Richard Char is the Managing Director and Global Head of Digital Networks and Retail Services for Citi Enterprise Payments (CEP) – which, among other things, delivers offers on behalf of third-party merchants. What was an email-based platform transformed to a mobile campaigning platform.
The mobile wallet piece can be used for NFC payments and also can add merchant services on top of that such as couponing, vouchers, and support for retail loyalty programs. CEP develops products based on the Voice of the Customer and “we’re willing to look at it from a holistic view.”
It is an interesting and challenging time to be in the payment, marketing and loyalty arena, especially when (as they are) those elements converge. The opportunity is immense, yet the myopic value proposition offered by many vendors and brands is offset by the opportunity to create truly compelling products and services. In the end, brands attain true loyalty if they listen to their most precious resource: their customers!
Char participated in a compelling interview with Loyalty 360 CEO and Chief Marketing Officer Mark Johnson and offered his thoughts on a variety of topics impacting CEP and its customer base.
Where are mobile wallets now?
A: A lot of early mobile wallets are either sponsored by retailers or by phone companies. The phone companies have this idea that they own valuable real estate (the secure element in the SIM card) which they could rent to banks and retailers. They start off with flawed business models.
In fact, banks don’t make a lot of money transacting these payments. Phone companies are misguided trying to collect a portion of the (nearly nonexistent) payment revenue. The banks aren’t making money doing payments so they haven’t signed up. Everyone is chasing after pennies.
More importantly, the resulting wallet experience becomes lame. People won’t pay money for a digital wallet if it’s just the same thing you can do with a plastic card.
Most shoppers aren’t so fanatical that they’d get a dedicated digital wallet or load a prepaid account just to shop at one merchant. The exception is Starbucks. Or a subway or train pass for daily commuting. These are the only applications I can think of which are so regularized that customers (1) are motivated by convenience, and (2) will suspend their concerns about “breakage.”
This will change when consumers receive value from their digital wallets. Getting specials deals. Receiving highly relevant offers. Being able to more easily participate in all of their favorite loyalty programs and earn extra rewards. Managing their coupons and rebates and store receipts. Enabling comparison shopping or getting lowest price protection. Making it easier and safer to engage in mobile commerce.
Getting someone to use a new payment method is inherently challenging
A: Your average consumer doesn’t want to have 30 wallets on their iPhone. It doesn’t make sense.
Passbook and Google have the right idea … allow apps to ride on top of the common functionality. Think about the map utility on your phone. Sometimes, you use it as is. But often, it’s a utility which other applications can call on as needed.
What we’re doing is loading a card, enabling NFC tap and pay, providing a platform for curating, scoring and delivering merchant offers, and integrating with anchor retailers’ loyalty programs to enable in-store loyalty earning and point redemption, e-couponing and gift cards. Look for leading merchants to develop their own apps. Banks like Citi will provide the commerce capabilities and merchants will connect to this infrastructure with their own apps and services.
How do you make your offers unique and create top-of-mind engagement?
A: As I said, banks should focus on building the commerce infrastructure. Merchants are going to build things for their customers on top of that. Early efforts by banks and phone companies focused SOLELY on consumers. But to get compelling offers, it has to work for merchants. They are the ones funding the offers. The merchant HAS to make a positive return on investment –driving incremental sales, acquiring new customers, reducing customer churn, getting customers to try new products or services, and reducing marketing costs.
Offers per day? Less is more
A: In our initial pilot, our default setting (changeable by the customer) is to deliver about two offers a day. Since we interact with the handset many times an hour, that means that more than 90% of the time our offer selection engine should determine that the right offer is NO offer.
The wallet experience has to be about the merchant, but it has to work for the consumer. Any given merchant running a dedicated wallet will have the same problem: Instead of determining what the best offer is for a customer at a given moment, the merchant is looking to distribute their offers to the widest audience as frequently as possible. It’s hard for a merchant’s individual wallet to be continuously relevant to the customer. This is the advantage of multiple merchants sharing a common commerce platform.
The number of offers to any given consumer is set by his or her parameters, which can be dialed up or down at any time. We invite people to set preferences at any time. That’s really important to us.
On top of that are optimization algorithms. We learn from customers’ searches and their uses of the commerce platform. What offers did they search? What offers did they save? What offers did they redeem? When? That helps us to be contextually relevant to the consumer.
Customers ought to feel like they own their own data. In the future, I predict that consumers will be able see what data they share and determine what information they don’t want to share. Platforms should accommodate that.
We triple opt-in
A: Can we send you offers? Can we use your data to do this? Can we use your location to do this? A person has to answer yes to all three questions for us to enroll them in our program. And of course, they can tell us when (and when not) to send offers, how frequently, and what kind of offers they’d like.
Background:
Char was previously CEO and President of Incentium/VIPGift, a corporate incentives and consumer loyalty program manager to Fortune 100 clients including AT&T, General Motors, Pepsi, McDonalds, UPS, 20th Century Fox, and Google. Char was Senior Vice President, Corporate Development and General Counsel of Blackhawk Networks, an affiliate of Safeway and the largest retail marketer of prepaid gift cards in the United States. During his tenure, the company grew to $7 billion in sales. Before that, he was CEO of IC Media, a U.S. - and Taiwan-based manufacturer of CMOS image sensors for camera cellphones. IC Media was sold to Korean semiconductor company Magnachip for $100 million in 2005.
Char was previously a managing director at the investment banks Credit Suisse First Boston and Cowen and Company.