Leave it to Tushy, the bidet brand, to persuade prospective purchasers to get off the pot.
A current promotion to Capital One credit cardholders offers them a 7% rebate as a credit to their accounts if they use the card to pay.
Such promotions—either with instant discounts or with rewards like rebates—are common, with credit card companies offering up to 100—or more—at a time.
Tushy, which promises consumers “more bang for your butt,” runs credit-card promotions regularly.
“Tushy partners with loyalty rewards programs for multiple offers throughout the year,” Miki Agrawal, founder and chief creative officer of Tushy, told us in an email.
Tushy is a good place to start when it comes to getting to the bottom of something, and in this case, that something is credit-card rewards offers. How do they come together? What’s the real value for retailers? And why are credit card companies so gung ho?
Calling card: Hemal Nagarsheth, a partner in the financial services practice of global strategy and management consulting firm Kearney, told Retail Brew credit-card reward offers aren’t a hard sell for credit card companies because of how symbiotic the promotions can be.
“It’s supposed to be a win-win-win,” Nagarsheth said. “Consumers win because they get a discount. The merchant wins because now they were able to get a newer customer.”
But the biggest winner may be the credit card companies themselves.
“Maybe this causes [cardholders] to have more affinity for their credit card than another credit card in their wallet,” Nagarsheth said.
Plastic wrap: How these credit card promotions work can be a bit of a mystery. Capital One, Chase, and Bank of America all offer promotions to retailers, but did not respond to our emails seeking more information.
We had better luck with American Express, which calls its discount promotion program Amex Offers, and which can show offers only to the precise customers retailers want to reach.
“We can target offers to the most relevant group of customers based on what we know about their spending habits,” Raymond Joabar, group president of global merchant and network services at American Express, said in an email to Retail Brew.
The terms, duration, and parameters of the offers are reached collaboratively.
“We know our card members. Our merchants know their customers,” Joabar continued. “When you pair the two together, it makes for desirable offers that have an exceptional return on investment.”
Case studies of Amex Offers in the UK indicate that the ROI is indeed significant:
- An offer by one unnamed brand described as a “popular American worldwide clothing and accessories retailer” earned $12 for every $1 spent.
- A British grocery and home goods superstore also earned $12 for every $1 spent.
- A food delivery company earned about $19 for every $1 spent
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How it works: For example, if Nike offered cardholders, say, 15% back in a statement credit for purchases, the shoe company would pay that 15% when a cardholder makes the purchase. There’s neither a transaction fee Nike would pay (besides the fee for the card swipe itself) nor a flat fee to put the offer in front of cardholders in the first place, Jessica Defilippo, director of corporate affairs and communications at American Express, explained in an email.
“You have no setup costs, no paperwork, no vouchers, no special codes, no staff training, and you only pay when the offer is redeemed,” explains a promotional YouTube video by Amex Offers for prospective brand participants.
After the promotion is complete, American Express provides a postmortem.
“We send you a detailed individual report, which analyzes the response data and gives you valuable insights into cardmembers’ behavior,” the video continues. “We can also use this to help hone, refine, and improve your offer for the next time.”
Stars and swipes: It’s no secret that credit card companies like American Express want to be in good standing with retailers, who—along with participating in these cardholder offers—are often the merchants off of whom the company earns transaction fees.
“Because these programs are incentives for consumers to use their credit cards in lieu of cash or debit cards, they generate increased merchant fees for the credit card company,” stated an article in Investopedia about cash-back credit cards generally, not about additional cash-back retailer offers, although the same principle applies.
As for the cardholders themselves, Nagarsheth noted that deals like this help keep credit cards at the top of consumers’ wallets, which is right where the credit card companies want them when the server drops the check.
“If the average American has two or three credit cards, how do I make sure mine is the one that they’re always pulling out?” Nagarsheth said. “That’s how you make money. You make money…if the card gets used.”