Consumer engagement and loyalty are one of commerce’s favorite mystery boxes. Building it is fundamental, everyone in retail is after it, but after years (and arguably millennia) of study, no one has exactly cracked the secret code. There have been many attempts — some of which have worked better than others — but no surefire remedies.
“If we look at megatrends, for too long, merchants have battled to get repeat transactions one by one on their own,” Augeo CEO David Kristal told Karen Webster shortly after the acquisition was announced. “They hang on as long as they can. But what card-linking can do is enable a much needed mix of offers that is more reflective of what customers need and what merchants want to deliver.”
Augeo knows card-linking. The St. Paul-based firm specializes in building out consumer and employee engagement and incentive programs across all industries. And though the firm is not quite a household name, over the last few years, the firm has grown up quietly as one of the leaders in enabling loyalty programs for regional banks and credit unions, which today number roughly 1,000.
As of today (Jan. 18), its circle has gotten somewhat wider with the acquisition of Nashville-based edo Interactive — a firm specializing in card-linked offers. This will be Augeo’s ninth acquisition over the last 10 years.
So, why make another buy, and why edo?
Well, other than a convergence of talent, shared culture and values between the two teams — and edo’s robust technical platform — the acquisition fundamentally allows Augeo to better address the problem it’s in the market to address.
“Card-linked offers just aren’t working the way people had hoped,” Kristal noted. “And as we began to really understand the coalition marketing space better, we also concluded pretty quickly that it wasn’t working the way it was intended either.”
The basic problem, Kristal noted, is offers inventory. Customers have card-linked offers that are time-sensitive and promotional in nature — and not all that relevant or evergreen. There are only so many offers for oil changes any consumer needs.
And this is why U.S. coalition loyalty programs don’t work nearly so well as their European counterparts, Kristal noted — lack of offer content that is evergreen and actually useful.
“We always look at the individual benefit to the cardholder — economically and transactionally but also emotionally.”
Customers don’t just want to get a good deal. To really build loyalty, they have to feel something about the brand and interacting with it. But those kinds of interactions, Kristal noted, can only be built upon a foundation of data about customer interests and preferences.
“Because we support a number of financial institutions, though we highly protect and secure the data that is highly anonymized, we can get a clearer picture of what is working for consumers, and we can, in turn, help merchants direct offers that reflect those preferences.”
Fine-tuning those systems and widening its base of data, he noted, was also one of the key drivers of the edo acquisition.
“Edo has put many millions of dollars into their tech. They have some of the best-functioning software in the industry today. Going forward, we will be working with a combined technological infrastructure where we will absolutely be leveraging significant parts of their technology.”
Though merchants have been hesitant to really commit to coalition card-based offers, the time where it is an optional feature may be running down. Consumers are used to choice and increasingly simply expect it. Engagement programs that don’t account for it will suffer.
Moreover, Kristal noted, the benefits of engaging customers and taking on loyalty as a coalition are longer-tail plays with long-term dividends.
“In a coalition-like platform, there is group validation. There is a lot of person-to-person transaction because of their very nature. As we add more components to this over the next 12–24 months, you will see a lot more of the group effect. The more validation, the more behavior the merchants will be able to drive.”
And, noted Kristal, with edo on board, Augeo will get to do more of what it does best: quietly standing in the background, helping merchants drive that behavior.