BillShrink Statement Offers Can Change on the Fly

BillShrink Inc., the discount-hunting service, has come up with a new spin on the Billy Mays-style hard sell in which consumers are cautioned to spend now or forever miss out on a host of extra goodies.

BillShrink made its name with the statement rewards program whose discounts it distributes online and with paper credit and debit card bills. In May it began adding "geo-enhanced" rewards that offer even larger discounts based on consumers' physical location. The new pitches are made possible when merchants locate nearby consumers through mobile phones and offer them additional incentives.

Industry experts said the geo-enhanced rewards improve upon the scattershot approach that many geo-location services use when targeting consumers.

Using Toys "R" Us Inc. as an example, Schwark Satyavolu, BillShrink's chief executive and co-founder, said the merchant would know that a nearby consumer had already been offered $10 off a particular product and might then offer an additional $5 off on immediate purchases.

"Location is not the end of the story," he said. "But coupled with my transaction history, it becomes most valuable to the merchant and the consumer."

In offering geo-enhanced discounts, BillShrink is treading a path that rivals have taken in the past. However, those services have typically blasted out offers to anyone near a retail outlet, rather than targeting those who have previously shown in interest in a product.

BillShrink's "geo-enhanced rewards are intelligent," said Jacob Jegher, a senior analyst at the research firm Celent. "This allows things to become personalized by geographic location," rather than "just a generic offer."

Banks also benefit from its targeted service, Satyavolu said. "They are really looking for ways to be more relevant to their customers, and driving engagement with mobile and online applications is a key priority."

The effectiveness of the offers will depend on BillShrink having a large enough pool of merchants to target consumers with offers that actually appeal to them, analysts said.

BillShrink, which is based in Redwood City, Calif., is working with 93 of the top 100 national merchants and several thousand local and regional merchants, Satyavolu said.

Advertising models based on consumer requests, called "pulled" ads, are likely to be more successful than those that merchants push to consumers, industry experts said. An ad that appears in Internet search results is an example of a pulled ad.

"We're saturated when things are pushed at us, and we start to ignore them," said Alan Mattei, a partner at Novantas LLC of New York. "When I am looking for something, the effectiveness of the ads is much higher, because I have asked for advice on it."

Intelligent reading of transactional data could also be interpreted as a form of consumer pull, said Ron Shevlin, a senior analyst at Aite Group LLC of Boston.

"The key to future marketing success is about sense and responsiveness," Shevlin said.

What's different about BillShrink's approach, however, is the degree to which it can potentially target consumers.

"The offers are coming from analysis of spending patterns and matching that to a merchant who wants to give you a discount based on your demonstrated spend," Shevlin said.

Experts pointed out that a large amount of money was being thrown at location-based advertising for mobile devices by companies like Google Inc., Yelp Inc., Foursquare Labs Inc., and eBay Inc., which purchased the geo-location application provider Where Inc. in April.

In contrast to BillShrink, Foursquare, which said it works with more than 300,000 merchants nationally, requires consumers to check in at or near a merchant's location before they receive special offers, which can be tailored more generally to consumer behavior.

Typical rewards might be discounts for first-time customers, incentives for loyal customers and freebies for frequent shoppers, a Foursquare representative said by email. A representative of a financial services company said that while location-based merchant-funded rewards could be potentially important, it was not ready to implement them.

"We are not seeing an overwhelming interest in our customers for" geo-enhanced rewards, said Michael Reiff, director of consumer product management for the prepaid card marketer NetSpend Holdings Inc. of Austin, Texas.

NetSpend currently uses Cardlytics Inc. of Atlanta as its merchant-funded rewards provider for online banking. Within the next year it will start testing mobile offers from merchants using SMS texts and emails delivered to handsets.

Reiff said NetSpend has to be careful about how it delivers messages to its customers through mobile devices, because many also have prepaid cell phone plans with strict limits on the number of messages they can receive.

"In the future," location-based rewards "may help them find a quick-service restaurant offering them something, but when it comes to a 'geo offer' that pings them when they drive by, our customers have major privacy concerns," Reiff said. "And they are concerned about getting spammed with messages, as they drive around town, and paying for them."

Satyavolu said BillShrink will be able to offer merchants very specific campaign information, using anonymous aggregated data, about how their offers to consumers fared compared to those of competitors.

The service could also let banks steer customers to specific payment types, potentially adding more discounts if they use the bank's card to redeem an offer at a particular merchant.

"It makes the bank more of a helper in customers' daily lives," Satyavolu said. "And the bank card becomes a more indispensable part of their daily lives."