Barclaycard Freedom launched in the UK this month. It's an unusual model which has been implemented in similar forms in other parts of the world - most notable in our neighbourhood : Asia. BPI bank in the Philippines run this technology as their card loyalty program (called Real Thrills) as do Axis Bank in India (theirs is called Spice Rewards). The technology that underpins these offerings comes from France based Welcome Real-time who have been developing their solution for over 12 years (and with whom Carlson has a Asia Pacific partnership).
The mechanics (there are two) are similar in all applications : (1) customers of the card company receive segmented offers at point of sale when they swipe their cards. These offers are printed on the till slip and are redeemable either back in that merchant or at another merchant.
(2) Customer of the card company can use their points to pay for their purchase at that merchant (not unlike ASB Bank's True Rewards program here in New Zealand).
The value of the first mechanic (offers on till slips) is clearer perhaps than the second (burning rewards points at the till). Most retailers want to get their customers through the till as fast as possible and any delay occasioned by a new process to redeem points wouldn't be appreciated. Importantly the retailer never knows the name or details of who they're making the offer to. They're simply card X which belongs to segment Y.
Merchants can set up segments of card carrying customer types from that issuer - a "frequent visitor" or a "never been here before" segment for example. These segments get different offers on the till slip. Frequent Visitor might get a "bring a friend for free next time offer" while Never Been Here Before might get a "come back and get a discounted item" offer. Merchants self manage these offers through an web portal.
What's different about Barclaycard's Freedom is that this is the first time this type of solution has been implemented on such a large scale in such a mature and sophisticated card market. The scale is significant. Barclaycard have 8 million customers who will be able to benefit from this solution at a large portfolio series of merchants (30,000 have been invited but less than that are available today). The goal is to have 200 outlets withing 5 miles of each customer making relevant offers.
If it pans out as its intended to then this is a great example of a marketing network in action. The three parties involved all benefit from relevance and richness.
The merchant is able to make different offers to different customers instead of the classic One Size Fits All structures. They don't have to incentivise business they were already going to get.
The customer gets an additional benefit on top of the others they're already receiving which, if the merchant gets their campaign management right, should be differently rich and differently relevant to each of them.
The bank in Barclaycard adds significant value to the near-commodity business of merchant acquiring as well as making their program an order of magnitude (again - if the merchants get their campaign management right) richer than competitor's card programs.
