Are you doing your banking online? If yes, you may have already seen several examples of Credit Link Marketing (CLM). This is a new type of digital couponing that, for many marketers and credit card companies, is said to be the future of coupon marketing.
What is CLM?
In a nutshell, CLM is a method by which your bank, or credit card company, keeps a record of purchases you have made using your debit or credit card. Using software, developed by third party marketing companies, the bank builds a history of products you tend to buy. In other words, CLM creates a profile about you based on your most frequent purchases. Then, while you access your bank account via the internet you will be presented with related deals and coupons on your online banking statements.
Example of CLM
Let say you have a cat and you purchase cat food online using your debit card. CML will see previous purchases you have made to a pet shop and will understand that you may be interested in pet products and services. When you access you credit or bank statement you will be presented with suitable offers, such as discount coupons for pet insurance. This of course happens with banks and advertisers that have signed up to a CLM scheme.
“This is scary!” says Alex Papaconstantinou, founder of UK coupon site Wikigains.com, “It means that banks can now scan through your bank statements, create a picture about your interests, know what your hobbies are, even what your favorite grocery store is”. All this based on how you use your debit card. Then the financial institutions use this intelligence in order to target you with coupons that show up on your online banking statement. It just couldn’t be more targeted than that.
Advantages of CLM Couponing
The first part of what makes CLM so special is targeting. Coupons are a way of life for many people. Rather than the merchant using aggregate demographic data to find the right audience to reach via coupon distribution in hard copy publications (newspapers and magazines), CLM “knows” your actual spending history by extracting data out of your bank account.
At the end of the day, CLM is a different way of targeting and delivering coupons. If you are a business you are still offering customers a discount in the hopes that they will bring more repeat business back to your website or physical store.
When it comes to the offers themselves, CLM is no less magical. Instead of sending the coupons to your monthly or quarterly paper bank statement, forcing you to cut out a paper coupon, CLM applies the coupon directly on your credit card. This makes it incredibly easy for you, the customer, to take advantage of store offers.
Does this mean, then, that this is the end of paper or digital couponing as we know it? Alex says no. Coupon sites like Wikigains are here to stay. There are several downsides to CLM.
Downsides to CLM
While card-linked marketing is effective and innovative, it has so far struggled to gain traction among both businesses and consumers. A recent poll by creditcards.com found that customers were over 20 times more likely to have used paper coupons than card-linked offers. Further data suggests that this is simply because people are unaware of card-linked marketing.
The modern CLM paradigm involves sending out limited, time-based offers that are frequently only applicable at retailers a customer doesn't frequent. In other words, though the consumer buys a certain product on a regular basis, they want to buy it from the same retailer. Sending them a coupon for a similar product from another retailer may not work.
CLM may also reduce the convenience factor. If the point of CLM is to make the discounts easier than paper coupons, forcing the consumer to go out of their way to shop from a different brand is a step backward.
“Another issue is that CLM is not smart enough to link you with stores that exist in your area” says Alex from Wikigains. “For example, CLM may see that you use your debit card to purchase items for kids. CLM then understands that you may have young kids and while you check your bank statement it shows a coupon for a Disney store. If you live in place like New York City then that is great because there will be a Disney Store you can drive to. If you live in Nebraska this coupon will be of no use to you as there may be no Disney stores to use your coupon in your area”.
Also, often the offers are presented at a time when the consumer does not need them. For example, for CLM to know that you buy auto insurance online you actually have to have purchased car insurance online using your card. By then, you may not need insurance for another year, unless of course CLM “remembers” and presents you with a coupon after a whole year when your renewal is due. This sharply limits how effective this type of marketing can be, since customers might not need to get the same product in such as short window.
Some consumers have also expressed privacy concerns. While it's great to target customers accurately, following the latest Facebook scandal, there's some amount of ill-will directed to big data these days. Some businesses might be better served by avoiding this sort of coupon marketing entirely.