Trapped Payments Data Becomes Retail’s Hidden Gold Mine

At the most basic level, retailers seek to change consumer behavior. They want to incentivize an individual to browse, to click, to find a promotion — say a card-linked offer — so stirring that they cement a relationship with the merchant by clicking the buy button or purchasing in-store, and then come back for more.

In an interview with PYMNTS’ Karen Webster, Jehan Luth, founder and CEO of Banyan, noted that for decades, retailers have thrown what they could at their target audience in hopes of making the sale — and in many cases, were flying blind.

“For the longest time, getting more and more content to the consumer was seen as the solution — and in fact, that’s not attractive for anyone,” Luth said. A 1% cash-back offer is not all that tantalizing when the average order is about $30. Deal fatigue is real, he told Webster.

Through the past few years, consumers have been demanding different things from merchants, Luth said. Chief among their desires is the need for a seamless interaction sans friction.

“They’re really starting to expect personal and relevant experience,” he said. On the retailer side of the equation, he added, retailers are scrutinizing every dollar they spend on customer acquisition and retention.

Mining the data tied to payments can yield insights that deliver value to customers. But there’s a problem in the mix: Many of the retailers operating at scale, Luth said, have been around for 30 years, and their tech stacks are decades old, too. Applications have been built and are being used to collect and analyze specific sets of data — to fight fraud, for example.

Grappling With ‘Stovepipe Systems’

“The payment systems have generated data and had applications on top of it — but they’ve not spoken with the other systems in the retailer (and vice versa),” Luth said. Inventory systems don’t “talk” to payment systems, and so the hodgepodge of what he termed “stovepipe” systems have been less than efficient.

For companies looking to leverage artificial intelligence (AI) and advanced technologies to bring personalized offers and interactions to their end markets, the recognition is there that the status quo just won’t hold. They need to examine the foundations and the data flows that are already in place, and how/why some things must change.

Banyan’s data infrastructure platform, which recently crossed the milestone of 20 billion transaction receipts processed, enables client firms to use receipt data to improve their omnichannel efforts. They have seen enterprises take stock of the ways in which data can be used — but there’s nervousness about overcoming the technical debt they carry.

“There’s a lot of work to do,” Luth said, “but it’s getting easier to build a compelling use case for retailers to start doing the work … and reprioritize their roadmaps a bit” and free the data that’s trapped in silos.

“There’s the understanding that the infrastructure needs to be built before you start doing interesting things with AI,” he said.

There is a need, he said, to take a platform-based approach and work with partners to get the foundation in place to innovate. There’s a good analogy here, as many of these same retailers are familiar with payments orchestration and gateways — working with providers that abstract away the complexity.

The same can be said with Banyan, he said, which acts as a data orchestration layer to help drive consumer engagement. In addition, he said, “Retailers are using our software and our platform to make their collaborations with other partners easier” and make data pipelines more efficient.

One illustration of the collaborative, data-driven approach can be seen with Banyan’s recent announcement that it is partnering with Walgreens, where Bilt Rewards customers earn 1X points on most items in the store and 2x points on Walgreens branded items.

“It’s a straightforward concept,” he said, as consumers don’t have to activate the rewards, “the retailers are incentivizing higher-margin purchases with 2x points, and the lower-margin items with 1x points.” The consumer-permissioned approach avoids the “long flurry of offers” that come with emails and coupons that don’t really hit the mark.

Asked by Webster about the trend where retailers are becoming media networks, Luth said firms with significant scale — such as Amazon or where Walmart bought Vizio — have been able to succeed with that approach. Most retailers cannot compete on price, he said, so they have to find ways to generate media-related revenues.

Looking into the next few years, Luth said the granularity of SKU-level data versus simply looking at payments data is akin to “looking at someone’s arm [versus] being able to do an Xray or MRI to understand what’s inside — that’s the difference. Without looking at those items, organizations are flying blind.”

As Luth told Webster of the movement toward personalization, driven by receipt-level information: “We’re in the middle of this … and nowhere near the end.”