Card Linked Offers — Past, Present and Future

For savvy consumers, this is a golden time of offers. Long gone are the days of clipping coupons (although that’s still possible). Many apps and services now allow consumers to amp up their savings without expending much effort.

Take Card Linked Offer (‘CLOs’). When CLOs first appeared is a point of debate, but they have been around for at least ten years. How do they work? Simple — a banking app shows an offer to a consumer, typically via a digital interface, and they activate it through a simple click. The Card Linked Offer requires a user to spend money with a merchant by a specific date.

Offers may be simple (e.g. 10% when you shop at a particular merchant, up to $3 off) or have a minimum spend requirement (e.g. spend $500 and get 1,000 bonus points). Either way, the consumer needs to visit the retailer and then use the credit or debit card linked to the offer. The offer is redeemed automatically.

Card Linked Offers have been around for more than a decade and are reaching large-scale adoption. There are a limited number of platforms enabling these offers. The number of participating merchants is also limited. Users with credit cards at multiple banks often get offered the same discount more than once.

For example, both Chase and Bank of America use the same platform to deliver offers to their customers. The experience is slightly different: Chase CLOs apply to each card in a user’s account separately if the user has more than one card. Bank of America CLOs apply at the user level; any card can be used to redeem them.

With banks using the same platform and the same merchants, a single person may see the same offer on multiple accounts. Duplicate CLOs create confusion (which card did I use for 10% off at Starbucks?) and dilute loyalty (which bank gave me the discount?).

Large financial institutions add CLOs as a standard way to provide additional customer value and build loyalty. We think that’s a good start, but that there’s a better way — discounts tailored to a consumer’s interests. Unique offers will increase consumer loyalty to the bank, drive transactions, and help differentiate the bank from its competitors.

It’s a winning situation all around: Consumers get offers they want, how they want them. Banks get to engage effectively with receptive customers that are less likely to take their business elsewhere.