How Retailers Are Using Card-Linking Technology for Customer Loyalty

Customer loyalty has been on the decline, with consumers having an abundance of options to choose from when making all sorts of retail purchases. If a retailer can’t meet a consumer's needs, whether it be related to price, product, experience, etc., he or she will often move on to a competitor that can. To help address this growing customer retention challenge, retailers are looking to technology solutions that can help them leverage their most critical asset: customer data. One way to do that is with card-linking technology.

Total Retail recently dived deeper into card-linking technology as part of a broader report on how retailers use loyalty programs to collect data. The report, Customer Loyalty in a Fragmented Market: How retailers can leverage data to create long-term relationships with their customers, is sponsored by Fidel API, a company which allows developers to build functionality, such as reward programs, on top of major credit card payment networks.

What is Card-Linking Technology?

Card-linking technology is a way for consumers to "link" their credit card to a merchant's loyalty program. When retailers use this technology it allows them to acquire customer data via an API which bypasses any challenges of going direct to the source. Therefore, valuable transaction data is captured when customers shop with their normal payment card. That data can then be attributed to a unique customer ID, which helps retailers build a single customer view. The type of information retailers can collect via card-linking technology include transaction time and amount of purchase, merchant location and ID, merchant category code (MCC) and authorization code, and payment method and status. This data offers a more complete picture of a customer's purchase history.

How Will it Help Retailers Build Customer Loyalty?

Card-linking technology is beneficial to retailers in a few key ways. One, it can help improve the checkout experience. At checkout, this method ensures that customers won't have to remember to scan a card, code or coupon, creating a better shopping experience. That better experience leads to a higher likelihood that customers will return to make repeat purchases. Customers will be happy to get their discounts and earn rewards points without having to remember their coupons.

In addition, retailers can better understand and satisfy their customers when they have easy access to real-time transactional data, which can help strengthen retailer-customer relationships. Customer data yielded from a loyalty program is particularly valuable because of how challenging it is to acquire it otherwise. Retailers are often left with an inconsistent customer experience and an incomplete picture of how customers actually engage with them, which interferes with efforts to retain them. With a single customer view obtained from card-linking technology, retailers can create customized offers and promotions for individual customers, leading to increased conversion rates.

Given the omnichannel nature of today's consumers, particularly during the COVID-19 pandemic, it's critical that card-linking technology work both online and offline. This allows for retailers to give customers a unified shopping experience whether they're shopping online or in-store. Data is captured from every transaction regardless of shopping channel. Most importantly, the data collected, such as payment methods and transaction times and locations, can help retailers understand exactly how customers are interacting with it.

For more on this topic, and to download Total Retail's latest research report, Customer Loyalty in a Fragmented Retail Market, click here.