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American Express’ Dave Wolf on Foursquare and the future of customer loyalty programs

6 min read

Digital Technology

At this year’s South by Southwest festival in Austin, Texas, American Express experimented with a unique approach to Foursquare integration. Last week the program went live nationwide. Prior to the national rollout, I sat down with American Express Vice President of Global Marketing Capabilities Dave Wolf to learn more about the program, the future of customer loyalty programs and the next step in location business intelligence for merchants. An edited transcript of our conversation appears below.

Tell me about the about the programs American Express did with Foursquare and SCVNGR. What did you do?

At American Express we need to go where our cardmembers and our merchants are going. Everyday more and more cardmembers and merchants are using digital tools, so they’re using social media and they’re using location based services or daily deal sites and apps. So we’ve developed a new digital marketing platform called the Smart Offer Engine, and the Smart Offer Engine allows us to deliver exclusive American Express experiences and provide exclusive American Express offers with third-party digital channels.

So the first examples of the partnerships that we enabled with the Smart Offer Engine were the ones with Foursquare at South by Southwest and then we just announced another partnership with LevelUp, which is a product of SCVNGR. … What that means for cardmembers is you no longer have to print out a coupon in order to get that discount. You no longer have to show your phone to a cashier or to your waiter to get a deal. Merchants will no longer have to train their staff to handle offers or coupons or change their point of sale devices to scan in any barcodes. And the other thing we’re doing is we’re finally able to link digital deals or digital offers or even digital behaviors in general with offline spend behavior.

We can play this very unique role in the digital space because of our unique position in the financial services industry. Unlike our competitors, American Express is a merchant acquirer and we’re a card issuer and we’re the payment network. That gives us an unrivaled amount of end-to-end transaction information, and it’s that transaction information which then allows us to create these kinds of exclusive experiences within those applications. So we know you’re a cardmember who opted in for this partnership and you loaded your offer to your card. We know you’re spending at that merchant, that you’re meeting the offer criteria and when that happens, in real time, we can actually send a message that says “congratulations, your reward is on it’s way and you’re going to get a cash back award via a statement credit, which will hit in about 2-3 days.” So all of that that I’ve just described , is partnered by the Smart Offer Engine, which connects to any partner, any time, anywhere or any device through APIs and the first was Foursquare at South by Southwest and again LevelUp with SCVNGR.

What did the Foursquare pilot teach you?

It was a great proving ground for the technology. This is the first time that our Smart Offer Engine was being leveraged in a third-party channel. Again, the closed loop data — that end-to-end transaction information that only American Express has — that’s something that we’ve brought to bear for our merchant marketing programs for many years, but we’ve never done it in a third-party application. This was a true integration within the Foursquare environment.

At this year’s South by Southwest conference, SCVNGR’s Seth Priebatsch talked about how game mechanics and reward  are affecting customer loyalty. What do you make of the gameification of loyalty?

Loyalty is a very important part of our marketing strategy and what we want to help our merchants achieve. And we think that tools like the Smart Offer Engine [are] something that can drive loyalty. For example, a mom and pop shop could set up an offer through the Smart Offer Engine that will give someone a reward only if that person spends three times in the next month and after that third transaction then they’ll get the reward. Or they could set a threshold, so they want to drive a higher amount of ticket per transaction.  … Both Foursquare and LevelUp have their own tools, their own unique ways of creating loyalty for merchants, and we think that our digital marketing platform can only make those offers that much more seamless and sophisticated.

Some people are skeptical of discounts being the only carrot involved in that loyalty system. If you take those discounts away, maybe people will stop playing the game. How are you addressing that? What else can you offer customers?

One of the really exciting things here is that for the first time, we can really link digital behavior to offline spend behavior and that can just generate an incredible amount of insights. Obviously no PII data is getting shared with any third party or anything like that, but in aggregate, we can start to see what type of check-in behavior leads to what kind of spend behavior, things like that. Maybe through insights and analytics we can help better service them.

Location-based services still have a low penetration point. Why get involved at this stage?

We always want to provide exclusive value to our cardmembers and our merchants. We have millions of cardmembers, millions of merchants and many of them are using these kinds of applications right now. We can provide a differentiating service, we can make it a better experience for them, for the merchants and for the application, so we’re happy to play a part.

How do you see the retail economy changing as a result of the location business intelligence being gathered by programs like this one?

We have an entire business focused on just that — on business insights and this type of location digital data, and this type of location behavioral data is going to be a very interesting new data point that they can potentially leverage to bring new types of insights and analysis to those merchants to help them make better business decisions. … Since everyone’s got these new high-speed computers in their pockets, we can deliver these types of customized experiences or offers at the most relevant time or the most relevant place on behalf of our merchants. So if you check in [on Foursquare] an American Express merchant down the street might be able to say, ‘Jesse we’ve got this great offer for you if you check in here an use your Amex card.’ “