Brands typically struggle to engage two key audiences: affluent consumers who are cash rich, time poor, and Gen Zs, who have a short attention span due to the endless stream of social media content they are exposed to.
As a result, these two groups of consumers don’t have the time to use traditional cashback sites which are fraught with pain points, such as the need to periodically click-to-activate bonuses or wait on the 90-day-plus payout period, said Luke Ladyman, COO and co-founder at U.K.-based cashback and payments app operator, Cheddar.
It’s a challenge open banking technology can help solve, he told PYMNTS in an interview, enabling brands to offer users relevant, frictionless and hyper-personalized cashback solutions based on their actual spend behavior that they receive directly in their inbox or access in the Cheddar app.
In fact, with hyper-targeting, he said there’s no need for Cheddar users to go through click-to-activate offers on the platform because they’re “always on,” which pushes customers to either increase their existing spend, while driving new revenue for the retailers.
Open banking data also offers brands detailed insights as to where affluent and Gen Z consumers are shopping, he noted further, if they engage with luxury brands and whether or not they shop at upscale department stores like Selfridges or Harvey Nichols, for example.
It’s cashback 2.0, Ladyman said, “where it’s not just one-way traffic of consumers coming to merchants but instead it’s creating analytical insights for merchants” to increase the chances of a particular shopper buying from them.
And the solution is increasingly catching on with retailers, he noted. Last month, the London-based firm announced new retail partnerships with designer fashion and lifestyle brands, Calvin Klein and Tommy Hilfiger, joining other fashion brands on the app’s cashback platform, including Ganni, Jack Wills, House of Fraser and USC.
The deal will see Calvin Klein and Tommy Hilfiger offer users in the Cheddar network cashback — 10% for new users and 5% for existing or lapsed users — on any online purchase, which they can redeem and instantly deposit directly into their linked bank account at any time.
Ladyman added that prior to open banking, customers could have used different email addresses to get a new customer offer from Calvin Klein. But with the ability now to access account information, Cheddar has a 360-degree view of consumer spending habits going back several years.
“With years’ worth of spend data via open banking, we can see if somebody has spent [at Calvin Klein] within the last two years and serve them an offer accordingly,” Ladyman said, while building existing customer loyalty with tiered cashback offers at the same time.
Helping Cash-Strapped Brits Save
According to Ladyman, the open banking-powered cashback solution is even more critical during the ongoing cost-of-living crisis in the U.K., where household disposable income has taken a hit and many Brits are struggling to make ends meet.
As a result, the payments firm will be focusing on securing partnerships with more staple brands in the next couple of months, targeting retailers in the food, grocery and travel segments where people shop on a daily basis.
“Our mission at Cheddar is to help people save and earn more, and that’s why on our platform we’re not over-indexing on fashion but rather you’ll see such a spread of retailers from groceries to food and travel,” he said.
And as people’s habits change, including how their bills and mortgages are increasing or how the squeeze on household income evolves, he said open banking data can enable brands to take action and acquire new business in a closed-loop system which has the ability to self-correct, rather than just provide cashback offers in an online open-loop system.
“And most importantly it’s measuring incrementality,” Ladyman added. “Our platform is an incremental revenue-generated platform where you can go after customers and move them through the ranks, from non-loyal to loyal VIP and VVIP, by tracking their spending and how they evolve through those behaviors over time.”
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