Retailers are desperate to have a conversation with their customers, and for the first time in history, the technology is now in everyone’s palm to actually do it.
A strange thing has happened in the past decade, or so: we voluntarily decided to permanently carry, care for and obsessively look at a pocket-sized digital device that is packed with sensors and can communicate with the world around it in a staggering variety of ways.
The other thing we are accustomed to carrying is a variety of plastic cards to use in place of cash. From the beginning — before the internet, NFC, magnetic stripes or even carbon paper click-clack copies — cards have offered significant advantages over cash. Despite having no real intrinsic value and in spite of fees attached, they generally buy us time to pay the bills; they are portable and fit in pocket, just like mobile phones.
For the majority of us, paying with a card is almost a robotic action. It isn’t the most amazing experience but it isn’t broken. So simply replacing the card with the mobile phone (cough Apple Pay) adds zero value to the experience and, once the novelty wears off, we revert to reaching for the good ol’ card.
The true power that mobile payments unlock is the ability to have a conversation.
The ability to offer a great deal on those shoes you were looking at because the retailer knows and trusts you.
The ability to capture the customer’s reason why they stopped going to that cafe they used to frequent.
The ability to recommend a new restaurant they might like that is right around the corner.
Compare that to your credit card. Your issuing bank might know who you are and where you shop. The retailer might be able to track your purchases. The thing that neither can do is have a conversation with you in real time, when and where it matters — when you are holding the card trying to make a payment.
The card network is not setup to have rich real-time conversations. It isn’t a technical problem (although the 50 years of legacy code that is the card network doesn’t help) but a structural one. The schemes, such as Visa, MasterCard, etc. do not have a direct relationship with you as their customer — is your bank, the card issuer. Your bank may want to have a conversation with you but it is almost never in your interest.
The party who is desperate to have a conversation with you is the retailer. As John Wanamaker, the US department store magnate, once said: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half”. What if, instead of spending a hefty sum on traditional marketing, the retailer could offer it directly to you? Give that money to new customers to encourage a visit to their store, reward their loyal customers or those customers who previously had a disappointing experience?
Consider the example of a sandwich shop where they have to sell 120 sandwiches just to break even. Some days they sell 80, some days they sell 200. On average, they do OK but their biggest issue is uncertainty.
In the traditional world, retailer’s marketing budget is fixed and already spent with a potentially good return. What they don’t know, however, is how many customers they will get day to day. On slow days, it makes good sense to throw the entire marketing budget towards the goal of selling 120 sandwiches. Imagine having the ability to turn the situation around in real time by offering customers 20% off all sandwiches that day. As a customer, imagine receiving such a great offer just before your lunch hour. It is a win-win: the retailer only pays for results and it goes directly to the customer.
Sure, Beam offers mobile payments and rewards but the true value of Beam lays in leveraging the ability to communicate and to reduce waste.
Beam Wallet
