How Credit Card Rewards Can Rebuild Consumer Loyalty in the Age of Amazon

Online aggregators allow customers to shop for deals, anonymizing brands and undermining their loyalty to merchants. Digital credit card rewards programs can bridge the gap.

How Credit Card Rewards Can Rebuild Loyalty in the Age of Amazon

Illustration by Jorge Godoy

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.

Illustration by Jorge Godoy

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 card holders. 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: Tell me a bit about the early part of your career.

Tom: I spent a decade helping to build start-ups focused on application and database software. This was where I learned how to sell and do business development. I was fortunate to be part of one company going public and another being sold to IBM.

Sandeep: What is something you learned during this time that helped you with consulting?

Tom: I began to appreciate how different customers achieved varying levels of success with the same foundational technology. This made me understand just how critical getting your team and process right can be.

Sandeep: This is something I only came to appreciate years into consulting, especially after the sale of my first consultancy to Capital One.I saw teams in different parts of the company trying to solve challenges like real-time messaging. Same corporate culture, same technology, same internal support mechanisms. Night and day outcomes.

Tom: We saw a lot of the same thing after selling our practice to EMC (sold to Dell in 2015). This is probably the thing I'm most proud of when it comes to the teams I've helped to build: the ability to perform well in a variety of contexts, sometimes in ways that inspires the client team to up their game as well.

Sandeep: Yes. It's particularly cool to see your team succeed in individual ways after an skills definitely translate into the corporate environment.

Tom: Totally. We have people who've stayed on at Dell and risen up the ranks, while others took the opportunity to become successful executives at other Fortune 100 companies....or to start their own agencies and startups.

Sandeep: We've both been around a while. My first consulting project was a Y2K thing for Cisco back in 1998. You've been around a little longer than that :). How do you think consulting has changed most during the past five years?

Tom: I think because there is so much infrastructure available now, consulting has become more delivery and outcome-oriented. A better blend of strategic and tactical. Public Cloud has also enabled velocity to increase at a pace unfathomable 5 years ago.

Sandeep: What has stayed the same?

Tom: It's still mostly about people. People who thrive on change and are focused on their personal and professional development. I love that this has not and will not's what I love about consulting.

Sandeep: I know you're adjusting your work style to COVID. You're still a dude who clearly prefers to drive an hour for a socially-distanced hike or outdoor meeting over Zoom any day of the week :) But personal styles aside, what is specifically compelling about a remote agency during the era of COVID?

Tom: Kunai has been remote for years, which gives them an inherent advantage. There is something about the communication and management styles that just works in a way that other organizations are still figuring out.

Sandeep: Yeah, I think what a lot of people fail to realize is that remote work isn't just office work over Zoom. it's an entirely new paradigm. There needs to be an understanding for asynchronous efficiency...and this just takes time and effort to develop. How do you approach remote work and family? What are you learning about separating work and personal time?

Tom: No matter what the form of interaction, Focus. Be present. Quality over quantity. The best weeks are the weeks where I proactively schedule work and personal time. Neil (Kunai's Head of Delivery) shared a great quote with me "With discipline comes freedom." When I am proactively addressing the majority of my professional and personal commitments, I find I earn a little flexibility. A little freedom.

Sandeep: Tell us about a business hero of yours that I may not have heard of before.

Tom: Paul O'Neill is someone you may not know. His work in both the public and the private sector created a profound impact

Sandeep: We are both over forty years old :). How have you learned how to work smarter during the past decade or so? What do you wish you knew about consulting when you were 25 that you know now?

Tom: Consultants want to make lasting change. Lasting change is often not the act of a single person. Today I work much harder bringing others along on the journey.

Sandeep: Last question. What are you doing here? :) Why join a small consulting company this late in your career when you could have a cushy job somewhere else?

Tom: I love a good challenge personally and professionally. When I turned 40, I decided I would run a 10K every Thanksgiving weekend and try to have my finishing time be less than my age. With the exception of one year where I did not run due to a health issue, I have met the goal. I also recently completed the Leadville 100 Mountain Bike race. So, I guess I'm here because I'm a glutton for punishment :) Jokes aside, our customers have a job to do and I intend to put Kunai in a position to execute flawlessly on their behalf. I love committing jointly to audacious goals for our customers and our business.

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