From copper coins to custom stamps, loyalty programs have been around for hundreds of years. Everyone from mom-and-pop shops to big retailers have used these programs to attract and retain customers to organically grow their business.

Recently, however, these direct interactions between merchants and consumers have dwindled. While credit card companies began offering rewards programs in the 1980s that bolstered loyalty, today’s internet aggregators present a new kind of challenge.

Online Aggregators Pose a Loyalty Threat

When customers shop for soap on Amazon or order Chinese food from DoorDash, they’re not just comparing brands or restaurants. One delivery study found that “money, time, and convenience…and in that order” influence consumer purchasing preferences.

By featuring purchase price and delivery time as prominently as the vendors themselves, aggregators drive a wedge between merchants and consumers. Many merchants feel that restoring direct interaction can revive loyalty, presenting an opportunity for credit card companies to play a bigger part in the customer journey.

Enabling Merchants to Customize Rewards

 Today’s technology makes it possible to scale rewards beyond just a few big airlines and department stores. A platform designed for merchants of any size can enable credit card networks or card-issuing banks to launch hundreds of rewards partnerships quickly.

Consider a two-sided network like PayPal with millions of merchants and customers. Merchants can create their own rewards and loyalty programs, and PayPal enables customers to easily access them and make purchases.

Credit card companies are starting to do the same for their merchants and cardholders. The value is simple: Provide qualified merchants with the ability to engage their customers with a digital rewards platform, and increase customer loyalty and card usage.

Leveraging Transactions to Connect with Customers

 Beyond the platform itself, credit card purchases are all encoded with valuable data, providing an opportunity for targeted rewards and offers. First-time purchase with a merchant? A text message from the credit card company can confirm the transaction and offer additional rewards at that store. If they become a frequent customer, accumulative rewards encourage and maintain this loyalty.

Payment providers can also engage in some aggregation of their own with apps that suggest in-network vendors based on a customer’s search. For instance, Square helps customers decide where to eat and shop by providing a shortlist of available discounts and offers, reinforcing in-network purchases.

Reclaiming the Relationship

 At Kunai, we’ve seen firsthand how loyalty can be rekindled through self-service platforms that enable approved merchants to set up and configure their own rewards programs. What used to take numerous departments several months to launch can go live in a few short weeks.

As we continue to help our clients explore new opportunities, we believe banks have got to start helping their merchant partners engage customers directly, and, in turn, propel the kinds of stickiness both merchants and banks need to compete with aggregators.

– Sandeep Sood