Understanding True Wallet Share
W ith data trails seemingly capturing consumers’ every digital movement, retailers are primed to turn those transaction footprints into sales. But here’s the rub: “Most retailers can tell you what customers are doing within their stores, but they don’t have much visibility to see what their customers are doing outside of their stores.”
That’s the point of Schwark Satyavolu, co-founder and CEO of Truaxis, a company that provides data-driven personalized loyalty services. The Truaxis platform is designed to slice up voluminous transaction data, organize it in consumer segments and then let retailers promote around the information to spark sales and convert new customers.
Satyavolu, who previously headed money management software start-up Yodlee and served as an entrepreneur-in-residence with high-tech shop Bessemer Venture Partners, says retailers must “cross the boundaries” of customer transactions by stepping outside comfortable sales environments and exploiting data to dig into competitors’ market share.
The objective, he says, is for retailers to use transaction data to lock onto the consumer’s wallet and grab a greater share of the dollars being spent. He has this question for retailers: If you have an apparel customer who spends $100 in your store, does that represent the total amount that customer is spending — or is it just a portion of the $500 the customer is spending on apparel?
If the latter is true, Satyavolu says, that retailer is “getting only 20 percent of the share of the wallet of this particular customer.”
The Truaxis platform, called StatementRewards, offers retailers access to customers’ purchasing information through its affiliations with banks and financial institutions, mining credit and debit card transaction data and then delivering deals and purchase recommendations from merchants directly to consumers through their online debit/credit statements and mobile devices.
Satyavolu says his company’s solution uses matching technology to mine the anonymous bank-user data, and then pairs those users with personalized offers. Once aggregated, segmenting the data gives merchants the ability to go after very specific consumer types.
“You can say, ‘I want to talk to consumers that spend $100 or more on apparel, and I want to do that only for consumers that spend 50 percent of it or higher outside my store,’” he says. “Or you can say, ‘I want people that spend a lot on clothes and most of it outside my store.’ You can even say, ‘I want to talk to customers that spend a lot on apparel and don’t spend any of it in my stores.’”
Satyavolu says the division of consumer segments is virtually limitless, allowing retailers to set up campaigns based on geographic location, category preference and performance, same-store analysis and customer visit profiles. On location, for instance, “You want to know what fraction of the purchases in your area you are capturing.”
Armed with the data, which is reported in a dashboard format, retailers can also consider going out-of-the-box to target new customers, Satyavolu says.
“I might say I am willing to do 80 percent off to get that new customer walking into my store for the first time because I have a certain lifetime value for every customer shopping with me,” he says. “I would be willing to invest a little more to make that happen.”
The StatementRewards platform has been rolled out to more than 2,500 banks and eight million customers nationwide since its launch in October 2010. Truaxis also operates a consumer site, BillShrink.com, that delivers personalized savings recommendations on household bills.
A Truaxis-commissioned study released in October 2011 found that a large majority of consumers would rather gain insight into their purchasing behavior within their online banking statements than registering with a separate website. The survey also noted that consumers trust banks and financial institutions more than third-party companies in managing transaction data.
Banks like the in-statement loyalty program approach as a means for generating revenue in what is considered a challenging legislative, regulatory and consumer landscape, according to financial analysts.
COLLOQUY, a market research organization that tracks loyalty program marketing, reports that the retail industry makes up about 40 percent of all loyalty program memberships, but issues the smallest value in rewards at $12 billion a year. At $18 billion a year, the financial services sector is the biggest provider of rewards, according to COLLOQUY.
Satyavolu says the Statement Rewards platform eliminates much of the overhead — enrollment, marketing and administrative costs — associated with loyalty programs.