Quick and Easy

This interview with Kristen Bailey, chief marketing officer of Zipline, originally appeared in the September issue of NACS Magazine. It was brought to you by support from ZipLine, a NACS member.

Why should convenience retailers that are interested in attracting millennials pay attention to private label debit?
Current data indicates as many as 63% of millennials don't even carry a credit card.* These consumers, between the ages of 18 and 29, are debt-averse and overwhelmingly prefer cash or debit for their purchases, and they’ll shop where they can easily use these forms of payment.

This reality is driving the recent growth in private label debit. Private label debit is a branded card or mobile app that directly debits payments from a consumer's bank account using PIN-protected and fully encrypted cardholder data—a form of payment that’s been readily adopted and widely used by millennials.

One well-recognized example is the popular Target Red Card, which gives consumers 5% off everyday purchases along with other rewards and incentives.

Other than attracting millennials, why is private label debit beneficial to convenience retailers?
Private label debit is the most cost-efficient payment method available, employing a flat, per-transaction fee. This creates discretionary margin retailers can use to drive consumer engagement, through incentives and rewards that inspire loyalty. These rewards naturally increase consumer adoption and usage, which translate into incremental sales, or “purchase lift.”

How can retailers inspire customer engagement to ensure program adoption?
The key is nurturing the connection between the merchant and the customer. ZipLine’s consumer engagement team supports our merchant partners so they can deliver best-in-class personalized rewards, which are integral to this connection. We capture data about purchasing habits that allows us to provide targeted, meaningful rewards that surprise and delight each customer, creating an emotional connection to the merchant.

What should merchants watch out for in the loyalty space?
As merchants look for ways to differentiate their stores, the combination of payment and rewards delivers a more seamless and delightful consumer experience. One-swipe checkout that debits a consumer bank account and provides instant, meaningful rewards can also create purchase lift and serious brand loyalty.

To validate this, ZipLine studied 165,000 consumers over a two-year period. What we saw is that consumers visit more often, and spend more—35% more on fuel and other purchases, even when there was another loyalty program in place.

This is an average across all participants and is driven by two segments that we call Increase Adopters and Super Adopters. Super Adopters, the heaviest participants in the loyalty program, showed a highly impactful 178% increase in purchasing above their initial purchasing behavior. Increase Adopters followed, elevating their purchases 72%. In terms of visits per month, Super Adopters went from an average of 4.6 visits per month to 10.8 visits, and Increase Adopters went from 3.2 visits per month to 5.3 visits.

Similar results were observed for gallons purchased per month. Super Adopter transactions grew from 50 to 105 gallons per month, and Increase Adopters increased from 36 to 58 gallons per month. These results demonstrate a clear and measurable impact of the program and reinforce the business value of active consumer engagement to increase purchase lift.

The study also showed that among consumers who join a c-store loyalty program using the ZipLine model, 83% become active users. This drives sizable gains in both visits and revenue.

What are the most important takeaways you’ve identified from your research?
In examining the design of loyalty and payment programs, I've learned that implementing a combined payment and loyalty approach creates greater enrollment, more participation and higher sales than a program with either payment or loyalty alone.

Additionally, the real program value lies in looking at the lifetime value of the consumer. Alongside a robust payment-forward loyalty program comes a well-balanced relationship. The consumer demonstrates clear commitment to the brand, and the brand is illustrating clear commitment to the consumer. It becomes symbiotic. 

Consumers expect quick, simple and delightful purchasing experiences and will shop where they find them. Payment-forward loyalty programs that seamlessly combine private label debit and rewards are becoming part of that expectation. And they’re a proven way to help build the relationships necessary to capture the loyalty of today’s consumers. In the end, it will be the merchants who take advantage of the relationship-building opportunities provided by the current payment and rewards trend who will reap the benefits.

*Data sourced from study commissioned by Bankrate and compiled by Princeton Survey Research Associates International

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