In today’s retail environment, it’s not enough for brands to offer industry-leading products or attract new customers. They must also encourage and incentivize those customers to keep coming back for more. The most successful brands inspire customer loyalty, which endures long after that first purchase is made.
This presents a golden opportunity for forward-thinking merchants to differentiate themselves and build customer loyalty. One way for retailers to inspire that loyalty is by offering immediate, exclusive rewards through debit payment.
The market demand is already in place. According to a recently released survey from ZipLine of 500 millennial and Gen X adults, the majority seek out merchants that offer debit-based rewards programs for immediate rewards, exclusive perks and long-term value. More than 70% of Gen X men and women are more likely to shop with merchants that offer rewards programs. This is also true for more than 60% of millennial men.
Retailers have numerous ways of strengthening their customer relationships, such as awarding points or offering “surprise and delight” bonuses, fuel discounts and clubs. Of course, different types of consumers bring different preferences to the table. Millennial men look for a balance between immediate rewards and long-term value, with 30% prioritizing immediate rewards and 30% finding long-term value to be most important. Millennial women find immediate rewards to be the biggest draw, followed closely by exclusive perks. For 45% of Gen X women, immediate rewards are the most important, while 20% primarily seek out exclusive perks.
What unites them all is a general preference for debit. For transactions of $10 to $250, more than 45% of survey respondents said they prefer debit payments over credit (37%) or cash (18%). This is especially true for women: More than half said they prefer debit payments over credit for everyday purchases.
According to these findings, it’s essential for retailers to meet that demand and offer a combined debit and rewards program. Typically called “private-label debit,” a merchant-branded card or mobile payment app will use an automated clearing house (ACH) to directly debit consumer checking accounts. Used in a closed-loop environment, private-label debit offers secure transactions through PIN protection or tokenization.
At the same time, private-label debit empowers retailers to spend less on interchange fees associated with the major credit cards. According to NACS, merchants pay $11 billion a year in interchange fees, which eat up their profits while doing nothing to inspire customer loyalty. By using private-label debit, c-stores can cut those costs and start redirecting their savings toward loyalty programs that build their brand and increase sales.
Loyalty is a win-win proposition: Retailers can grow sales and brand loyalty while saving on interchange fees, and consumers can earn immediate rewards with their preferred payment. This allows both parties to build a direct, long-term relationship.
Public opinion is clear: Americans are looking for debit-based rewards, and combining payment with loyalty is the best way forward.
This post is sponsored by ZipLine