likely spend more because it’s free,” Silver said. “It becomes a win-win for everyone in the ecosystem.”
Cadence is a fintech reporter and writer at Fintech Unltd, where she covers the changing landscape of financial technologies. Previously, Cadence interned at Psychology Today, Business Insider and the Wisconsin State Journal. Cadence is interested in how science and technology intersect with power and culture and is curious about the world we are creating for tomorrow, consciously or not. She graduated from the University of Wisconsin–Madison in 2017 with degrees in Journalism and Chinese. Send tips and story ideas to Cadence at [email protected] You can also follow her on Twitter @cadencebambenek.