Affinity Solutions Inc. is putting a new spin on the daily-deals market with a merchant-funded rewards program that enables businesses to track a deal’s effectiveness and deploy follow-up offers to drive repeat business with discounts consumers should find relevant based on their past purchases.
New York-based Affinity is partnering with Sovereign Bank to deliver Spot On Deals to participating issuers’ credit and debit cardholders through email, online banking and mobile alerts, among other methods.
Affinity wants to do something with daily deals it believes companies such as Groupon Inc. and LivingSocial fail to accomplish, which is repeat business, according to Jonathan Silver, president and CEO of Affinity.
“You have a basic problem with the Groupon and Living Social model, which is offered to everyone and attracts people who are not going to come back” to some merchants a second time, he says.
Affinity will target those same consumers plus those who are seeking a deal on something they would have purchased anyway, Silver adds.
Madeline Aufseeser, an Aite Group senior analyst, agrees that vendors’ existing daily deals are unsustainable for merchants and do not present enough options to consumers over the long term.
“Merchant-funded incentive programs are richer for the merchants” because there is more chance for repeat customers, she says.
Consumers benefit from merchant-funded offers because the deals likely involve something that would have been purchased regardless of an incentive, Aufseeser says. “These are deals that are targeted for you specifically as opposed to Groupon, which is just sending streams of offers which may not be relevant,” she adds.
Merchants who use Spot On have access to data-driven daily deals that match the recent spending history of shoppers in their area. Businesses also can track a deal’s success and follow up with offers that are less attractive but appealing enough for consumers to visit a location multiple times, Silver says.
Affinity’s promise to consumers with Spot On is to offer relevant deals, Silver adds.
“We want to project the notion that ‘my bank gets me,’” he says. “That is the experience we want the consumer to have when they get the deal because it reflects how they shop.”
Financial institutions that offer Spot On also can show customers how much they spend and where, Silver says.
“We show them how much they are spending at restaurants and for home furnishing and then offer them deals that way,” he adds.
Affinity is partnering with local and national retailers to offer deals. Red Robin Gourmet Burgers Inc. is one of the initial merchants participating in Spot On.
Local businesses typically dominate daily deals, Silver says. He believes national retailers have shied away from such offers because the tools Affinity provides to track redemption were not available.
“If it’s one complaint I hear from national retailers is that they don’t trust third-party programs to provide them with a reliable measurement of what actually occurred and a reliable way to optimize offer delivery,” Silver says.
Some 450 banks use Affinity’s standard merchant-funded rewards program, including Capital One Financial Corp. and HSBC Bank USA.
Affinity will offer banks Spot On as a standalone product or to complement existing rewards programs, Silver says.
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